By Brimer H.B. No. 2847
Line and page numbers may not match official copy.
Bill not drafted by TLC or Senate E&E.
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to receiverships and guaranty associations.
1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-4 SECTION 1. Amend Sec. 3(a), Art. 21.28, Insurance Code, to
1-5 read as follows:
1-6 Sec. 3. (a) Time for Filing. Where a liquidation,
1-7 rehabilitation, or conservation order has been entered in a
1-8 proceeding against an insurer under this Article, all persons who
1-9 may have claims against such insurer as set out in Subsection (a)
1-10 of Section 8 of this Article, including claimants with secured
1-11 claims and claims based on trust or escrow funds, shall present
1-12 proof of the same to the receiver at a place specified by him
1-13 within a period of time to be specified by the court, in no event,
1-14 however, less than ninety (90) days nor more than fifteen (15)
1-15 months after the date of the entry of the order specifying such
1-16 time. The receiver shall notify all persons who may have claims
1-17 against such insurer as disclosed by its books and records, to
1-18 present proof of the same to him within the time as fixed. The last
1-19 day for the filing of proofs of claim shall be specified in the
1-20 notice. Such notice shall be given in a manner determined by the
1-21 court. Receipt of the required proof of claim by the receiver is a
2-1 condition precedent to the payment of any claim, and except as
2-2 provided by Subsection (b) of this section, claims that are not
2-3 filed within the time specified by the court shall not participate
2-4 in any distribution of the assets by the receiver.
2-5 SECTION 2. Amend Sec. 8 (d), Art. 21.28-C, Insurance Code,
2-6 to read as follows:
2-7 (d) (1) The association shall investigate and adjust,
2-8 compromise, settle, and pay covered claims to the extent of the
2-9 association's obligation and deny all other claims. The
2-10 association may review settlements, releases, and judgments to
2-11 which the impaired insurer or its insureds were parties to
2-12 determine the extent to which those settlements, releases, and
2-13 judgments may be properly contested. Any judgment taken by default
2-14 or consent against an insured or the impaired insurer, and any
2-15 settlement, release, or judgment entered into by the insured or the
2-16 impaired insurer, is not binding on the association and may not be
2-17 considered as evidence of liability or of damages in connection
2-18 with any claim brought against the association or any other party
2-19 under this Act. Notwithstanding any other provision of this Act, a
2-20 covered claim shall not include any claim filed with the guaranty
2-21 association after [the later of] the final date for filing claims
2-22 against the liquidator or receiver of an insolvent insurer [or
2-23 eighteen months after the order of liquidation]. The final date
2-24 for filing claims with the liquidator or receiver and association
2-25 shall be the same but in no event more than fifteen (15) months
3-1 after the order of impairment. In the event no necessity exists
3-2 for a receivership estate to receive claim filings, the final date
3-3 for filing claims with the association shall be fifteen (15) months
3-4 after the order of impairment.
3-5 (2) Notwithstanding any other provisions of this Act,
3-6 except in the case of a claim for benefits under a policy of
3-7 workers' compensation insurance, any obligation of the association
3-8 to any and all persons shall cease when $10,000,000 in the
3-9 aggregate shall have been paid to or on behalf of any insured or
3-10 its affiliates for covered or allowed claims and all expenses
3-11 incurred in connection therewith arising under a policy or policies
3-12 of any one insolvent insurer by the association, any other similar
3-13 state associations, and any property and casualty insurance
3-14 security fund which obtains contributions from insurers on a
3-15 pre-insolvency basis. For purposes of this section, the term
3-16 "affiliate" means a person who directly, or indirectly or through
3-17 one or more intermediaries, controls, is controlled by, or is under
3-18 common control with the insurer. If the association determines
3-19 that there may be more than one claimant having a covered or
3-20 allowed claim against the association, any other similar state
3-21 association or any property and casualty insurance security fund
3-22 under a policy or policies of any one insolvent insurer, the
3-23 association may establish a plan to allocate amounts payable by the
3-24 association in such manner as the association in its discretion
3-25 deems equitable.
4-1 SECTION 3. Amend Sec. 11 (b), Art. 21.28-C, Insurance Code,
4-2 to read as follows:
4-3 (b) The association is entitled to recover from the
4-4 following persons the amount of any covered claim all expenses
4-5 incurred and arising out of that covered claim, including legal and
4-6 defense costs, paid on behalf of that person under this Act:
4-7 (1) any insured, other than an insured who is exempt
4-8 from federal income tax under Section 501(a) of the Internal
4-9 Revenue Code of 1986 (26 U.S.C. Section 501(a)) by being described
4-10 by Section 501(c)(3) of that code, whose net worth on December 31
4-11 of the year next preceding the date the insurer becomes an impaired
4-12 insurer exceeds $[50] 10 million and whose liability obligations to
4-13 other persons [under a policy or contract of insurance written,
4-14 issued, and placed in force after January 1, 1992,] are satisfied
4-15 in whole or in part by payments made under this Act; and
4-16 (2) any person who is an affiliate of the impaired
4-17 insurer and whose liability obligations to other persons are
4-18 satisfied in whole or in part by payments made under this Act.
4-19 SECTION 4. This Act shall take effect on September 1, 1999,
4-20 and be applicable only to receivership estates for which the order
4-21 of impairment is entered on or after that date.
4-22 SECTION 5. The importance of this legislation and the
4-23 crowded condition of the calendars in both houses create an
4-24 emergency and an imperative public necessity that the
4-25 constitutional rule requiring bills to be read on three several
5-1 days in each house be suspended, and this, rule is hereby
5-2 suspended.