1-1 AN ACT
1-2 relating to increasing the policy limit on stipulated insurance
1-3 company policies.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Section 3, Article 21.07, Insurance Code, as
1-6 amended by Chapters 596 and 972, Acts of the 75th Legislature,
1-7 Regular Session, 1997, is reenacted and amended to read as follows:
1-8 Sec. 3. ISSUANCE OF LICENSE UNDER CERTAIN CIRCUMSTANCES.
1-9 The commissioner [department] shall issue a license to a person,
1-10 corporation, or bank in such form as the department [it] may
1-11 prepare authorizing such applicant to write the types of insurance
1-12 authorized by law to be issued by applicant's appointing insurance
1-13 carrier, except that:
1-14 (1) the [(a) Such] applicant shall not be authorized
1-15 to write health and accident insurance unless the applicant:
1-16 (A) [(i) applicant,] if not a partnership,
1-17 corporation, or bank shall have first passed a written examination
1-18 as provided for in this Article;
1-19 (B)[, or (ii) applicant] will act only as a
1-20 ticket-selling agent of a public carrier with respect to accident
1-21 life insurance covering risks of travel or as an agent selling
1-22 credit life, health and accident insurance issued exclusively in
1-23 connection with credit transactions;[,] or
1-24 (C) [(iii) applicant] will write policies or
2-1 riders to policies providing only lump sum cash benefits in the
2-2 event of the accidental death, or death by accidental means, or
2-3 dismemberment, or providing only ambulance expense benefits in the
2-4 event of accident or sickness; and
2-5 (2) the [(b) Such] applicant, if not a partnership,
2-6 corporation, or bank shall not be authorized to write life
2-7 insurance in excess of $15,000 [$10,000] upon any one life unless
2-8 the applicant:
2-9 (A) [(i) applicant,] if not a partnership,
2-10 corporation, or bank shall have first passed a written examination
2-11 as provided for in this Article;
2-12 (B)[, or (ii) applicant] will act only as a
2-13 ticket-selling agent of a public carrier with respect to accident
2-14 life insurance covering risks of travel or as an agent selling
2-15 credit life, health and accident insurance issued exclusively in
2-16 connection with credit transactions;[,] or
2-17 (C) [(iii) applicant] will write policies or
2-18 riders to policies providing only lump sum cash benefits in the
2-19 event of the accidental death, or death by accidental means, or
2-20 dismemberment, or providing only ambulance expense benefits in the
2-21 event of accident or sickness.
2-22 SECTION 2. The heading to Section 4A, Article 21.07,
2-23 Insurance Code, is amended to read as follows:
2-24 Sec. 4A. EXAMINATION OF APPLICANT FOR LICENSE TO WRITE LIFE
2-25 INSURANCE UPON ANY ONE LIFE IN EXCESS OF $15,000 [$10,000].
2-26 SECTION 3. Sections 4A(a), (c), and (e), Article 21.07,
2-27 Insurance Code, are amended to read as follows:
3-1 (a) Each applicant for a license under the provisions of
3-2 this Article 21.07, Insurance Code, as amended, who desires to
3-3 write life insurance in excess of $15,000 [$10,000] upon any one
3-4 life, other than as excepted in Section 3 of this Article 21.07,
3-5 within this state shall submit to a personal written examination
3-6 prescribed by the commissioner and administered in the English or
3-7 Spanish language to determine the applicant's competency with
3-8 respect to life insurance and the applicant's familiarity with the
3-9 pertinent provisions of the laws of the State of Texas relating to
3-10 life insurance and shall pass the same to the satisfaction of the
3-11 commissioner; except that no written examination shall be required
3-12 of an applicant that is a partnership or corporation.
3-13 (c) After the commissioner determines that such applicant
3-14 has successfully passed the written examination or it has been
3-15 waived, the commissioner shall forthwith issue a license to such
3-16 applicant which shall also authorize such applicant to write life
3-17 insurance upon any one life in excess of $15,000 [$10,000] for the
3-18 designated insurance carrier.
3-19 (e) When any license shall be issued by the commissioner to
3-20 an applicant entitled to write life insurance upon any one life in
3-21 excess of $15,000 [$10,000], the license shall have stamped thereon
3-22 the words, "Life Insurance in Excess of $15,000 [$10,000]."
3-23 SECTION 4. Section 3, Article 22.07, Insurance Code, is
3-24 amended to read as follows:
3-25 Sec. 3. If the surplus of a stipulated premium company is at
3-26 least Fifty Thousand Dollars ($50,000.00) but less than Two Hundred
3-27 Thousand Dollars ($200,000.00), the stipulated premium company
4-1 shall reinsure the insurance amount that exceeds Fifteen [Ten]
4-2 Thousand Dollars ($15,000 [$10,000.00]) on a life insurance risk on
4-3 any one life.
4-4 SECTION 5. Section 1(b), Article 22.13, Insurance Code, is
4-5 amended to read as follows:
4-6 (b) Except as otherwise provided by this subsection, it
4-7 shall be unlawful for any stipulated premium company to assume
4-8 liability on a life insurance risk on any one life in an amount in
4-9 excess of Fifteen [Ten] Thousand Dollars ($15,000 [$10,000.00]).
4-10 If a stipulated premium company assumes a life insurance risk under
4-11 a life insurance policy, the initial death benefit of Fifteen [Ten]
4-12 Thousand Dollars ($15,000 [$10,000.00]) or less may increase to an
4-13 amount greater than Fifteen [Ten] Thousand Dollars ($15,000
4-14 [$10,000.00]). For a policy in which the death benefit subsequent
4-15 to issuance exceeds Fifteen [Ten] Thousand Dollars ($15,000
4-16 [$10,000.00]), the death benefit at the end of each policy year may
4-17 not exceed the greater of the maximum increase as specified in the
4-18 policy, compounded annually, or the CPI-U, compounded annually.
4-19 The maximum increase that may be specified in a life insurance
4-20 policy subject to this article is five percent, compounded
4-21 annually. For purposes of this subsection, the CPI-U for a given
4-22 calendar year is the consumer price index for all urban consumers
4-23 for all items and for all regions of the United States, combined as
4-24 determined by the United States Department of Labor, Bureau of
4-25 Labor Statistics, on September 30 of the prior calendar year.
4-26 SECTION 6. Article 22.23(a), Insurance Code, is amended to
4-27 read as follows:
5-1 (a) Each stipulated premium company possessing capital and
5-2 unencumbered surplus of at least the combined total sum of
5-3 $100,000.00 may issue policies of life insurance as authorized and
5-4 permitted under the provisions of Chapter Three of this Insurance
5-5 Code provided that:
5-6 (1) no individual life shall be insured for more than
5-7 $15,000 [$10,000.00], except as provided by Section 1(b), Article
5-8 22.13, of this code or Article 22.23A of this code;
5-9 (2) each such policy shall be reserved and reinsured
5-10 as required under the provisions of Chapter Three of this Insurance
5-11 Code; and
5-12 (3) each such life policy shall be issued only upon an
5-13 endowment or limited pay basis.
5-14 SECTION 7. This Act takes effect September 1, 1999, and
5-15 applies only to an insurance policy that is delivered, issued for
5-16 delivery, or renewed on or after the effective date of this Act. A
5-17 policy that is delivered, issued for delivery, or renewed before
5-18 the effective date of this Act is governed by the law as it existed
5-19 immediately before the effective date of this Act, and that law is
5-20 continued in effect for that purpose.
5-21 SECTION 8. The importance of this legislation and the
5-22 crowded condition of the calendars in both houses create an
5-23 emergency and an imperative public necessity that the
5-24 constitutional rule requiring bills to be read on three several
5-25 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. 2559 was passed by the House on April
23, 1999, by a non-record vote.
_______________________________
Chief Clerk of the House
I certify that H.B. No. 2559 was passed by the Senate on May
26, 1999, by the following vote: Yeas 30, Nays 0.
_______________________________
Secretary of the Senate
APPROVED: _____________________
Date
_____________________
Governor