1-1 By: Ellis S.B. No. 324
1-2 (In the Senate - Filed January 29, 1999; February 2, 1999,
1-3 read first time and referred to Committee on Economic Development;
1-4 April 9, 1999, reported adversely, with favorable Committee
1-5 Substitute by the following vote: Yeas 7, Nays 0; April 9, 1999,
1-6 sent to printer.)
1-7 COMMITTEE SUBSTITUTE FOR S.B. No. 324 By: Whitmire
1-8 A BILL TO BE ENTITLED
1-9 AN ACT
1-10 relating to applications for coverage under the market assistance
1-11 program operated by the Texas Department of Insurance.
1-12 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-13 SECTION 1. Subsection (b), Section 2, Article 21.49-12,
1-14 Insurance Code, is amended to read as follows:
1-15 (b) The plan of operation shall include, but is not limited
1-16 to, the following provisions:
1-17 (1) [Applications will be accepted only from agents
1-18 duly licensed by the Texas Department of Insurance. Applications
1-19 from all other sources will be returned for referral to duly
1-20 licensed agents of the applicant's choice for preparation and
1-21 resubmission to the program.]
1-22 [(2)] Applications for assistance shall be addressed
1-23 to the Market Assistance Program at the Texas Department of
1-24 Insurance. Each application must be accompanied by a copy of a
1-25 current nonrenewal or cancellation notice and a current declination
1-26 letter from at least one other insurer writing the coverage sought.
1-27 Applicants not having previous residential property insurance
1-28 coverage must provide copies of current declination letters from at
1-29 least two unaffiliated insurers writing the coverage sought.
1-30 (2) [(3)] Each insurer has the right to individually
1-31 evaluate the risk and apply the rates in accordance with the
1-32 provisions of this code applicable to each insurer.
1-33 (3) [(4)] Each insurer has the option of providing a
1-34 premium quote on the same coverage basis for which it normally
1-35 provides insurance in this state using its own underwriting
1-36 guidelines and the rates determined in accordance with the
1-37 provisions of this code applicable to each insurer.
1-38 (4) [(5)] An insurer shall make its premium quote,
1-39 indicate its refusal to quote, or make a request for additional
1-40 time within 30 days of receiving the application.
1-41 (5) [(6)] If a premium quote is made, the insurer
1-42 shall notify the applicant or notify the applicant's agent, if an
1-43 agent is used, [shall be notified by the program] so that [the
1-44 agent may complete] the placement of the insurance may be
1-45 completed, if the applicant accepts the coverage at the premium
1-46 quoted.
1-47 (6) [(7)] An applicant is not eligible to apply to the
1-48 program again for the same coverage for the same risk if the
1-49 insurer cancels or nonrenews coverage for nonpayment of premium or
1-50 submission of a fraudulent claim.
1-51 (7) [(8)] The plan of operation shall contain criteria
1-52 under which the commissioner may make insurer participation in the
1-53 program mandatory.
1-54 SECTION 2. Section 4, Article 21.49-12, Insurance Code, is
1-55 amended to read as follows:
1-56 Sec. 4. DIRECT REFERRAL TO INSURER; AGENTS. (a) The
1-57 department may:
1-58 (1) assist an applicant for coverage through the
1-59 market assistance program in completing an initial application; and
1-60 (2) refer the applicant to one or more participating
1-61 companies.
1-62 (b) Notwithstanding any other provision of law, a market
1-63 assistance program may have two categories of agents:
1-64 (1) an originating agent; and
2-1 (2) an issuing agent.
2-2 (c) [(b)] An originating agent may complete an application
2-3 for insurance on behalf of an insured for submission to the
2-4 program, but an applicant is not required to submit the application
2-5 through an originating agent. If an originating agent is used, the
2-6 originating agent is not required to be [without being] appointed
2-7 to represent the ultimate insurer.
2-8 (d) [(c)] An issuing agent must be appointed to represent
2-9 the ultimate insurer and shall perform all of the customary duties
2-10 of a local recording agent including but not limited to the
2-11 following:
2-12 (1) signing, executing, and delivering policies of
2-13 insurance;
2-14 (2) maintaining a record of the business;
2-15 (3) examining and inspecting the risk; and
2-16 (4) receiving and collecting premiums.
2-17 (e) The [(d) An] originating agent, if any, shall share
2-18 commissions, as required by the market assistance program plan of
2-19 operation, with the issuing agent if the originating agent holds a
2-20 license as either a local recording agent or as a salaried
2-21 representative for those companies whose plan of operation does not
2-22 contemplate the use of local recording agents.
2-23 (f) [(e)] The originating agent, if any, and the issuing
2-24 agent may be the same person. If the originating agent and the
2-25 issuing agent are not the same person, the originating agent may
2-26 not be held to be the agent of the insurer unless there is an
2-27 appointment as specified by Article 21.14 of this code.
2-28 (g) [(f)] The program may not share in commissions.
2-29 SECTION 3. Section 5, Article 21.49-12, Insurance Code, is
2-30 repealed.
2-31 SECTION 4. This Act takes effect September 1, 1999, and
2-32 applies only to an application for assistance under the market
2-33 assistance program established by Article 21.49-12, Insurance Code,
2-34 as amended by this Act, submitted on or after January 1, 2000. An
2-35 application submitted before January 1, 2000, is governed by the
2-36 law as it existed immediately before the effective date of this
2-37 Act, and that law is continued in effect for that purpose.
2-38 SECTION 5. The importance of this legislation and the
2-39 crowded condition of the calendars in both houses create an
2-40 emergency and an imperative public necessity that the
2-41 constitutional rule requiring bills to be read on three several
2-42 days in each house be suspended, and this rule is hereby suspended.
2-43 * * * * *