Amend SB 1839 (senate engrossment) as follows:
(1) In SECTION 5.06 of the bill, in the recital (page 10,
line 17), strike "Subdivision (1)" and substitute "Subdivisions (1)
and (3)".
(2) In SECTION 5.06 of the bill, following amended
Subdivision (1), insert the following:
(3) Any deficit sustained by the association with respect to
physicians and health care providers, other than for-profit and
not-for-profit nursing homes, or by for-profit and not for profit
nursing homes in any one year shall be recouped, pursuant to the
plan of operation and the rating plan then in effect, by one or
more of the following procedures in this sequence:
First, a contribution from the policyholder's stabilization
reserve fund for physicians and health care providers, other than
for-profit and not-for-profit nursing homes, established under
Section 4A of this article or from the policyholder's stabilization
reserve fund for for-profit and not-for-profit nursing homes,
established under Section 4B of this article, as appropriate, until
the respective fund <same> is exhausted;
Second, an assessment upon the policyholders pursuant to
Section 5(a) of this article;
Third, an assessment upon the members pursuant to Section
5(b) of this article. To the extent a member has paid one or more
assessments and has not received reimbursement from the association
in accordance with Subdivision (5) of this subsection, a credit
against premium taxes under Article 4.10 of this code <7064,
Revised Civil Statutes of Texas, 1925>, as amended, shall be
allowed. The tax credit shall be allowed at a rate of 20 percent
per year for five successive years following the year in which said
deficit was sustained and at the option of the insurer may be taken
over an additional number of years.
(3) In Section 5.07 of the bill, strike amended Section 4A,
Article 21.49-3, Insurance Code (page 11, line 18, through page 13,
line 23), and substitute the following:
Sec. 4A. ]SPOLICYHOLDER'S STABILIZATION RESERVE FUND FOR
PHYSICIANS AND HEALTH CARE PROVIDERS OTHER THAN FOR-PROFIT AND
NOT-FOR-PROFIT NURSING HOMES. (a) There is hereby created a
policyholder's stabilization reserve fund for physicians and health
care providers, other than for-profit and not-for-profit nursing
homes, which shall be administered as provided herein and in the
plan of operation of the association. The stabilization reserve
fund created by this section is separate and distinct from the
stabilization reserve fund for for-profit and not-for-profit
nursing homes created by Section 4B of this article.
(b) Each policyholder shall pay annually into the
stabilization reserve fund a charge, the amount of which shall be
established annually by advisory directors chosen by health care
providers, other than for-profit and not-for-profit nursing homes,
and physicians eligible for insurance in the association in
accordance with the plan of operation. The charge shall be in
proportion to each premium payment due for liability insurance
through the association. Such charge shall be separately stated in
the policy, but shall not constitute a part of premiums or be
subject to premium taxation, servicing fees, acquisition costs, or
any other such charges.
(c) The <policyholder's> stabilization reserve fund shall be
collected and administered by the association and shall be treated
as a liability of the association along with and in the same manner
as premium and loss reserves. The fund shall be valued annually by
the board of directors as of the close of the last preceding year.
(d) Collections of the stabilization reserve fund charge
shall continue until such time as the net balance of the
stabilization reserve fund is not less than the projected sum of
premiums for physicians and health care providers, other than
for-profit and not-for-profit nursing homes, to be written in the
year following valuation date.
(e) The stabilization reserve fund shall be credited with
all stabilization reserve fund charges collected from physicians
and health care providers, other than for-profit and not-for-profit
nursing homes, <policyholders> and shall be charged with any
deficit from the prior year's operation of the association.
(4) In Section 5.08 of the bill, in the recital (page 13,
line 25), strike "Section 4B" and substitute "Sections 4B and 4C".
(5) In Section 5.08 of the bill, following the recital (page
13, between lines 25 and 26), insert the following new Section 4B,
Article 21.49-3, Insurance Code, and renumber existing Section 4B
as 4C:
Sec. 4B. STABILIZATION RESERVE FUND FOR FOR-PROFIT AND
NOT-FOR-PROFIT NURSING HOMES. (a) There is hereby created a
stabilization reserve fund for for-profit and not-for-profit
nursing homes which shall be administered as provided in this
section and in the plan of operation of the association. The
stabilization reserve fund created by this section is separate and
distinct from the policyholder's stabilization reserve fund for the
physicians and health care providers, other than for-profit and
not-for-profit nursing homes, created by Section 4A of this
article.
(b) Each policyholder shall pay annually into the
stabilization reserve fund a charge, the amount of which shall be
established annually by advisory directors chosen by for-profit and
not-for-profit nursing homes eligible for insurance in the
association in accordance with the plan of operation. The charge
shall be in proportion to each premium payment due for liability
insurance through the association. The charge shall be separately
stated in the policy, but shall not constitute a part of premiums
or be subject to premium taxation, servicing fees, acquisition
costs, or any other similar charges.
(c) The stabilization reserve fund shall be collected and
administered by the association and shall be treated as a liability
of the association along with and in the same manner as premium and
loss reserves. The fund shall be valued annually by the board of
directors as of the close of the last preceding year.
(d) Collections of the stabilization reserve fund charge
shall continue only until such time as the net balance of the
stabilization reserve fund is not less than the projected sum of
premiums for for-profit and not-for-profit nursing homes to be
written in the year following valuation date.
(e) The stabilization reserve fund shall be credited with
all stabilization reserve fund charges collected from for-profit
and not-for-profit nursing homes and the net earnings on liability
insurance policies issued to for-profit and not-for-profit nursing
home, and shall be charged with any deficit sustained by for-profit
and not-for-profit nursing homes from the prior year's operation of
the association.
(f) The stabilization reserve fund established under this
section, and any earnings of the fund, are state funds and shall be
held by the comptroller outside the state treasury on behalf of,
and with legal title in, the department. No part of the fund, or
the earnings of the fund, may inure to the benefit of a member of
the association, a policyholder, or any other individual, and the
assets of the fund may be used in accordance with the association's
plan of operation only to implement this article and for the
purposes of the association, including making payment to satisfy,
in whole or in part, the liability of the association regarding a
claim made on a policy written by the association.
(g) Notwithstanding Sections 11, 12, and 13 of this article,
the stabilization reserve fund established under this section may
be terminated only by law.
(h) Notwithstanding Section 11 of this article, on
termination of the stabilization reserve fund established under
this section, all assets of the fund shall be transferred to the
general revenue fund to be appropriated for purposes related to
ensuring the kinds of liability insurance coverage that may be
provided by the association under this article for for-profit and
not-for-profit nursing homes.
(6) Following SECTION 5.08 of the bill (page 15, between
lines 1 and 2) insert the following new SECTION, appropriately
numbered:
SECTION ____. Section 5, Article 21.49-3, Insurance Code, is
amended to read as follows:
Sec. 5. PARTICIPATION. (a) Each policyholder within the
group of physicians and health care providers, other than
for-profit and not-for-profit nursing homes, or within the group of
for-profit and not for profit nursing homes shall have contingent
liability for a proportionate share of any assessment of
policyholders in the applicable group made under the authority of
this article. Whenever a deficit, as calculated pursuant to the
plan of operation, is sustained with respect to the group of
physicians and health care providers, other than for-profit and
not-for-profit nursing homes, or the group of for-profit and not
for profit nursing homes <by the association> in any one year, its
directors shall levy an assessment only upon those policyholders in
the applicable group who held policies in force at any time within
the two most recently completed calendar years in which the
association was issuing policies preceding the date on which the
assessment was levied. The aggregate amount of the assessment
shall be equal to that part of the deficit not recouped from the
applicable stabilization reserve fund. The maximum aggregate
assessment per policyholder in the applicable group shall not
exceed the annual premium for the liability policy most recently in
effect. Subject to such maximum limitation, each policyholder in
the applicable group shall be assessed for that portion of the
deficit reflecting the proportion which the earned premium on the
policies of such policyholder bears to the total earned premium for
all policies of the association in the applicable group in the two
most recently completed calendar years.
(b) All insurers which are members of the association shall
participate in its writings, expenses, and losses in the proportion
that the net direct premiums, as defined herein, of each such
member, excluding that portion of premiums attributable to the
operation of the association, written during the preceding calendar
year bears to the aggregate net direct premiums written in this
state by all members of the association. Each insurer's
participation in the association shall be determined annually on
the basis of such net direct premiums written during the preceding
calendar year, as reported in the annual statements and other
reports filed by the insurer that may be required by the board. No
member shall be obligated in any one year to reimburse the
association on account of its proportionate share in the deficits
<deficit> from operations of the association in that year in excess
of one percent of its surplus to policyholders and the aggregate
amount not so reimbursed shall be reallocated among the remaining
members in accordance with the method of determining participation
prescribed in this subdivision, after excluding from the
computation the total net direct premiums of all members not
sharing in such excess deficits <deficit>. In the event that the
deficits <deficit> from operations allocated to all members of the
association in any calendar year shall exceed one percent of their
respective surplus to policyholders, the amount of such deficits
<deficit> shall be allocated to each member in accordance with the
method of determining participation prescribed in this subdivision.
(7) In SECTION 5.09 of the bill, in added Section 3, Article
21.49-3d, Insurance Code, strike Subsection (a) (page 15, line 22
through page 16, line 2), and substitute the following:
(a) On behalf of the association, the Texas Public Finance
Authority shall issue revenue bonds to:
(1) fund the policyholder's stabilization reserve fund
for for-profit and not-for-profit nursing homes established under
Section 4B, Article 21.49-3 of this code;
(2) pay costs related to issuance of the bonds; and
(3) pay other costs related to the bonds as may be
determined by the board.
(8) In SECTION 5.09 of the bill, in added Section 9, Article
21.49-3d, Insurance Code, in Subsection (a) (page 17, line 7),
strike "fund" and substitute "association".
(9) Renumber SECTIONS of Article 5 of the bill accordingly.