S.B. No. 1592
AN ACT
relating to special deposits required of certain insurers.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Chapter 1, Insurance Code, is amended by adding
Article 1.33 to read as follows:
Art. 1.33. SPECIAL DEPOSITS
Sec. 1. DEFINITION. In this article, "insurer" includes:
(1) a capital stock insurance company;
(2) a reciprocal or interinsurance exchange;
(3) a Lloyd's plan;
(4) a fraternal benefit society;
(5) a mutual company, including a mutual assessment
company;
(6) a statewide mutual assessment company;
(7) a local mutual aid association;
(8) a burial association;
(9) a county mutual insurance company;
(10) a farm mutual insurance company;
(11) a fidelity, guaranty, or surety company;
(12) a title insurance company;
(13) a stipulated premium company;
(14) a group hospital service corporation;
(15) a health maintenance organization;
(16) a risk retention group; and
(17) any other organization or person engaged in the
business of insurance.
Sec. 2. APPLICABILITY OF ARTICLE. This article applies to a
person or organization engaged in the business of insurance without
regard to whether the person or organization is listed in Section 1
of this article, unless another statute specifically cites this
article and exempts the person or organization from this article.
Sec. 3. STANDARDS AND CRITERIA. The commissioner, in the
commissioner's sole discretion, may require an insurer to make a
deposit under this article if the commissioner determines that one
of the following conditions, if not rectified, may potentially be
hazardous to the insurer's policyholders, enrollees, or creditors,
or to the public:
(1) the financial or operating condition of the
insurer, when reviewed in conjunction with the kinds and nature of
risks insured;
(2) the insurer's method of operation;
(3) the insurer's relationship with affiliates;
(4) the nature and amount of the insurer's
investments;
(5) the insurer's contracts that may lead to a
contingent liability; or
(6) the insurer's agreements with respect to guaranty
and surety.
Sec. 4. REQUIRED DEPOSIT; FORM OF SECURITY. A deposit
required under Section 3 of this article must be made with the
comptroller and approved by the commissioner. The deposit must be
made in:
(1) cash;
(2) securities authorized under this code to be a
legal investment for the insurer that:
(A) are readily marketable over a national
exchange with a maturity date of not more than one year, are listed
by the Securities Valuation Office of the National Association of
Insurance Commissioners, and qualify as admitted assets; or
(B) are clean, irrevocable, unconditional
letters of credit, issued or confirmed by a financial institution
organized and licensed under the laws of the United States or a
state of the United States; or
(3) another form of security acceptable to the
commissioner.
Sec. 5. DURATION OF DEPOSIT. Subject to Section 6 of this
article, the comptroller shall hold a deposit required under this
article until the commissioner issues a written order finding that
the condition for which the deposit was required no longer exists.
Sec. 6. SUBSTITUTION OR WITHDRAWAL OF DEPOSIT. (a) An
insurer may file a written application with the commissioner
requesting:
(1) withdrawal of all or a portion of the deposit held
by the comptroller under this article; or
(2) substitution of all or a part of the deposited
securities held by the comptroller under this article.
(b) The application must state the basis for the request to
withdraw the deposit or to substitute the deposited security.
(c) If the application is for the substitution of a
deposited security, the insurer's application must provide
specific information regarding the security to be deposited as a
substitute for the security held by the comptroller.
(d) The commissioner shall issue an order approving or
denying an application under this section not later than the 30th
day after the date the department receives the application. If the
commissioner does not approve or deny the application within that
period, the application is denied.
(e) The commissioner may, in the commissioner's sole
discretion, approve an application to withdraw a deposit or
substitute a deposited security if the commissioner determines that
the withdrawal or substitution will not be hazardous to the
insurer's policyholders, enrollees, or creditors, or to the public.
(f) The comptroller may not release a deposit made under
this article, or any part of the deposit, and may not accept a
substitute for a deposited security unless the commissioner issues
an order approving the withdrawal or substitution.
Sec. 7. APPEAL. An insurer may appeal an action of the
commissioner under this article in accordance with Subchapter D,
Chapter 36, of this code.
Sec. 8. CUMULATIVE OF OTHER DEPOSITS. A deposit required to
be made under this article is in addition to any other deposit that
the insurer is required or authorized to make under this code.
SECTION 2. This Act takes effect immediately if it receives
a vote of two-thirds of all the members elected to each house, as
provided by Section 39, Article III, Texas Constitution. If this
Act does not receive the vote necessary for immediate effect, this
Act takes effect September 1, 2005.
______________________________ ______________________________
President of the Senate Speaker of the House
I hereby certify that S.B. No. 1592 passed the Senate on
April 21, 2005, by the following vote: Yeas 31, Nays 0.
______________________________
Secretary of the Senate
I hereby certify that S.B. No. 1592 passed the House on
May 25, 2005, by the following vote: Yeas 144, Nays 0, two
present not voting.
______________________________
Chief Clerk of the House
Approved:
______________________________
Date
______________________________
Governor