By: Cain S.B. No. 1293
97S0764/1
A BILL TO BE ENTITLED
AN ACT
1-1 relating to the approval and use of certain life, health, and
1-2 accident insurance policy forms.
1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-4 SECTION 1. Article 3.42, Insurance Code, is amended to read
1-5 as follows:
1-6 Art. 3.42. Policy Form Approval. (a) No policy, contract
1-7 or certificate of life, term or endowment insurance, group life or
1-8 term insurance, industrial life insurance, accident or health
1-9 insurance, group accident or health insurance, hospitalization
1-10 insurance, group hospitalization insurance, medical or surgical
1-11 insurance, group medical or surgical insurance, or fraternal
1-12 benefit insurance, and no annuity or pure endowment contract or
1-13 group annuity contract, shall be delivered, issued or used in this
1-14 state by a life, accident, health or casualty insurance company, a
1-15 mutual life insurance company, mutual insurance company other than
1-16 life, mutual or natural premium life insurance company, general
1-17 casualty company, Lloyds, reciprocal or interinsurance exchange,
1-18 fraternal benefit society, group hospitalization service or any
1-19 other insurer, unless the form of said policy, contract or
1-20 certificate has been filed with the department as provided by
1-21 Subsections (c) and (e) [(d)] of this Article. Provided, however,
1-22 that this Article shall not apply to any society, company or other
1-23 insurer whose activities are by statute exempt from the control of
2-1 the department and which is entitled by statute to an exemption
2-2 certificate from the department in evidence of its exempt status;
2-3 provided, further, that this Act shall not be construed to enlarge
2-4 the powers of any of the insurers subject to this Article.
2-5 (b) No application form which is required to be or is
2-6 attached to the policy, contract or certificate, and no rider or
2-7 endorsement to be attached to, printed upon or used in connection
2-8 with any policy, contract or certificate described by Subsection
2-9 (a) of this Article shall be delivered, issued or used in this
2-10 state by any insurer described by Subsection (a) of this Article
2-11 unless the form of said application, rider or endorsement has been
2-12 filed with the department as provided by Subsections (c) and (e)
2-13 [(d)] of this Article. Each individual accident and sickness
2-14 policy application form, which is required to be or is attached to
2-15 the policy, shall comply with the rules and regulations of the
2-16 commissioner adopted under Subchapter G of this chapter. Provided,
2-17 however, that this Article shall not apply to riders or
2-18 endorsements which relate to the manner of distribution of benefits
2-19 or to the reservation of rights and benefits under such policies,
2-20 contracts and certificates, and which are used at the request of
2-21 the holder of the policy, contract or certificate.
2-22 (c) Each filing required under Subsection (a) or (b) of this
2-23 Article shall be made prior to any such issuance, delivery or use
2-24 of such form, contract or policy. On that filing, the insurer may
2-25 immediately issue, deliver and use such form, contract or policy,
3-1 provided such filing shall be accompanied by a certification on
3-2 behalf of the filing insurer, signed by either an attorney licensed
3-3 to practice law in this state, an actuary familiar with the
3-4 requirements of this Code and the applicable rules and regulations
3-5 adopted pursuant thereto, or the chief executive officer of such
3-6 filing insurer or a person designated by that officer. Such
3-7 certification must affirm that it is on behalf of the insurer, that
3-8 the insurer is bound thereby, that the person certifying has
3-9 reviewed the filing, and that, based upon that person's best
3-10 knowledge, information, and belief, such filed form, contract, or
3-11 policy complies in all respects with the provisions of this Code
3-12 and the adopted rules and regulations that are applicable to such
3-13 policy, contract, certificate, application, rider, endorsement, or
3-14 other form being filed.
3-15 (d) At the expiration of 60 days after receipt of a [such]
3-16 filed form, contract or policy by the department, a [such] form,
3-17 contract or policy shall, other than a policy, contract or
3-18 certificate of life, term or endowment insurance, group life or
3-19 term insurance, industrial life insurance, annuity or pure
3-20 endowment contract or group annuity contract, be deemed approved by
3-21 the department unless prior thereto it has been affirmatively
3-22 either approved or disapproved by the written order of the
3-23 commissioner, or the insurer has requested in writing that the
3-24 approval period be extended for an additional period not to exceed
3-25 45 days. The request for extension shall be considered granted
4-1 upon being received by the department. Only one extension may be
4-2 granted. On the expiration of the extension, the form is
4-3 considered approved unless the commissioner has taken affirmative
4-4 action to either approve or disapprove the form before the
4-5 expiration of the extension. If such policy, contract or form is
4-6 affirmatively disapproved by the commissioner, the insurer, upon
4-7 receiving written notice thereof, shall immediately cease issuing
4-8 or using such policy, contract or form. If any such filed
4-9 contract, policy or form is used, issued, or delivered prior to
4-10 either affirmative or statutory deemer approval, and if corrections
4-11 are required to be made before the commissioner will approve the
4-12 contract, policy or form to bring the contract, policy or form into
4-13 complete compliance with the provisions of this Code and the
4-14 applicable rules of the commissioner, the commissioner may order
4-15 the insurer either to reissue a corrected contract, policy or form
4-16 to replace the one previously issued, delivered, or used, or to
4-17 amend and correct it by endorsement or rider. If a contract,
4-18 policy or form is disapproved or approval is withdrawn under the
4-19 provisions of Subsection (j) [(i)] of this Article, the
4-20 commissioner may order a similar replacement or amendment to
4-21 correct the original contract, policy or form. In the event it is
4-22 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 Subsection (c) of this Article
4-25 [subsection] but that has not been approved as provided by this
5-1 subsection and that does not comply with this Code and legally
5-2 adopted applicable rules of the commissioner, and the commissioner
5-3 determines that the insurer intentionally used and issued that
5-4 contract, policy or form with the knowledge that it did not comply
5-5 with this Code or those applicable rules, the commissioner may
5-6 order the insurer to make complete restitution to those financially
5-7 damaged insureds in such form and amount and within such time
5-8 period as determined by the commissioner. This section shall not
5-9 be construed to be in derogation or to in any way limit the
5-10 applicability of any otherwise applicable statute, but the
5-11 commissioner may not impose other sanctions or penalties on an
5-12 insurer for the issuance of a form, policy, or contract filed under
5-13 Subsection (c) of this Article [subsection] except as specifically
5-14 provided by this subsection.
5-15 (e) [(d)] In lieu of and as an alternative to such filing
5-16 being accompanied by such certification as required by Subsection
5-17 (c) of this Article, any such filing required hereby shall be made
5-18 not less than 60 days in advance of any such issuance, delivery, or
5-19 use of such form, and at the expiration of 60 days the form so
5-20 filed shall be deemed approved by the commissioner unless prior
5-21 thereto it has been affirmatively approved or disapproved by the
5-22 written order of the commissioner. Approval of any such form by
5-23 the commissioner shall constitute a waiver of any unexpired portion
5-24 of the waiting period, or periods, herein provided.
5-25 (f) [(e)] The department shall charge and receive the
6-1 following fees in an amount to be determined by the commissioner
6-2 not to exceed the following:
6-3 (1) for a filing of policy forms, amendments,
6-4 endorsements, and riders filed for review under this Article,
6-5 unless exempted pursuant to Subsection (i) [(h)] of this Article,
6-6 $100; and
6-7 (2) for a filing of policy forms, amendments,
6-8 endorsements, and riders, exempted from review pursuant to
6-9 Subsection (i) [(h)] of this Article, $50.
6-10 (g) [(f)] The commissioner shall, within the limits fixed by
6-11 Subsection (f) [(e)] of this Article, prescribe the fees to be
6-12 charged under Subsection (f) [(e)] of this Article. Fees collected
6-13 under that subsection shall be deposited in the State Treasury.
6-14 (h) [(g)] The order of the commissioner disapproving any
6-15 such form or withdrawing a previous approval must state the grounds
6-16 for such disapproval or withdrawal and must describe in adequate
6-17 detail the changes necessary to obtain approval. The insurer is
6-18 entitled to 45 days after the date of the order to make the changes
6-19 required to correct the deficiencies noted in the order. The
6-20 commissioner has 45 days to approve or disapprove the form filed
6-21 for reconsideration or the form is considered approved for purposes
6-22 of this Article.
6-23 (i) [(h)] The commissioner may, by written order, exempt
6-24 from the requirements of this Article for so long as the
6-25 commissioner considers proper, any insurance document or form
7-1 specified in such order, to which in the commissioner's opinion
7-2 this Article may not practically be applied, the form's
7-3 preparation, use, and meaning have become routine or commonplace,
7-4 or the filing and approval of such form or document are, in the
7-5 commissioner's opinion, not desirable, appropriate, required, or
7-6 necessary for the protection of the public. Additionally, the
7-7 commissioner may, after notice and hearing, adopt reasonable rules
7-8 and amendments to rules that are necessary for the commissioner to
7-9 establish guidelines, procedures, methods, standards, and criteria
7-10 by which the various and different types of forms and documents
7-11 submitted to the department are to be reviewed and approved by the
7-12 commissioner as in compliance with this article or exempted under
7-13 this subsection, and to provide those guidelines, procedures,
7-14 methods, standards, and criteria by which a summary review and
7-15 approval may be given to those particular types of forms and
7-16 documents designated by the commissioner that, in the
7-17 commissioner's opinion, will expedite the review and approval
7-18 process of those forms and documents.
7-19 (j) [(i)] The commissioner may disapprove any such form, or,
7-20 after notice and hearing, may withdraw any previous approval
7-21 thereto if the form:
7-22 (1) violates or does not comply with this Code or any
7-23 valid rule relating thereto duly adopted by the commissioner, or is
7-24 otherwise contrary to law; or
7-25 (2) contains provisions or has any titles or headings
8-1 which are unjust, encourage misrepresentation or are deceptive.
8-2 (k) [(j)] If a form subject to Subsection (j) [(i)] of this
8-3 Article has been on file with the department for at least 180 days
8-4 and has been previously affirmatively approved by the commissioner,
8-5 considered approved under the operation of this Article, or
8-6 exempted from the approval requirements as provided by this
8-7 Article, the commissioner may withdraw the previous approval or the
8-8 exemption from the approval requirements only if the form violates
8-9 or does not comply with specific requirements under this Code or a
8-10 rule adopted under this Code unless the commissioner finds proof of
8-11 gross misrepresentation or fraud to the policyholder.
8-12 (l) [(k)] The commissioner may, after notice and hearing,
8-13 withdraw any previous approval of an individual accident and
8-14 sickness insurance policy form if, after consideration of all
8-15 relevant facts, the commissioner finds that the benefits provided
8-16 under such policy form are unreasonable in relation to the premium
8-17 charged, or the reserve required by Article 6.01 of this code is
8-18 not maintained by the insurer on the policies issued upon such
8-19 policy form. The commissioner shall from time to time as
8-20 conditions warrant, and after notice and hearing, promulgate such
8-21 reasonable rules and regulations and amendments thereto as are
8-22 necessary to establish the standard or standards by which any
8-23 previous approval of a policy form may be withdrawn. Any such rule
8-24 or regulation shall be promulgated in accordance with Section 10,
8-25 Chapter 397, Acts of the 54th Legislature, 1955 (Article 3.70-10,
9-1 Vernon's Texas Insurance Code). Nothing in this section shall be
9-2 construed as granting the commissioner any power or authority to
9-3 determine, fix, prescribe, or promulgate the rates to be charged
9-4 for any individual accident and sickness insurance policy or
9-5 policies.
9-6 (m) [(l)] If a form subject to Subsection (l) [(k)] of this
9-7 Article has been on file with the department for at least 360 days
9-8 and has been previously affirmatively approved by the commissioner,
9-9 considered approved under the operation of this Article, or
9-10 exempted from the approval requirements as provided by this
9-11 Article, the commissioner may withdraw the previous approval or the
9-12 exemption from the approval requirements only if the form violates
9-13 or does not comply with specific requirements under this Code or a
9-14 rule adopted under this Code unless the commissioner finds proof of
9-15 gross misrepresentation or fraud to the policyholder.
9-16 (n) [(m)] The commissioner shall require the filing of all
9-17 rates to be charged for individual accident and sickness policies
9-18 and may adopt necessary forms to be filed by insurers in
9-19 conjunction with the annual statement required under Articles 3.07
9-20 and 3.20-1 of this code for reporting the experience on all
9-21 individual accident and sickness insurance policy forms issued by
9-22 the insurer so as to determine compliance with Subsection (m) [(l)]
9-23 of this Article.
9-24 (o) [(n)] Appeals from any order of the commissioner issued
9-25 under this Article may be taken to the District Court of Travis
10-1 County, Texas, in accordance with Article 1.04 of this code, or any
10-2 amendments thereof.
10-3 (p) [(o)] No policy, contract, or certificate filed pursuant
10-4 to this article that contains a coordination of benefits provision
10-5 may be approved for use in this state unless it also provides the
10-6 order of benefit determination for insured dependent children. An
10-7 order of benefits determination provision may not be approved
10-8 unless it complies with the standards specified in Subsection (j)
10-9 [(i)] of this article. The commissioner is authorized to
10-10 promulgate and may order such provision as is necessary in the
10-11 accomplishment of the purpose of this subsection.
10-12 (q) [(p)] The commissioner is hereby authorized to adopt
10-13 such reasonable rules and regulations as are necessary to implement
10-14 and accomplish the specific provisions of this Article and are
10-15 within the standards and purposes of this Article. The
10-16 commissioner shall adopt rules under this Article in compliance
10-17 with Chapter 2001, Government Code (Administrative Procedure Act).
10-18 A rule adopted under this Article may not be repealed or amended
10-19 until the first anniversary of the adoption of the rule unless the
10-20 commissioner finds in a public hearing after notice that there is a
10-21 compelling public need for the amendment or repeal of the rule or
10-22 part of the rule.
10-23 SECTION 2. If any provision of this Act or its application
10-24 to any person or circumstance is held invalid, the invalidity does
10-25 not affect other provisions or applications of this Act that can be
11-1 given effect without the invalid provision or application, and to
11-2 this end the provisions of this Act are declared to be severable.
11-3 SECTION 3. Any rule adopted by the commissioner of insurance
11-4 which is not in conformity to the standards set forth in Section 1
11-5 of this Act shall be null and void and of no force or effect.
11-6 SECTION 4. If a provision of this Act is in conflict with
11-7 any other law, rule, regulation, or provision of the Insurance
11-8 Code, this Act shall control.
11-9 SECTION 5. The importance of this legislation and the
11-10 crowded condition of the calendars in both houses create an
11-11 emergency and an imperative public necessity that the
11-12 constitutional rule requiring bills to be read on three several
11-13 days in each house be suspended, and this rule is hereby suspended,
11-14 and that this Act take effect and be in force from and after its
11-15 passage, and it is so enacted.