By Junell                                             H.B. No. 2527
         77R4863 DLF-D                           
                                A BILL TO BE ENTITLED
 1-1                                   AN ACT
 1-2     relating to certificates of insurance used to evidence the
 1-3     existence of workers' compensation insurance coverage.
 1-4           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
 1-5           SECTION 1. Subchapter D, Chapter 5, Insurance Code, is
 1-6     amended by adding Article 5.56A to read as follows:
 1-7           Art. 5.56A.  CERTIFICATE OF INSURANCE. (a)  The commissioner
 1-8     shall by rule establish requirements for a certificate of insurance
 1-9     issued by an insurance company to be used as evidence of the
1-10     existence of a workers' compensation policy. The rules must include
1-11     requirements designed to ensure that a fraudulent document can  be
1-12     distinguished from an authentic certificate of insurance issued by
1-13     an insurance company.
1-14           (b)  The certificate of insurance must state:
1-15                 (1)  the number of employees covered under the workers'
1-16     compensation insurance policy;
1-17                 (2)  the classes of employees covered under the
1-18     workers' compensation insurance policy; and
1-19                 (3)  an address for the insurance company that can be
1-20     used to request notification of cancellation or nonrenewal of the
1-21     policy, in accordance with Section 406.008, Labor Code.
1-22           SECTION 2. Section 406.008(a), Labor Code, is amended to read
1-23     as follows:
1-24           (a)  An insurance company that cancels a policy of workers'
 2-1     compensation insurance or that does not renew the policy by the
 2-2     anniversary date of the policy shall deliver notice of the
 2-3     cancellation or nonrenewal [by certified mail or in person] to the
 2-4     employer, [and] the commission, and each person who requests notice
 2-5     of the cancellation or nonrenewal in writing. The notice must be
 2-6     provided by certified mail or in person not later than:
 2-7                 (1)  the 30th day before the date on which the
 2-8     cancellation or nonrenewal takes effect; or
 2-9                 (2)  the 10th day before the date on which the
2-10     cancellation or nonrenewal takes effect if the insurance company
2-11     cancels or does not renew because of:
2-12                       (A)  fraud in obtaining coverage;
2-13                       (B)  misrepresentation of the amount of payroll
2-14     for purposes of premium calculation;
2-15                       (C)  failure to pay a premium when due;
2-16                       (D)  an increase in the hazard for which the
2-17     employer seeks coverage that results from an act or omission of the
2-18     employer and that would produce an increase in the rate, including
2-19     an increase because of a failure to comply with:
2-20                             (i)  reasonable recommendations for loss
2-21     control; or
2-22                             (ii)  recommendations designed to reduce a
2-23     hazard under the employer's control within a reasonable period; or
2-24                       (E)  a determination made by the commissioner of
2-25     insurance that the continuation of the policy would place the
2-26     insurer in violation of the law or would be hazardous to the
2-27     interest of subscribers, creditors, or the general public.
 3-1           SECTION 3. (a)  This Act takes effect September 1, 2001.
 3-2           (b)  The commissioner of insurance shall adopt rules as
 3-3     required by Article 5.56A, Insurance Code, as added by this Act,
 3-4     not later than December 1, 2001.
 3-5           (c)  Article 5.56A, Insurance Code, as added by this Act,
 3-6     applies only to a certificate of insurance issued by an insurance
 3-7     company on or after January 1, 2002.