1-1 By: Bonnen (Senate Sponsor - Sibley) H.B. No. 2437
1-2 (In the Senate - Received from the House April 18, 1997;
1-3 April 22, 1997, read first time and referred to Committee on
1-4 Economic Development; May 16, 1997, reported adversely, with
1-5 favorable Committee Substitute by the following vote: Yeas 8, Nays
1-6 0; May 16, 1997, sent to printer.)
1-7 COMMITTEE SUBSTITUTE FOR H.B. No. 2437 By: Sibley
1-8 A BILL TO BE ENTITLED
1-9 AN ACT
1-10 relating to the Texas Property and Casualty Insurance Guaranty
1-11 Association.
1-12 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-13 SECTION 1. Section 5(8), Article 21.28-C, Insurance Code, is
1-14 amended to read as follows:
1-15 (8) "Covered claim" means an unpaid claim of an
1-16 insured or third-party liability claimant that arises out of and is
1-17 within the coverage and not in excess of the applicable limits of
1-18 an insurance policy to which this Act applies, issued or assumed
1-19 (whereby an assumption certificate is issued to the insured) by an
1-20 insurer licensed to do business in this state, if that insurer
1-21 becomes an impaired insurer and the third-party claimant or
1-22 liability claimant or insured is a resident of this state at the
1-23 time of the insured event, or the claim is a first-party claim for
1-24 damage to property that is permanently located in this state.
1-25 "Covered claim" shall also include [75 percent of] unearned
1-26 premiums, but in no event shall a covered claim for unearned
1-27 premiums exceed $25,000 [$1,000]. Individual covered claims
1-28 (including any and all derivative claims by more than one person
1-29 which arise from the same occurrence, which shall be considered
1-30 collectively as a single claim under this Act) shall be limited to
1-31 $300,000 [$100,000], except that the association shall pay the full
1-32 amount of any covered claim arising out of a workers' compensation
1-33 claim made under a workers' compensation policy. "Covered claim"
1-34 shall not include any amount sought as a return of premium under a
1-35 retrospective rating plan or any amount due any reinsurer, insurer,
1-36 insurance pool, or underwriting association, as subrogation
1-37 recoveries, reinsurance recoveries, contribution, indemnification,
1-38 or otherwise, and the insured of an impaired insurer is not liable,
1-39 and the insurer is not entitled to sue or continue a suit against
1-40 that insured, for any subrogation recovery, reinsurance recovery,
1-41 contribution, or indemnity asserted by a reinsurer, insurer,
1-42 insurance pool, or underwriting association to the extent of the
1-43 applicable liability limits of the policy written and issued to the
1-44 insured by the insolvent insurer. "Covered claim" shall not
1-45 include supplementary payment obligations, including adjustment
1-46 fees and expenses, attorney's fees and expenses, court costs,
1-47 interest and penalties, and interest and bond premiums incurred
1-48 prior to the determination that an insurer is an impaired insurer
1-49 under this Act. "Covered claim" shall not include any prejudgment
1-50 or postjudgment interest that accrues subsequent to the
1-51 determination that an insurer is an impaired insurer under this
1-52 Act. "Covered claim" shall not include any claim for recovery of
1-53 punitive, exemplary, extracontractual, or bad-faith damages,
1-54 whether sought as a recovery against the insured, insurer, guaranty
1-55 association, receiver, special deputy receiver, or commissioner,
1-56 awarded in a court judgment against an insured or insurer.
1-57 "Covered claim" shall not include, and the association shall not
1-58 have any liability to an insured or third-party liability claimant,
1-59 for its failure to settle a liability claim within the limits of a
1-60 covered claim under this Act. With respect to a covered claim for
1-61 unearned premiums, both persons who were residents of this state at
1-62 the time the policy was issued and persons who are residents of
1-63 this state at the time the company is found to be an impaired
1-64 insurer shall be considered to have covered claims under this Act.
2-1 If the impaired insurer has insufficient assets to pay the expenses
2-2 of administering the receivership or conservatorship estate, that
2-3 portion of the expenses of administration incurred in the
2-4 processing and payment of claims against the estate shall also be a
2-5 covered claim under this Act.
2-6 SECTION 2. Section 5(10)(A), Article 21.28-C, Insurance
2-7 Code, is amended to read as follows:
2-8 (10) "Member insurer" means any person who:
2-9 (A) writes any kind of insurance to which this
2-10 Act applies under Section 3 of this Act, including [the] Lloyds,
2-11 [exchange of] reciprocal exchanges and county mutual insurance
2-12 companies [or inter-insurance contracts]; and
2-13 (B) is licensed to transact insurance in this
2-14 state.
2-15 SECTION 3. (a) SECTION 1 of this Act shall take effect on
2-16 September 1, 1997, and shall apply to claims against insurers which
2-17 are impaired under Article 21.28-C, Insurance Code, on or after
2-18 such date.
2-19 (b) SECTION 2 of this Act shall take effect on September 1,
2-20 1997.
2-21 SECTION 4. The importance of this legislation and the
2-22 crowded condition of the calendars in both houses create an
2-23 emergency and an imperative public necessity that the
2-24 constitutional rule requiring bills to be read on three several
2-25 days in each house be suspended, and this rule is hereby suspended.
2-26 * * * * *