1-1 By: Turner of Coleman (Senate Sponsor - Ratliff) H.B. No. 2559
1-2 (In the Senate - Received from the House April 26, 1999;
1-3 April 27, 1999, read first time and referred to Committee on
1-4 Economic Development; May 13, 1999, reported favorably by the
1-5 following vote: Yeas 4, Nays 0; May 13, 1999, sent to printer.)
1-6 A BILL TO BE ENTITLED
1-7 AN ACT
1-8 relating to increasing the policy limit on stipulated insurance
1-9 company policies.
1-10 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-11 SECTION 1. Section 3, Article 21.07, Insurance Code, as
1-12 amended by Chapters 596 and 972, Acts of the 75th Legislature,
1-13 Regular Session, 1997, is reenacted and amended to read as follows:
1-14 Sec. 3. ISSUANCE OF LICENSE UNDER CERTAIN CIRCUMSTANCES.
1-15 The commissioner [department] shall issue a license to a person,
1-16 corporation, or bank in such form as the department [it] may
1-17 prepare authorizing such applicant to write the types of insurance
1-18 authorized by law to be issued by applicant's appointing insurance
1-19 carrier, except that:
1-20 (1) the [(a) Such] applicant shall not be authorized
1-21 to write health and accident insurance unless the applicant:
1-22 (A) [(i) applicant,] if not a partnership,
1-23 corporation, or bank shall have first passed a written examination
1-24 as provided for in this Article;
1-25 (B)[, or (ii) applicant] will act only as a
1-26 ticket-selling agent of a public carrier with respect to accident
1-27 life insurance covering risks of travel or as an agent selling
1-28 credit life, health and accident insurance issued exclusively in
1-29 connection with credit transactions;[,] or
1-30 (C) [(iii) applicant] will write policies or
1-31 riders to policies providing only lump sum cash benefits in the
1-32 event of the accidental death, or death by accidental means, or
1-33 dismemberment, or providing only ambulance expense benefits in the
1-34 event of accident or sickness; and
1-35 (2) the [(b) Such] applicant, if not a partnership,
1-36 corporation, or bank shall not be authorized to write life
1-37 insurance in excess of $15,000 [$10,000] upon any one life unless
1-38 the applicant:
1-39 (A) [(i) applicant,] if not a partnership,
1-40 corporation, or bank shall have first passed a written examination
1-41 as provided for in this Article;
1-42 (B)[, or (ii) applicant] will act only as a
1-43 ticket-selling agent of a public carrier with respect to accident
1-44 life insurance covering risks of travel or as an agent selling
1-45 credit life, health and accident insurance issued exclusively in
1-46 connection with credit transactions;[,] or
1-47 (C) [(iii) applicant] will write policies or
1-48 riders to policies providing only lump sum cash benefits in the
1-49 event of the accidental death, or death by accidental means, or
1-50 dismemberment, or providing only ambulance expense benefits in the
1-51 event of accident or sickness.
1-52 SECTION 2. The heading to Section 4A, Article 21.07,
1-53 Insurance Code, is amended to read as follows:
1-54 Sec. 4A. EXAMINATION OF APPLICANT FOR LICENSE TO WRITE LIFE
1-55 INSURANCE UPON ANY ONE LIFE IN EXCESS OF $15,000 [$10,000].
1-56 SECTION 3. Sections 4A(a), (c), and (e), Article 21.07,
1-57 Insurance Code, are amended to read as follows:
1-58 (a) Each applicant for a license under the provisions of
1-59 this Article 21.07, Insurance Code, as amended, who desires to
1-60 write life insurance in excess of $15,000 [$10,000] upon any one
1-61 life, other than as excepted in Section 3 of this Article 21.07,
1-62 within this state shall submit to a personal written examination
1-63 prescribed by the commissioner and administered in the English or
1-64 Spanish language to determine the applicant's competency with
2-1 respect to life insurance and the applicant's familiarity with the
2-2 pertinent provisions of the laws of the State of Texas relating to
2-3 life insurance and shall pass the same to the satisfaction of the
2-4 commissioner; except that no written examination shall be required
2-5 of an applicant that is a partnership or corporation.
2-6 (c) After the commissioner determines that such applicant
2-7 has successfully passed the written examination or it has been
2-8 waived, the commissioner shall forthwith issue a license to such
2-9 applicant which shall also authorize such applicant to write life
2-10 insurance upon any one life in excess of $15,000 [$10,000] for the
2-11 designated insurance carrier.
2-12 (e) When any license shall be issued by the commissioner to
2-13 an applicant entitled to write life insurance upon any one life in
2-14 excess of $15,000 [$10,000], the license shall have stamped thereon
2-15 the words, "Life Insurance in Excess of $15,000 [$10,000]."
2-16 SECTION 4. Section 3, Article 22.07, Insurance Code, is
2-17 amended to read as follows:
2-18 Sec. 3. If the surplus of a stipulated premium company is at
2-19 least Fifty Thousand Dollars ($50,000.00) but less than Two Hundred
2-20 Thousand Dollars ($200,000.00), the stipulated premium company
2-21 shall reinsure the insurance amount that exceeds Fifteen [Ten]
2-22 Thousand Dollars ($15,000 [$10,000.00]) on a life insurance risk on
2-23 any one life.
2-24 SECTION 5. Section 1(b), Article 22.13, Insurance Code, is
2-25 amended to read as follows:
2-26 (b) Except as otherwise provided by this subsection, it
2-27 shall be unlawful for any stipulated premium company to assume
2-28 liability on a life insurance risk on any one life in an amount in
2-29 excess of Fifteen [Ten] Thousand Dollars ($15,000 [$10,000.00]).
2-30 If a stipulated premium company assumes a life insurance risk under
2-31 a life insurance policy, the initial death benefit of Fifteen [Ten]
2-32 Thousand Dollars ($15,000 [$10,000.00]) or less may increase to an
2-33 amount greater than Fifteen [Ten] Thousand Dollars ($15,000
2-34 [$10,000.00]). For a policy in which the death benefit subsequent
2-35 to issuance exceeds Fifteen [Ten] Thousand Dollars ($15,000
2-36 [$10,000.00]), the death benefit at the end of each policy year may
2-37 not exceed the greater of the maximum increase as specified in the
2-38 policy, compounded annually, or the CPI-U, compounded annually.
2-39 The maximum increase that may be specified in a life insurance
2-40 policy subject to this article is five percent, compounded
2-41 annually. For purposes of this subsection, the CPI-U for a given
2-42 calendar year is the consumer price index for all urban consumers
2-43 for all items and for all regions of the United States, combined as
2-44 determined by the United States Department of Labor, Bureau of
2-45 Labor Statistics, on September 30 of the prior calendar year.
2-46 SECTION 6. Article 22.23(a), Insurance Code, is amended to
2-47 read as follows:
2-48 (a) Each stipulated premium company possessing capital and
2-49 unencumbered surplus of at least the combined total sum of
2-50 $100,000.00 may issue policies of life insurance as authorized and
2-51 permitted under the provisions of Chapter Three of this Insurance
2-52 Code provided that:
2-53 (1) no individual life shall be insured for more than
2-54 $15,000 [$10,000.00], except as provided by Section 1(b), Article
2-55 22.13, of this code or Article 22.23A of this code;
2-56 (2) each such policy shall be reserved and reinsured
2-57 as required under the provisions of Chapter Three of this Insurance
2-58 Code; and
2-59 (3) each such life policy shall be issued only upon an
2-60 endowment or limited pay basis.
2-61 SECTION 7. This Act takes effect September 1, 1999, and
2-62 applies only to an insurance policy that is delivered, issued for
2-63 delivery, or renewed on or after the effective date of this Act. A
2-64 policy that is delivered, issued for delivery, or renewed before
2-65 the effective date of this Act is governed by the law as it existed
2-66 immediately before the effective date of this Act, and that law is
2-67 continued in effect for that purpose.
2-68 SECTION 8. The importance of this legislation and the
2-69 crowded condition of the calendars in both houses create an
3-1 emergency and an imperative public necessity that the
3-2 constitutional rule requiring bills to be read on three several
3-3 days in each house be suspended, and this rule is hereby suspended.
3-4 * * * * *