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.