By Ellis S.B. No. 324
76R3782 DLF-D
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to applications for coverage under the market assistance
1-3 program operated by the Texas Department of Insurance.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Section 2(b), Article 21.49-12, Insurance Code,
1-6 is amended to read as follows:
1-7 (b) The plan of operation shall include, but is not limited
1-8 to, the following provisions:
1-9 (1) [Applications will be accepted only from agents
1-10 duly licensed by the Texas Department of Insurance. Applications
1-11 from all other sources will be returned for referral to duly
1-12 licensed agents of the applicant's choice for preparation and
1-13 resubmission to the program.]
1-14 [(2)] Applications for assistance shall be addressed
1-15 to the Market Assistance Program at the Texas Department of
1-16 Insurance. Each application must be accompanied by a copy of a
1-17 current nonrenewal or cancellation notice and a current declination
1-18 letter from at least one other insurer writing the coverage sought.
1-19 Applicants not having previous residential property insurance
1-20 coverage must provide copies of current declination letters from at
1-21 least two unaffiliated insurers writing the coverage sought.
1-22 (2) [(3)] Each insurer has the right to individually
1-23 evaluate the risk and apply the rates in accordance with the
1-24 provisions of this code applicable to each insurer.
2-1 (3) [(4)] Each insurer has the option of providing a
2-2 premium quote on the same coverage basis for which it normally
2-3 provides insurance in this state using its own underwriting
2-4 guidelines and the rates determined in accordance with the
2-5 provisions of this code applicable to each insurer.
2-6 (4) [(5)] An insurer shall make its premium quote,
2-7 indicate its refusal to quote, or make a request for additional
2-8 time within 30 days of receiving the application.
2-9 (5) [(6)] If a premium quote is made, the program
2-10 shall notify the applicant or notify the applicant's agent, if an
2-11 agent is used, [shall be notified by the program] so that [the
2-12 agent may complete] the placement of the insurance may be
2-13 completed, if the applicant accepts the coverage at the premium
2-14 quoted.
2-15 (6) [(7)] An applicant is not eligible to apply to the
2-16 program again for the same coverage for the same risk if the
2-17 insurer cancels or nonrenews coverage for nonpayment of premium or
2-18 submission of a fraudulent claim.
2-19 (7) [(8)] The plan of operation shall contain criteria
2-20 under which the commissioner may make insurer participation in the
2-21 program mandatory.
2-22 SECTION 2. Section 4, Article 21.49-12, Insurance Code, is
2-23 amended to read as follows:
2-24 Sec. 4. DIRECT REFERRAL TO INSURER; AGENTS. (a) The
2-25 department may:
2-26 (1) assist an applicant for coverage through the
2-27 market assistance program in completing an initial application; and
3-1 (2) refer the applicant to one or more participating
3-2 companies.
3-3 (b) Notwithstanding any other provision of law, a market
3-4 assistance program may have two categories of agents:
3-5 (1) an originating agent; and
3-6 (2) an issuing agent.
3-7 (c) [(b)] An originating agent may complete an application
3-8 for insurance on behalf of an insured for submission to the
3-9 program, but an applicant is not required to submit the
3-10 application through an originating agent. If an originating agent
3-11 is used, the orginating agent is not required to be [without being]
3-12 appointed to represent the ultimate insurer.
3-13 (d) [(c)] An issuing agent must be appointed to represent
3-14 the ultimate insurer and shall perform all of the customary duties
3-15 of a local recording agent including but not limited to the
3-16 following:
3-17 (1) signing, executing, and delivering policies of
3-18 insurance;
3-19 (2) maintaining a record of the business;
3-20 (3) examining and inspecting the risk; and
3-21 (4) receiving and collecting premiums.
3-22 (e) The [(d) An] originating agent, if any, shall share
3-23 commissions, as required by the market assistance program plan of
3-24 operation, with the issuing agent if the originating agent holds a
3-25 license as either a local recording agent or as a salaried
3-26 representative for those companies whose plan of operation does not
3-27 contemplate the use of local recording agents.
4-1 (f) [(e)] The originating agent, if any, and the issuing
4-2 agent may be the same person. If the originating agent and the
4-3 issuing agent are not the same person, the originating agent may
4-4 not be held to be the agent of the insurer unless there is an
4-5 appointment as specified by Article 21.14 of this code.
4-6 (g) [(f)] The program may not share in commissions.
4-7 SECTION 3. This Act takes effect September 1, 1999, and
4-8 applies only to application for assistance under the market
4-9 assistance program established by Article 21.49-12, Insurance Code,
4-10 as amended by this Act, submitted on or after January 1, 2000. An
4-11 application submitted before January 1, 2000, is governed by the
4-12 law as it existed immediately before the effective date of this
4-13 Act, and that law is continued in effect for that purpose.
4-14 SECTION 4. The importance of this legislation and the
4-15 crowded condition of the calendars in both houses create an
4-16 emergency and an imperative public necessity that the
4-17 constitutional rule requiring bills to be read on three several
4-18 days in each house be suspended, and this rule is hereby suspended.