2007S0201-1 01/26/07

By: Carona S.B. No. 354

A BILL TO BE ENTITLED

AN ACT

relating to the operation and regulation of certain consolidated insurance programs.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Title 2, Insurance Code, is amended by adding Subtitle C to read as follows:

SUBTITLE C. PROGRAMS AFFECTING MULTIPLE LINES OF INSURANCE

CHAPTER 151. CONSOLIDATED INSURANCE PROGRAMS SUBCHAPTER A. GENERAL PROVISIONS

Sec. 151.001. DEFINITIONS. In this chapter:

(1) "Administrator" means a person who operates and manages a consolidated insurance program on behalf of a principal. The administrator can be a person that, in the regular course of business, operates and manages a consolidated insurance program as an agent of a principal.

(2) "Consolidated insurance program" means a program under which a principal, for a contractor or contractors on a construction project, provides insurance coverages that are bundled into one insurance program for a single construction project or multiple construction projects. The consolidated insurance program may include only one type of insurance.

(3) "Construction project" means construction, remodeling, maintenance, or repair of improvements to real property.

(4) "Contractor" includes:

(A) a prime contractor;

(B) a general contractor;

(C) a subcontractor; and

(D) any other person who receives insurance coverage under an insurance policy or contract subject to this chapter.

(5) "Insurance credit" means a discount on a contract price offered to a principal by a contractor bidding on a construction project contract in consideration of the principal's providing insurance coverage for the construction project that covers the contractor.

(6) "Principal" means the person who procures an insurance contract or policy and is responsible for the payment of the premium on the insurance coverage. The principal is typically the first-named insured on the insurance contract or policy.

(7) "Residential" means a single-family house, a duplex, a triplex, a quadruplex, or a unit in a multiunit structure used for residential purposes that is:

(A) owned by one or more adult persons; and

(B) used or intended to be used as a dwelling by one of the owners; or

(C) being or intended to be newly constructed with the purpose and intention of selling such to a person described by Paragraph (A). [Sections 151.002-151.050 reserved for expansion] SUBCHAPTER B. GENERAL REQUIREMENTS FOR A CONSOLIDATED INSURANCE PROGRAM

Sec. 151.051. GENERAL REQUIREMENTS. An insurance contract or policy issued under a consolidated insurance program must:

(1) provide coverages in the manner required by the department under this code; and

(2) comply with the requirements adopted under this chapter.

Sec. 151.052. REQUIRED COVERAGES. (a) An insurance policy or contract issued under a consolidated insurance program must provide coverages for all operations on the construction project site that are necessary and incidental to the construction project to the extent of the general type of insurance that is being provided under the policy or contract. For purposes of this subsection, the construction project site is the immediate area of construction and adjacent areas such as sidewalks, streets, storage areas, temporary construction yards, and staging areas.

(b) This chapter may not be interpreted to prevent a contractor from obtaining, and charging to the principal the cost of, any insurance coverage not provided by the consolidated insurance program in order to protect the contractor and the construction project.

(c) Except as provided by Subsection (d), after the execution of a construction contract by the principal, the operations or coverages under the consolidated insurance program may not be materially changed, nonrenewed, or canceled without written notice provided to the principal and all contractors not later than the 60th day before the effective date of the material change, nonrenewal, or cancellation.

(d) A notice to cancel coverage due to nonpayment of premium shall be effective only after written notice is provided to the principal not later than the 10th day before the effective date of the cancellation due to nonpayment of premium.

(e) If any coverage is canceled, the insurer or administrator shall notify each contractor in writing that coverage has been canceled. Such notice shall be sent not later than the date of cancellation of coverage.

(f) If the operations or coverages under a consolidated insurance program are materially changed, nonrenewed, or canceled and not replaced by the principal with equivalent operations or coverages, a contractor shall be:

(1) entitled to an increase in its construction project contract price to cover:

(A) the contractor's cost of insurance and the overhead cost of procuring coverage to replace the coverage provided by the consolidated insurance program; or

(B) the contractor's typical standard insurance coverage for the same general type of coverages provided under the consolidated insurance program; or

(2) entitled to suspend its construction project contract without recourse or liability for damages to any person provided that:

(A) the contractor has made a reasonable effort to obtain replacement coverage under this subsection; and

(B) the principal or contractor will not agree to a reasonable change as provided by this subsection.

(g) For purposes of Subsection (f), equivalent operations or coverages includes, where applicable:

(1) an insurer that meets the requirements of Section 151.059; or

(2) if no insurer that meets the requirements of Section 151.059 will provide replacement coverage, an insurer with a financial strength of at least A- and a financial size rating of not less than XI.

(h) Subsection (f)(2) does not apply to work not covered by the consolidated insurance program.

(i) A contractor that elects to suspend its construction project contract under Subsection (f)(2) shall:

(1) provide written notification of the suspension to the principal or other contractor covered under the consolidated insurance program with whom it has a direct contractual relationship; and

(2) be entitled to payment for all properly performed labor or properly furnished materials and equipment, including overhead cost and profit for such labor, material, and equipment, supplied by the contractor to the construction project before the effective date of suspension of its construction project contract.

(j) A contractor that suspends a construction project contract under Subsection (f)(2) and is paid under Subsection (i) shall be responsible for the labor, materials, and equipment for which the contractor is paid as if the contract were not suspended.

Sec. 151.053. COVERAGE OF CONTRACTORS; EFFECT OF SEPARATE COVERAGE. (a) Each contractor on a construction project covered by a consolidated insurance program must be a named insured on each insurance policy and contract under this program and have equal rights under the policy or contract with the principal and other contractors, subject to the industry standard differences between a first-named insured and a named insured. This subsection does not apply to a policy or contract that is issued individually in the name of the contractor as the first-named insured under a consolidated insurance program.

(b) The principal or a contractor may not require a contractor to obtain an additional insured endorsement on the contractor's separately maintained insurance contract or policy that is of the same general type as the insurance coverage provided by the consolidated insurance program except for off-site work for ongoing operations related to the project that is not covered by the consolidated insurance program.

(c) The coverages under the consolidated insurance program must be primary and noncontributory to any insurance policy or contract separately maintained by a contractor covered by the consolidated insurance program that is of the same general type as the insurance coverages provided by the consolidated insurance program.

Sec. 151.054. COMPLIANCE BY PRINCIPAL. (a) A principal under a consolidated insurance program who does not comply with the requirements of this chapter may not, directly or indirectly, including by deduction from a payment or by requesting an insurance credit, charge a contractor for any insurance coverage provided to the contractor by the program. Similarly, a contractor who contracts with a lower-tier contractor may not charge the lower-tier contractor for any insurance coverage when the principal has failed to comply with the requirements of this chapter.

(b) For purposes of this section, noncompliance by a principal includes material or significant matters but does not include inadvertent errors that are not repeated in a way that would cause a reasonable person to believe they are habitual or premeditated. Dates set as deadlines in this chapter shall be interpreted to be material matters.

Sec. 151.055. SUBROGATION. (a) The principal and a contractor do not have subrogation rights against each other for a claim covered by the consolidated insurance program.

(b) A contractor and another contractor do not have subrogation rights against each other for a claim covered by the consolidated insurance program.

Sec. 151.056. LIMITS OF COVERAGE. (a) Subject to Section 151.058, aggregate and per-occurrence limits of all insurance coverages under a consolidated insurance program apply to all contractors under the program for the term of each construction project covered by the program.

(b) For a residential construction project, the per-occurrence limit shall be not less than the greater of:

(1) 20 percent of the overall construction project value; or

(2) $5 million.

(c) For a nonresidential construction project that has an overall construction project value that does not exceed $400 million the per-occurrence limit shall be not less than the greater of:

(1) 25 percent of the overall construction project value; or

(2) $50 million.

(d) For a nonresidential construction project that has an overall construction project value that exceeds $400 million the per-occurrence limit shall be not less than $100 million.

(e) A consolidated insurance program must reinstate annually the liability limits for each policy or contract subject to the program or be replaced by other policies or contracts that provide equivalent coverage and limits. This subsection does not apply to completed operations coverage upon completion of the construction project.

(f) The insurer shall notify all contractors in writing not later than the 10th day after the date the total monetary limit of liability coverage for any type of coverage issued under the consolidated insurance program is reduced by:

(1) 50 percent; and

(2) after the initial 50 percent reduction, each additional 10 percentage point reduction.

(g) The reduction in monetary limit in Subsection (f) shall be calculated based on incurred losses and expenses.

(h) The notice under Subsection (f) shall describe the initial monetary limit of liability coverage and the monetary limit of liability coverage that remains as of the notice date.

(i) For limits on coverages that have been extended by other policies, the notice under Subsection (f) is required only if the combined monetary limit of all policies providing such coverage has been reached.

(j) The monetary limit of liability shall not be reduced if the insurer fails to comply properly with Subsection (f).

Sec. 151.057. APPLICATION TO GENERAL LIABILITY COVERAGE. If a consolidated insurance program includes general liability coverage, coverage for the construction project must be provided for:

(1) a negligent act of a contractor, regardless of whether the negligent act is caused by a direct act of the contractor or assumed under a contract; and

(2) the contractor's ongoing operations and its completed operations.

Sec. 151.058. DURATION OF COVERAGE. (a) A consolidated insurance program that provides general liability coverage must continue completed operations insurance coverage until the last date for bringing a suit for damages as defined in Chapter 16, Civil Practice and Remedies Code.

(b) A contractor's separately maintained insurance may not exclude coverage for ongoing operations of the contractor for warranty or punch-out work on a construction project covered by a consolidated insurance program that occurs after the contractor has received written notice from the principal, insurer, or administrator that the consolidated insurance program has ended.

Sec. 151.059. INSURER REQUIREMENTS; INSURER RATINGS. (a) Insurance coverages under a consolidated insurance program for a nonresidential construction project must be provided by an insurer that has:

(1) a financial strength rating of at least A- and a financial size rating of at least Class XIII, as currently reported by the A. M. Best Company; or

(2) an equivalent rating made by a similar rating organization recognized by the commissioner.

(b) Insurance coverages under a consolidated insurance program for a residential construction project must be provided by an insurer that has:

(1) a financial strength rating of at least A- and a financial size rating of at least Class XIII, as currently reported by the A. M. Best Company; or

(2) an equivalent rating made by a similar rating organization recognized by the commissioner.

(c) Insurance policies or contracts providing coverage under the consolidated insurance program must be issued to the first-named insured not later than the 30th day after coverage has been bound or otherwise agreed to by the insurer.

(d) The requirements of this subsection must be maintained for the duration of the construction project.

Sec. 151.060. INDEMNIFICATION. (a) On a construction project covered by a consolidated insurance program, the consolidated insurance program must provide liability insurance to cover the obligation of a contractor insured under the consolidated insurance program to indemnify, hold harmless, or defend another person for any action that results in bodily injury or property damage.

(b) The minimum liability insurance coverage required under Subsection (a) must be at least equal to the general liability coverage provided by the current standard form promulgated by the Insurance Service Office.

(c) A contractor on a construction project on which a consolidated insurance program is used in which the contractor participates may not be required to indemnify, hold harmless, or defend any claim for any action that would be covered under the general liability coverage provided by the current standard form promulgated by the Insurance Service Office unless the general liability coverage provided by the consolidated insurance program provides complete coverage for such obligation, and any such requirement in a construction project contract pertaining to a construction project covered by a consolidated insurance program in which the contractor participates is void.

Sec. 151.061. DEFENSE COVERAGE FOR CLAIM OR SUIT. (a) In the event of a lawsuit or arbitration proceeding that is covered by a consolidated insurance program, the insurance policy or contract must provide coverage for the defense of each contractor.

(b) A contractor covered by a consolidated insurance program has standing in any hearing or proceeding involving workers' compensation or liability claims, including any claim adjustment and settlement negotiations, provided that such coverage is part of the consolidated insurance program, and the contractor is entitled to representation at any such hearing or proceeding by:

(1) an employee or agent of the contractor; and

(2) on request of the contractor, legal counsel covered by the consolidated insurance program.

Sec. 151.062. PAYMENT OF CERTAIN DEDUCTIBLES, LOSSES, OR PENALTIES. (a) Subject to Subsection (b), a principal shall pay:

(1) any coverage deductibles or losses in a retrospective rating plan or other loss-sensitive rating plan under a consolidated insurance program;

(2) any penalties incurred under the consolidated insurance program; and

(3) all deductibles applicable to any policy provided under the consolidated insurance program.

(b) A principal may charge a contractor a small, reasonable deductible for a property damage loss that is caused by the contractor's direct negligence and is covered by the general liability contract or policy of the consolidated insurance program if the deductible amount and purpose is included in the disclosure made at bid solicitation. The purpose of the deductible is to encourage safe operations by the contractor. The deductible shall be in proportion to the size and severity of the loss, not to exceed $5,000.

Sec. 151.063. PREMIUMS ASSESSED TO CONTRACTOR. If any premiums for coverage under a consolidated insurance program on a single or multiple construction project are assessed to a contractor, the contractor's most recent experience modifier, as of the date on which the construction project begins, must be used in the computation of the premium to be assessed to the contractor and the premium shall be adjusted annually to reflect any change in the contractor's experience modifier.

Sec. 151.064. AUDIT REQUIREMENTS. (a) Any required audit of a contractor covered by a consolidated insurance program who is subject to a premium charge for the coverage must be completed not later than the 60th day after the date on which the contractor completes its work on the construction project.

(b) The audit completion date provided by Subsection (a) shall be extended by one day for each day the contractor subject to the audit delays completion of the audit by failing to provide the auditor with access to the contractor's records after the contractor has received written notice from the administrator, insurer, or auditor stating the date the audit is to be conducted.

Sec. 151.065. DATA REPORTS FOR WORKERS' COMPENSATION. (a) At least quarterly, the program administrator shall report to a contractor in detail the loss and payroll data that pertains to that contractor.

(b) The initial report under Subsection (a) must be sent not later than the 30th day after the last day of the calendar quarter on which work begins on the construction project, with subsequent quarterly reports to be sent not later than the 15th day of the month following the end of the quarter covered by the report.

(c) The insurer shall report to the appropriate rating bureau annually, not later than the 60th day after the ending date of the experience rating period of a contractor that is the subject of the report, the loss and payroll data that pertains to the contractor, with a final report not later than the 60th day after the completion date of the construction project.

(d) A report under Subsection (c) must include data that has been corrected after the investigation of any discrepancies reported by a contractor.

(e) On receipt of written notice of any erroneous information submitted to a rating bureau, the insurer shall notify the rating bureau of the correct information not later than the 30th day after the date on which the written notice is received by the insurer.

(f) The reporting and notification deadlines provided by Subsections (b), (c), and (e) shall be extended by one day for each day the contractor that is the subject of the report delays completion of any necessary audit by failing to provide the auditor with access to the contractor's records after the contractor has received written notice from the administrator, insurer, or auditor stating the date the audit is to be conducted. [Sections 151.066-151.100 reserved for expansion] SUBCHAPTER C. DISCLOSURE REQUIREMENTS FOR ADMINISTRATION OF A CONSOLIDATED INSURANCE PROGRAM

Sec. 151.101. REQUIRED DISCLOSURE AT BID SOLICITATION. At the time a principal or contractor is soliciting bids for a construction project, the principal or contractor must disclose prominently in the project plans, specifications, and any request for bids or proposals that the project may be covered by a consolidated insurance program subject to this chapter.

Sec. 151.102. GENERAL ELEMENTS OF BID SOLICITATION DISCLOSURE. A disclosure made under Section 151.101 must include:

(1) the scope of coverage and limits for each insurance policy or contract under the consolidated insurance program, including an accurate specimen copy of full and complete declarations, policy conditions, limitations, coverages, and endorsements;

(2) the scope of coverage and limits for each policy or contract of excess insurance covering the consolidated insurance program, including a statement that the excess policy or contract will follow form as to the primary policy or contract, with any material exceptions listed; and

(3) a complete description of the safety program required by Subchapter D.

Sec. 151.103. REQUIRED DISCLOSURE PRIOR TO CONTRACT EXECUTION. (a) A principal may establish for a construction project a minimum construction contract amount in order for a contractor to be included in a consolidated insurance program.

(b) A contractor who submits a price proposal for work on a construction project under a consolidated insurance program is entitled to written notification from the principal or other contractor of any material change in the consolidated insurance program not later than the 10th day before the date the contractor executes the contract for work on the construction project.

(c) After receipt of notice of any adverse material change under Subsection (b), a contractor may without recourse or liability for damages to any person:

(1) withdraw its price proposal for work on the construction project; or

(2) modify the price for the insurance component of the proposal for work on the construction project.

(d) Not later than the seventh day before the date a principal or contractor executes a contract for a construction project covered by a consolidated insurance program, the principal or contractor must make a written disclosure to the contractor submitting the price proposal that contains detailed information concerning the consolidated insurance program.

Sec. 151.104. GENERAL ELEMENTS OF PRE-CONTRACT DISCLOSURE. Each disclosure made under Section 151.103 must include:

(1) the name and address of each insurer providing an insurance policy or contract under the consolidated insurance program and identification of the coverage each insurer will provide;

(2) the name, address, and telephone number of the insurance producer, if any, acting as agent for the insurer;

(3) the name of the primary contact person of the insurance producer for the consolidated insurance program;

(4) the name, primary contact name, street address, city, state, and zip code of the administrator of the consolidated insurance program;

(5) a specimen copy of each form, including enrollment forms, claim forms, and payroll forms, that a contractor may be required to submit to the principal, program administrator, or insurer;

(6) the number, frequency, and subject matter of any audits of the contractor required by the insurer, administrator, or principal; and

(7) a detailed description of any differences in the items disclosed under Section 151.102 and the actual scope and limits of coverage for the consolidated insurance program, including any deviations from the specimen copy provided.

Sec. 151.105. FORMULA FOR INSURANCE CREDITS. (a) The disclosure required under Section 151.101 must include the formula to be used by a contractor in computing any insurance credits.

(b) The formula must include:

(1) the discounts, credits, and rate variances used by the contractor;

(2) examples of credit computations; and

(3) a method for incorporating any scheduled credits, premium discounts, or other items of credit or discount that apply specifically to the contractor.

(c) A principal may not require an insurance credit from a contractor for coverage provided under the consolidated insurance program that is of the same type as flat-rate coverages maintained by the contractor.

Sec. 151.106. CONTRACT AWARD; BASIS. (a) The disclosure required under Section 151.101 must state a specific explanation of how any premium overruns or underruns will be applied and whether the contract award will be made on a basis that:

(1) excludes the cost of insurance coverages; or

(2) includes the cost of insurance coverage.

(b) A contractor awarding a contract to another contractor must use the basis described under Subsection (a) for any contractor insured under the consolidated insurance program. [Sections 151.107-151.150 reserved for expansion] SUBCHAPTER D. SAFETY PROGRAM AND INJURED WORKERS

Sec. 151.151. APPLICATION. This subchapter applies only if workers' compensation is a coverage provided by the consolidated insurance program.

Sec. 151.152. SAFETY PROGRAM REQUIRED. (a) A principal shall adopt a comprehensive safety program designed to reduce the frequency and severity of worker injuries. The principal shall require participation in the safety program by all persons working on the construction project.

(b) The safety program must include a program for detection of drug use and other substance abuse.

(c) A qualified third-party safety company may administer and operate a safety program required under this section.

Sec. 151.153. SAFETY PROFESSIONALS. (a) This section sets forth minimum safety staffing requirements for a consolidated insurance program. The principal, directly or through its contract with a contractor, shall maintain safety policies and a level of safety staffing commensurate with the expected and actual hazards of the construction project.

(b) A safety program conducted under this subchapter must have at least one qualified safety professional assigned to the construction project for primary safety responsibility. If the construction project value exceeds $25 million, a safety professional must work not less than 40 hours per week at the work site of the construction project and no work may take place at the work site unless at least one qualified safety professional is present at the work site.

(c) Except as provided by Subsection (d), to be qualified to serve as a safety professional under Subsection (b), a person must have demonstrable knowledge of Title 29, Code of Federal Regulations, and related regulations adopted by the federal Occupational Safety and Health Administration and not less than:

(1) 10 years of primary safety responsibility experience in the construction industry; or

(2) five years of primary safety responsibility experience in the construction industry; and

(A) hold a bachelor of science degree conferred by an accredited institution of higher education, with a major in safety engineering, industrial hygiene, or a related field;

(B) hold an associate's degree conferred by an accredited institution of higher education, with a major in safety engineering, industrial hygiene, or a related field; or

(C) hold a current certification as a certified safety professional issued by an entity recognized by the commissioner.

(d) To be qualified to serve as a safety professional under Subsection (b) for a nonresidential construction project that is solely for the maintenance or remodeling of an existing industrial plant facility that maintains an ongoing consolidated insurance program in its regular course of business for such maintenance or remodeling work at the industrial plant facility, a person must have demonstrable knowledge of Title 29, Code of Federal Regulations, and related regulations adopted by the federal Occupational Safety and Health Administration and not less than:

(1) 10 years of primary safety responsibility experience in an industrial plant facility; or

(2) five years of primary safety responsibility experience in an industrial plant facility; and

(A) hold a bachelor of science degree conferred by an accredited institution of higher education, with a major in safety engineering, industrial hygiene, or a related field;

(B) hold an associate's degree conferred by an accredited institution of higher education, with a major in safety engineering, industrial hygiene, or a related field; or

(C) hold a current certification as a certified safety professional issued by an entity recognized by the commissioner.

Sec. 151.154. INJURED EMPLOYEES. The disclosure required under Section 151.101 must fully describe any light duty return-to-work program required for a contractor's injured employees. A return-to-work program must provide a reasonable length of time during which any required light-duty program would be in place for an injured employee. The period that is considered a reasonable length of time for light-duty work may vary depending on the type of injury.

Sec. 151.155. LIGHT DUTY STANDARDS. The consolidated insurance program may require the employer of an injured employee to provide alternative duty for an injured employee when:

(1) the work status report, or similar report, of the division of workers' compensation of the department completed by the injured employee's examining doctor specifies the injured employee's physical restrictions or limitations;

(2) the examining doctor recommends that the injured employee return to work on a limited basis in compliance with the doctor's restrictions or limitations;

(3) the alternate duty position is reasonably available and such activity provides a benefit for the employer; and

(4) the cost to the contractor for any modifications to the workplace necessary in facilitating the injured employee's return to work based on restrictions or limitations identified by the examining doctor is reasonable. [Sections 151.156-151.200 reserved for expansion] SUBCHAPTER E. PROGRAM ADMINISTRATION

Sec. 151.201. PROGRAM ADMINISTRATOR. (a) Each principal shall appoint a qualified administrator for the consolidated insurance program whose only duty is administration of the program.

(b) To be eligible to serve as the program administrator, a person must:

(1) hold a risk manager license under Chapter 4153, a general property and casualty agent license under Chapter 4051, or another license as an insurance professional that is:

(A) recognized as appropriate by the commissioner; and

(B) issued under Title 13; and

(2) have been licensed under this code for at least the five years preceding the date of the appointment as program administrator.

(c) Subsection (b) does not apply to a person that provides assistance to the program administrator for support duties such as clerical or bookkeeping services.

Sec. 151.202. POWERS AND DUTIES OF PROGRAM ADMINISTRATOR; RELATIONSHIP WITH CONTRACTORS. For purposes of this chapter, each contractor covered under the consolidated insurance program is considered a client of the program administrator. A program administrator shall in a timely manner:

(1) enroll all contractors covered by the consolidated insurance program to assure immediate coverage;

(2) maintain a current consolidated insurance program manual that contains a detailed description of the consolidated insurance program and provide all contractors with a current copy of the manual on the contractor's enrollment in the program and not later than the seventh day after any updates are made;

(3) issue a certificate of insurance on behalf of a contractor to represent the coverages and limits provided by the consolidated insurance program not later than the fifth day after receipt of a request from the contractor;

(4) provided that the insurer has issued insurance policies or contracts, ensure that all contractors receive insurance policies or contracts, or renewal certificates for previously issued policies or contracts, for all coverages provided by the consolidated insurance program by the date that is the earlier of the 30th day after the date of enrollment in the program or the date the contractor begins work on the project;

(5) coordinate any regular reporting required of the contractors and any audits required of the contractors;

(6) coordinate all meetings with the insurer, whether with the principal, the contractors, or other parties;

(7) maintain an organized paper and electronic file system that is available for immediate access;

(8) establish and disseminate to contractors clear procedures for contractors on how to file claims properly and what loss control procedures need to be implemented;

(9) coordinate availability and communication between contractors and any on-site medical facilities;

(10) ensure that all insurance coverages provided by the consolidated insurance program are maintained;

(11) ensure that all contractors are notified in writing promptly of any changes or cancellation in coverages provided by the consolidated insurance program;

(12) monitor the financial standing of the insurer as provided by Section 151.059 and provide written notice to the principal and all contractors of any significant negative change not later than the 10th day after the date of the negative change;

(13) prepare and present to the principal, on at least a monthly basis, any required payroll reports, claim reviews, and loss control reviews; and

(14) provide oversight and management of claims for the principal and any affected contractor until all claims are closed.

Sec. 151.203. CONTRACTOR AS BENEFICIARY. For purposes of this chapter and insurance benefits under the consolidated insurance program, each contractor is considered a beneficiary of the administrator, and the administrator owes a fiduciary duty to each contractor that participates in the program. [Sections 151.204-151.250 reserved for expansion] SUBCHAPTER F. RULE MAKING AUTHORITY

Sec. 151.251. RULES. The commissioner shall adopt rules as necessary to implement and enforce this chapter and its purpose and intent and to provide for the protection of policyholders, insureds, and workers under a consolidated insurance program.

SECTION 2. Chapter 151, Insurance Code, as added by this Act, applies only to a consolidated insurance program for a construction project that begins on or after January 1, 2008. A consolidated insurance program for a construction project that begins before January 1, 2008, is governed by the law as it existed immediately before the effective date of this Act, and that law is continued in effect for this purpose.

SECTION 3. This Act takes effect September 1, 2007.