By: Eiland H.B. No. 2783
A BILL TO BE ENTITLED
AN ACT
relating to the withdrawal of an insurance company from a
particular line of insurance.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Amend 21.11-1, Section 1(a) of the Insurance
Code to read as follows:
(a) After an agency contract has been in effect for a period
of two years an insurance company writing fire and casualty
insurance in this state, specifically including reciprocal or
interinsurance exchange, mutual, capital stock company, county
mutual insurance company, association, or Lloyd's plan company, may
not terminate or suspend an agency contract or terminate one or more
lines of insurance included within the agency contract with any
appointed agent unless the company gives the agent notice in
writing of the termination or suspension at least six months in
advance. As used in this article, "suspend" means the temporary
cessation of business relations and refusal to accept insurance
contracts [contract] submitted by the agent and shall not include
situations in which business is suspended immediately following a
natural disaster.
(b) The company shall renew all contracts or lines of
insurance included within the agency contract for fire and casualty
insurance for the agent during a period of six months from the
effective date of the termination or suspension, but in the event
any risk shall not meet current underwriting standards of the
company, the company may decline its renewal, provided that the
company shall give the agent not less than 60 days' notice of its
intention not to renew the contract or line of insurance. The
company's written underwriting standards shall be provided to its
agents who have been terminated at the same time the company first
notifies the agent of the company's intention to terminate the
agent's contract or a line of insurance. The written underwriting
standards that the insurer furnishes to its terminated agents must
conform to the same underwriting standards that were in effect for
that agent before the company's decision to terminate or suspend
the agent's contract or a line of insurance. Notwithstanding the
provisions of this section, an insurance company may furnish
different underwriting standards to different agents of the
company, so long as such underwriting standards are not used in ways
that intentionally or otherwise serve to prevent or discourage the
renewal of the insurance policies of terminated agents. An
insurance company that is renewing contracts or lines of insurance
under this subsection shall pay to the terminated agent commissions
for those renewals according to the same commission schedule that
was in effect for that agent before the company's decision to
terminate the agency contract or line of insurance. A terminated
agent must be allowed to pay to the company all sums due according
to the same accounts current payment terms that are in effect for
agents of the company who have not been terminated. An insurance
company that is renewing contracts or lines of insurance under this
subsection may not require a terminated agent to convert from
agency billing to company billing during the termination period
unless that agent agrees to such conversion in writing.
(c) No new business or increases in liability on renewal or
in force business shall be written by the agent for the company
after notice of termination without the written approval of the
company.
(d) Nothing contained in this Act shall ever be deemed or
construed to prohibit an amendment or addendum subsequent to the
inception date of the original agency agreement providing in such
subsequent amendment or addendum that the original agency agreement
may be terminated at a sooner time than is required by this Act
provided the agent agrees in writing to such sooner termination. An
insurance company that proposes to revise the termination
provisions of an existing agency agreement must first present the
agent with a separate written impact statement that summarizes the
effect, if any, that such proposed subsequent amendment or addendum
shall have on the agent's rights as provided for by this article.
(e) An agency agreement that replaces, revises, or in any
other way takes the place of an agency agreement that has been in
effect for a period of two years is subject to the provisions of
this article so long as there has been no material change in the
ownership of the agency.
(f) The board shall promulgate reasonable rules and
regulations to provide for definitions as necessary in the
accomplishments of the purposes of this article.
SECTION 2. Amend 17.22(a)(2) of the Insurance Code to read
as follows:
(2) Articles 1.15, 1.15A, 1.16, 1.24, 2.04, 2.05,
2.08, 2.10, 4.10, 5.12, 5.37, 5.38, 5.39, 5.40, 5.49, 21.21,
21.21-1, and 21.49 of the Code.
SECTION 3. Amend 18.23(b) of the Insurance Code to read as
follows:
(b) In addition to such Articles as may be made to apply by
other Articles of this Chapter, underwriters at a Lloyds' shall not
be exempt from and shall be subject to Articles 1.15A, 2.20, 5.35,
5.38, 5.39, 5.40, 5.49, 21.21, 21.11-1, and 21.49-8 of this Code.
SECTION 4. This Act takes effect September 1, 2003.