|
|
|
A BILL TO BE ENTITLED
|
|
AN ACT
|
|
relating to the nonsubstantive revision of statutes relating to the |
|
Texas Department of Insurance, the business of insurance, and |
|
certain related businesses, to nonsubstantive additions to and |
|
corrections in the codified Insurance Code, and to conforming the |
|
provisions of that code that were codified by the 79th Legislature |
|
to other Acts of that legislature, including conforming amendments, |
|
repeals, and penalties. |
|
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
|
ARTICLE 1. REVISION OF THE INSURANCE CODE OF 1951 |
|
PART A. ADDITIONS AND CONFORMING AMENDMENTS TO TITLE 2, |
|
INSURANCE CODE |
|
SECTION 1A.001. CONFORMING AMENDMENT. Chapter 30, |
|
Insurance Code, is amended to read as follows: |
|
CHAPTER 30. GENERAL PROVISIONS |
|
Sec. 30.001. PURPOSE OF TITLES 2, 3, 4, 5, 6, 7, 8, 9, 10, |
|
11, 12, 13, [AND] 14, AND 20. (a) This title and Titles 3, 4, 5, 6, |
|
7, 8, 9, 10, 11, 12, 13, [and] 14, and 20 are enacted as a part of the |
|
state's continuing statutory revision program, begun by the Texas |
|
Legislative Council in 1963 as directed by the legislature in the |
|
law codified as Section 323.007, Government Code. The program |
|
contemplates a topic-by-topic revision of the state's general and |
|
permanent statute law without substantive change. |
|
(b) Consistent with the objectives of the statutory |
|
revision program, the purpose of this title and Titles 3, 4, 5, 6, |
|
7, 8, 9, 10, 11, 12, 13, [and] 14, and 20 is to make the law |
|
encompassed by the titles more accessible and understandable by: |
|
(1) rearranging the statutes into a more logical |
|
order; |
|
(2) employing a format and numbering system designed |
|
to facilitate citation of the law and to accommodate future |
|
expansion of the law; |
|
(3) eliminating repealed, duplicative, |
|
unconstitutional, expired, executed, and other ineffective |
|
provisions; and |
|
(4) restating the law in modern American English to |
|
the greatest extent possible. |
|
Sec. 30.002. CONSTRUCTION. Except as provided by Section |
|
30.003 and as otherwise expressly provided in this code, Chapter |
|
311, Government Code (Code Construction Act), applies to the |
|
construction of each provision in this title and in Titles 3, 4, 5, |
|
6, 7, 8, 9, 10, 11, 12, 13, [and] 14, and 20. |
|
Sec. 30.003. DEFINITION OF PERSON. The definition of |
|
"person" assigned by Section 311.005, Government Code, does not |
|
apply to any provision in this title or in Title 3, 4, 5, 6, 7, 8, 9, |
|
10, 11, 12, 13, [or] 14, or 20. |
|
Sec. 30.004. REFERENCE IN LAW TO STATUTE REVISED BY TITLE 2, |
|
3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, [OR] 14, OR 20. A reference in a |
|
law to a statute or a part of a statute revised by this title or by |
|
Title 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, [or] 14, or 20 is |
|
considered to be a reference to the part of this code that revises |
|
that statute or part of that statute. |
|
SECTION 1A.002. ADDITION. Subchapter A, Chapter 32, |
|
Insurance Code, is amended by adding Sections 32.0015 and 32.004 to |
|
read as follows: |
|
Sec. 32.0015. FILING ARTICLES OF INCORPORATION AND OTHER |
|
PAPERS; CERTIFIED COPIES. (a) The department shall file and |
|
maintain in a department office: |
|
(1) all insurance companies' acts or articles of |
|
incorporation; and |
|
(2) any other paper required by law to be filed with |
|
the department. |
|
(b) The department shall provide a certified copy of a |
|
document described by Subsection (a)(1) or (2) to a party |
|
interested in the document who: |
|
(1) submits an application; and |
|
(2) pays the fee prescribed by law. (V.T.I.C. Art. |
|
1.10, Sec. 2.) |
|
Sec. 32.004. PUBLICATION OF RESULTS OF EXAMINATION. The |
|
department shall publish the results of an examination of a |
|
company's affairs if the commissioner determines that publication |
|
is in the public interest. (V.T.I.C. Art. 1.10, Sec. 6.) |
|
PART B. ADDITIONS TO TITLE 3, INSURANCE CODE |
|
SECTION 1B.001. ADDITION. Subtitle B, Title 3, Insurance |
|
Code, is amended by adding Chapter 228 to read as follows: |
|
CHAPTER 228. PREMIUM TAX CREDIT FOR CERTAIN INVESTMENTS |
|
SUBCHAPTER A. GENERAL PROVISIONS |
|
Sec. 228.001. GENERAL DEFINITIONS. In this chapter: |
|
(1) "Allocation date" means the date on which |
|
certified investors are allocated premium tax credits. |
|
(2) "Certified capital" means cash invested by a |
|
certified investor that fully funds the purchase price of an equity |
|
interest in a certified capital company or a qualified debt |
|
instrument issued by the company. |
|
(3) "Certified capital company" means a partnership, |
|
corporation, or trust or limited liability company, whether |
|
organized on a profit or nonprofit basis, that: |
|
(A) has as the company's primary business |
|
activity the investment of cash in qualified businesses; and |
|
(B) is certified as meeting the criteria of this |
|
chapter. |
|
(4) "Certified investor" means an insurer or other |
|
person that has state premium tax liability and that contributes |
|
certified capital pursuant to a premium tax credit allocation under |
|
this chapter. |
|
(5) "Early stage business" means a business described |
|
by Section 228.152(a). |
|
(6) "Person" means an individual or entity, including |
|
a corporation, general or limited partnership, or trust or limited |
|
liability company. |
|
(7) "Premium tax credit allocation claim" means a |
|
claim for allocation of premium tax credits. |
|
(8) "Qualified business" means a business described by |
|
Section 228.201. |
|
(9) "Qualified debt instrument" means a debt |
|
instrument issued by a certified capital company, at par value or a |
|
premium, that: |
|
(A) has an original maturity date that is a date |
|
on or after the fifth anniversary of the date of issuance; |
|
(B) has a repayment schedule that is not faster |
|
than a level principal amortization over five years; and |
|
(C) does not have interest, distribution, or |
|
payment features that are related to: |
|
(i) the profitability of the company; or |
|
(ii) the performance of the company's |
|
investment portfolio. |
|
(10) "Qualified investment" means the investment of |
|
cash by a certified capital company in a qualified business for the |
|
purchase of any debt, debt participation, equity, or hybrid |
|
security of any nature or description, including a debt instrument |
|
or security that has the characteristics of debt but that provides |
|
for conversion into equity or equity participation instruments such |
|
as options or warrants. |
|
(11) "State premium tax liability" means: |
|
(A) any liability incurred by any person under |
|
Chapter 221, 222, 223, or 224; or |
|
(B) if the tax liability imposed under Chapter |
|
221, 222, 223, or 224 is eliminated or reduced, any tax liability |
|
imposed on an insurer or other person that had premium tax liability |
|
under Subchapter A, Chapter 4, or Article 9.59 as those laws existed |
|
on January 1, 2003. |
|
(12) "Strategic investment business" means a business |
|
described by Section 228.153(a). (V.T.I.C. Art. 4.51, Subdivs. |
|
(2), (3), (4), (5), (6) (part), (7), (8), (9) (part), (10), (12), |
|
(13), (15) (part).) |
|
Sec. 228.002. DEFINITION OF AFFILIATE. In this chapter, |
|
"affiliate" of another person means: |
|
(1) a person that is an affiliate for purposes of |
|
Section 823.003; |
|
(2) a person that directly or indirectly: |
|
(A) beneficially owns 10 percent or more of the |
|
outstanding voting securities or other voting or management |
|
interests of the other person, whether through rights, options, |
|
convertible interests, or otherwise; or |
|
(B) controls or holds power to vote 10 percent or |
|
more of the outstanding voting securities or other voting or |
|
management interests of the other person; |
|
(3) a person 10 percent or more of the outstanding |
|
voting securities or other voting or management interests of which |
|
are directly or indirectly: |
|
(A) beneficially owned by the other person, |
|
whether through rights, options, convertible interests, or |
|
otherwise; or |
|
(B) controlled or held with power to vote by the |
|
other person; |
|
(4) a partnership in which the other person is a |
|
general partner; |
|
(5) an officer, director, employee, or agent of the |
|
other person; or |
|
(6) an immediate family member of an officer, |
|
director, employee, or agent described by Subdivision (5). |
|
(V.T.I.C. Art. 4.51, Subdiv. (1).) |
|
[Sections 228.003-228.050 reserved for expansion] |
|
SUBCHAPTER B. ADMINISTRATION AND PROMOTION |
|
Sec. 228.051. ADMINISTRATION BY COMPTROLLER. The |
|
comptroller shall administer this chapter. (V.T.I.C. Art. 4.52 |
|
(part).) |
|
Sec. 228.052. RULES; FORMS. The comptroller shall adopt |
|
rules and forms as necessary to implement this chapter, including |
|
rules that: |
|
(1) establish the application procedures for |
|
certified capital companies; and |
|
(2) facilitate the transfer or assignment of premium |
|
tax credits by certified investors. (V.T.I.C. Art. 4.52 (part); |
|
Art. 4.53, Sec. (a); Art. 4.71, Sec. (a) (part).) |
|
Sec. 228.053. REPORT TO LEGISLATURE. (a) The comptroller |
|
shall prepare a biennial report concerning the results of the |
|
implementation of this chapter. The report must include: |
|
(1) the number of certified capital companies holding |
|
certified capital; |
|
(2) the amount of certified capital invested in each |
|
certified capital company; |
|
(3) the amount of certified capital the certified |
|
capital company invested in qualified businesses as of January 1, |
|
2006, and the cumulative total for each subsequent year; |
|
(4) the total amount of tax credits granted under this |
|
chapter for each year that credits have been granted; |
|
(5) the performance of each certified capital company |
|
with respect to renewal and reporting requirements imposed under |
|
this chapter; |
|
(6) with respect to the qualified businesses in which |
|
certified capital companies have invested: |
|
(A) the classification of the qualified |
|
businesses according to the industrial sector and size of the |
|
business; |
|
(B) the total number of jobs created by the |
|
investment and the average wages paid for the jobs; and |
|
(C) the total number of jobs retained as a result |
|
of the investment and the average wages paid for the jobs; and |
|
(7) the certified capital companies that have been |
|
decertified or that have failed to renew the certification and the |
|
reason for any decertification. |
|
(b) The comptroller shall file the report with the governor, |
|
the lieutenant governor, and the speaker of the house of |
|
representatives not later than December 15 of each even-numbered |
|
year. (V.T.I.C. Art. 4.73.) |
|
Sec. 228.054. PROMOTION OF PROGRAM. The Texas Economic |
|
Development and Tourism Office shall promote the program |
|
established under this chapter in the Texas Business and Community |
|
Economic Development Clearinghouse. (V.T.I.C. Art. 4.72.) |
|
[Sections 228.055-228.100 reserved for expansion] |
|
SUBCHAPTER C. APPLICATION FOR AND GENERAL OPERATION OF CERTIFIED |
|
CAPITAL COMPANIES |
|
Sec. 228.101. APPLICATION FOR CERTIFICATION. (a) An |
|
applicant for certification must file the application in the form |
|
prescribed by the comptroller. The application must be accompanied |
|
by a nonrefundable application fee of $7,500. |
|
(b) The application must include an audited balance sheet of |
|
the applicant, with an unqualified opinion from an independent |
|
certified public accountant, as of a date not more than 35 days |
|
before the date of the application. (V.T.I.C. Art. 4.53, Sec. |
|
(b).) |
|
Sec. 228.102. QUALIFICATION. To qualify as a certified |
|
capital company: |
|
(1) the applicant must have, at the time of |
|
application for certification, an equity capitalization of at least |
|
$500,000 in unencumbered cash or cash equivalents; |
|
(2) at least two principals or persons employed to |
|
manage the funds of the applicant must have at least four years of |
|
experience in the venture capital industry; and |
|
(3) the applicant must satisfy any additional |
|
requirement imposed by the comptroller by rule. (V.T.I.C. Art. |
|
4.53, Sec. (c).) |
|
Sec. 228.103. MANAGEMENT BY AND CERTAIN OWNERSHIP INTERESTS |
|
OF INSURANCE ENTITIES PROHIBITED. (a) An insurer, group of |
|
insurers, or other persons who may have state premium tax liability |
|
or the insurer's or person's affiliates may not directly or |
|
indirectly: |
|
(1) manage a certified capital company; |
|
(2) beneficially own, whether through rights, |
|
options, convertible interests, or otherwise, more than 10 percent |
|
of the outstanding voting securities of a certified capital |
|
company; or |
|
(3) control the direction of investments for a |
|
certified capital company. |
|
(b) Subsection (a) applies without regard to whether the |
|
insurer or other person or the affiliate of the insurer or other |
|
person is authorized by or engages in business in this state. |
|
(c) Subsections (a) and (b) do not preclude an insurer, |
|
certified investor, or any other party from exercising its legal |
|
rights and remedies, including interim management of a certified |
|
capital company, if authorized by law, with respect to a certified |
|
capital company that is in default of the company's statutory or |
|
contractual obligations to the insurer, certified investor, or |
|
other party. |
|
(d) This chapter does not limit an insurer's ownership of |
|
nonvoting equity interests in a certified capital company. |
|
(V.T.I.C. Art. 4.54; Art. 4.56, Sec. (d).) |
|
Sec. 228.104. ACTION ON APPLICATION. (a) The comptroller |
|
shall: |
|
(1) review the application, organizational documents, |
|
and business history of each applicant; and |
|
(2) ensure that the applicant satisfies the |
|
requirements of this chapter. |
|
(b) Not later than the 30th day after the date an |
|
application is filed, the comptroller shall: |
|
(1) issue the certification; or |
|
(2) refuse to issue the certification and communicate |
|
in detail to the applicant the grounds for the refusal, including |
|
suggestions for the removal of those grounds. (V.T.I.C. Art. |
|
4.53, Secs. (d), (e).) |
|
Sec. 228.105. CONTINUATION OF CERTIFICATION. To continue |
|
to be certified, a certified capital company must make qualified |
|
investments according to the schedule established by Section |
|
228.151. (V.T.I.C. Art. 4.56, Sec. (a) (part).) |
|
Sec. 228.106. REPORTS TO COMPTROLLER; AUDITED FINANCIAL |
|
STATEMENT. (a) Each certified capital company shall report to the |
|
comptroller as soon as practicable after the receipt of certified |
|
capital: |
|
(1) the name of each certified investor from whom the |
|
certified capital was received, including the certified investor's |
|
insurance premium tax identification number; |
|
(2) the amount of each certified investor's investment |
|
of certified capital and premium tax credits; and |
|
(3) the date on which the certified capital was |
|
received. |
|
(b) Not later than January 31 of each year, each certified |
|
capital company shall report to the comptroller: |
|
(1) the amount of the company's certified capital at |
|
the end of the preceding year; |
|
(2) whether or not the company has invested more than |
|
15 percent of the company's total certified capital in a single |
|
business; |
|
(3) each qualified investment that the company made |
|
during the preceding year and, with respect to each qualified |
|
investment, the number of employees of the qualified business at |
|
the time the qualified investment was made; and |
|
(4) any other information required by the comptroller, |
|
including any information required by the comptroller to comply |
|
with Section 228.053. |
|
(c) Not later than April 1 of each year, each certified |
|
capital company shall provide to the comptroller an annual audited |
|
financial statement that includes the opinion of an independent |
|
certified public accountant. The audit must address the methods of |
|
operation and conduct of the business of the company to determine |
|
whether: |
|
(1) the company is complying with this chapter and the |
|
rules adopted under this chapter; |
|
(2) the funds received by the company have been |
|
invested as required within the time provided by Section 228.151; |
|
and |
|
(3) the company has invested the funds in qualified |
|
businesses. (V.T.I.C. Art. 4.58.) |
|
Sec. 228.107. RENEWAL FEE; LATE FEE; EXCEPTION. (a) Not |
|
later than January 31 of each year, each certified capital company |
|
shall pay a nonrefundable renewal fee of $5,000 to the comptroller. |
|
(b) If a certified capital company fails to pay the renewal |
|
fee on or before the date specified by Subsection (a), the company |
|
must pay, in addition to the renewal fee, a late fee of $5,000 to |
|
continue the company's certification. |
|
(c) Notwithstanding Subsection (a), a renewal fee is not |
|
required within six months of the date on which a certified capital |
|
company's initial certification is issued under Section |
|
228.104(b). (V.T.I.C. Art. 4.59.) |
|
Sec. 228.108. OFFERING MATERIAL USED BY CERTIFIED CAPITAL |
|
COMPANY. Any offering material involving the sale of securities of |
|
the certified capital company must include the following statement: |
|
By authorizing the formation of a certified |
|
capital company, the State of Texas does not endorse |
|
the quality of management or the potential for |
|
earnings of the company and is not liable for damages |
|
or losses to a certified investor in the company. Use |
|
of the word "certified" in an offering does not |
|
constitute a recommendation or endorsement of the |
|
investment by the comptroller of public accounts. If |
|
applicable provisions of law are violated, the State |
|
of Texas may require forfeiture of unused premium tax |
|
credits and repayments of used premium tax credits. |
|
(V.T.I.C. Art. 4.55.) |
|
[Sections 228.109-228.150 reserved for expansion] |
|
SUBCHAPTER D. INVESTMENT BY CERTIFIED CAPITAL COMPANIES |
|
Sec. 228.151. REQUIRED SCHEDULE OF INVESTMENT. (a) Before |
|
the third anniversary of a certified capital company's allocation |
|
date, the company must make qualified investments in an amount |
|
cumulatively equal to at least 30 percent of the company's |
|
certified capital, subject to Section 228.153(b). |
|
(b) Before the fifth anniversary of a certified capital |
|
company's allocation date, the company must make qualified |
|
investments in an amount cumulatively equal to at least 50 percent |
|
of the company's certified capital, subject to Sections 228.152(b) |
|
and 228.153(b). (V.T.I.C. Art. 4.56, Sec. (a) (part).) |
|
Sec. 228.152. INVESTMENT IN EARLY STAGE BUSINESS REQUIRED. |
|
(a) In this section, "early stage business" means a qualified |
|
business that: |
|
(1) is involved, at the time of a certified capital |
|
company's first investment, in activities related to the |
|
development of initial product or service offerings, such as |
|
prototype development or establishment of initial production or |
|
service processes; |
|
(2) was initially organized less than two years before |
|
the date of the certified capital company's first investment; or |
|
(3) during the fiscal year immediately preceding the |
|
year of the certified capital company's first investment had, on a |
|
consolidated basis with the business's affiliates, gross revenues |
|
of not more than $2 million as determined in accordance with |
|
generally accepted accounting principles. |
|
(b) A certified capital company must place at least 50 |
|
percent of the amount of qualified investments required by Section |
|
228.151(b) in early stage businesses. (V.T.I.C. Art. 4.51, Subdiv. |
|
(6); Art. 4.56, Sec. (b) (part).) |
|
Sec. 228.153. INVESTMENT IN STRATEGIC INVESTMENT BUSINESS |
|
REQUIRED. (a) In this section: |
|
(1) "Strategic investment area" means an area of this |
|
state that qualifies as a strategic investment area under |
|
Subchapter O, Chapter 171, Tax Code, or, after the date that |
|
subchapter expires, an area that qualified as a strategic |
|
investment area under that subchapter immediately before that date. |
|
(2) "Strategic investment business" means a qualified |
|
business that: |
|
(A) has the business's principal business |
|
operations located in one or more strategic investment areas; and |
|
(B) intends to maintain business operations in |
|
the strategic investment areas after receipt of the investment by |
|
the certified capital company. |
|
(b) A certified capital company must place at least 30 |
|
percent of the amount of qualified investments required by Sections |
|
228.151(a) and (b) in a strategic investment business. (V.T.I.C. |
|
Art. 4.51, Subdivs. (14), (15); Art. 4.56, Sec. (b) (part).) |
|
Sec. 228.154. CERTIFIED CAPITAL NOT INVESTED IN QUALIFIED |
|
INVESTMENTS. A certified capital company shall invest any |
|
certified capital not invested in qualified investments only in: |
|
(1) cash deposited with a federally insured financial |
|
institution; |
|
(2) certificates of deposit in a federally insured |
|
financial institution; |
|
(3) investment securities that are: |
|
(A) obligations of the United States or agencies |
|
or instrumentalities of the United States; or |
|
(B) obligations that are guaranteed fully as to |
|
principal and interest by the United States; |
|
(4) debt instruments rated at least "A" or the |
|
equivalent by a nationally recognized credit rating organization, |
|
or issued by, or guaranteed with respect to payment by, an entity |
|
whose unsecured indebtedness is rated at least "A" or the |
|
equivalent by a nationally recognized credit rating organization, |
|
and which indebtedness is not subordinated to other unsecured |
|
indebtedness of the issuer or the guarantor; |
|
(5) obligations of this state or a municipality or |
|
political subdivision of this state; or |
|
(6) any other investment approved in advance in |
|
writing by the comptroller. (V.T.I.C. Art. 4.56, Sec. (h).) |
|
Sec. 228.155. COMPUTATION OF AMOUNT OF INVESTMENTS. (a) |
|
The aggregate cumulative amount of all qualified investments made |
|
by a certified capital company after the company's allocation date |
|
shall be considered in the computation of the percentage |
|
requirements under this subchapter. |
|
(b) A certified capital company may invest proceeds |
|
received from a qualified investment in another qualified |
|
investment, and that investment counts toward any requirement of |
|
this chapter with respect to investments of certified capital. |
|
(V.T.I.C. Art. 4.56, Sec. (c).) |
|
Sec. 228.156. LIMIT ON QUALIFIED INVESTMENT. A certified |
|
capital company may not make a qualified investment at a cost to the |
|
company that is greater than 15 percent of the company's total |
|
certified capital at the time of investment. (V.T.I.C. Art. 4.56, |
|
Sec. (f).) |
|
Sec. 228.157. DISTRIBUTIONS BY CERTIFIED CAPITAL COMPANY. |
|
(a) In this section, "qualified distribution" means any |
|
distribution or payment from certified capital by a certified |
|
capital company in connection with: |
|
(1) the reasonable costs and expenses of forming, |
|
syndicating, managing, and operating the company, provided that the |
|
distribution or payment is not made directly or indirectly to a |
|
certified investor, including: |
|
(A) reasonable and necessary fees paid for |
|
professional services, including legal and accounting services, |
|
related to the company's formation and operation; and |
|
(B) an annual management fee in an amount that |
|
does not exceed 2.5 percent of the company's certified capital; and |
|
(2) a projected increase in federal or state taxes, |
|
including penalties and interest related to state and federal |
|
income taxes, of the company's equity owners resulting from the |
|
earnings or other tax liability of the company to the extent that |
|
the increase is related to the ownership, management, or operation |
|
of the company. |
|
(b) A certified capital company may make a qualified |
|
distribution at any time. To make a distribution or payment other |
|
than a qualified distribution, a company must have made qualified |
|
investments in an amount cumulatively equal to 100 percent of the |
|
company's certified capital. |
|
(c) If a business in which a qualified investment is made |
|
relocates the business's principal business operations to another |
|
state during the term of the certified capital company's investment |
|
in the business, the cumulative amount of qualified investments |
|
made by the certified capital company for purposes of satisfying |
|
the requirements of Subsection (b) only is reduced by the amount of |
|
the certified capital company's qualified investments in the |
|
business that has relocated. |
|
(d) Subsection (c) does not apply if the business |
|
demonstrates that the business has returned the business's |
|
principal business operations to this state not later than the 90th |
|
day after the date of the relocation. (V.T.I.C. Art. 4.51, Subdiv. |
|
(11); Art. 4.60, Secs. (a), (c).) |
|
Sec. 228.158. REPAYMENT OF DEBT. Notwithstanding Section |
|
228.157(b), a certified capital company may make repayments of |
|
principal and interest on the company's indebtedness without any |
|
restriction, including repaying the company's indebtedness on |
|
which certified investors earned premium tax credits. (V.T.I.C. |
|
Art. 4.60, Sec. (b).) |
|
[Sections 228.159-228.200 reserved for expansion] |
|
SUBCHAPTER E. QUALIFIED BUSINESS |
|
Sec. 228.201. DEFINITION OF QUALIFIED BUSINESS. (a) In |
|
this chapter, "qualified business" means a business that complies |
|
with this section at the time of a certified capital company's first |
|
investment in the business. |
|
(b) A qualified business must: |
|
(1) be headquartered in this state and intend to |
|
remain in this state after receipt of the certified capital |
|
company's investment; and |
|
(2) have the business's principal business operations |
|
located in this state and intend to maintain business operations in |
|
this state after receipt of the certified capital company's |
|
investment. |
|
(c) A qualified business must agree to use the qualified |
|
investment primarily to: |
|
(1) support business operations in this state, other |
|
than advertising, promotion, and sales operations which may be |
|
conducted outside of this state; or |
|
(2) in the case of a start-up company, establish and |
|
support business operations in this state, other than advertising, |
|
promotion, and sales operations which may be conducted outside of |
|
this state. |
|
(d) A qualified business may not have more than 100 |
|
employees and must: |
|
(1) employ at least 80 percent of the business's |
|
employees in this state; or |
|
(2) pay 80 percent of the business's payroll to |
|
employees in this state. |
|
(e) A qualified business must be primarily engaged in: |
|
(1) manufacturing, processing, or assembling |
|
products; |
|
(2) conducting research and development; or |
|
(3) providing services. |
|
(f) A qualified business may not be primarily engaged in: |
|
(1) retail sales; |
|
(2) real estate development; |
|
(3) the business of insurance, banking, or lending; or |
|
(4) the provision of professional services provided by |
|
accountants, attorneys, or physicians. (V.T.I.C. Art. 4.51, |
|
Subdiv. (9).) |
|
Sec. 228.202. RELOCATION OF PRINCIPAL BUSINESS OPERATIONS. |
|
If, before the 90th day after the date a certified capital company |
|
makes an investment in a qualified business, the qualified business |
|
moves the business's principal business operations from this state, |
|
the investment may not be considered a qualified investment for |
|
purposes of the percentage requirements under this chapter. |
|
(V.T.I.C. Art. 4.56, Sec. (g).) |
|
Sec. 228.203. EVALUATION OF BUSINESS BY COMPTROLLER. (a) A |
|
certified capital company may, before making an investment in a |
|
business, request a written opinion from the comptroller as to |
|
whether the business in which the company proposes to invest is a |
|
qualified business, an early stage business, or a strategic |
|
investment business. |
|
(b) Not later than the 15th business day after the date of |
|
the receipt of a request under Subsection (a), the comptroller |
|
shall: |
|
(1) determine whether the business meets the |
|
definition of a qualified business, an early stage business, or a |
|
strategic investment business, as applicable, and notify the |
|
certified capital company of the determination and provide an |
|
explanation of the determination; or |
|
(2) notify the company that an additional 15 days will |
|
be needed to review the request and make the determination. |
|
(c) If the comptroller fails to notify the certified capital |
|
company with respect to the proposed investment within the period |
|
specified by Subsection (b), the business in which the company |
|
proposes to invest is considered to be a qualified business, an |
|
early stage business, or a strategic investment business, as |
|
appropriate. (V.T.I.C. Art. 4.57.) |
|
Sec. 228.204. CONTINUATION OF CLASSIFICATION AS QUALIFIED |
|
BUSINESS; FOLLOW-ON INVESTMENTS AUTHORIZED. (a) A business that |
|
is classified as a qualified business at the time of the first |
|
investment in the business by a certified capital company: |
|
(1) remains classified as a qualified business; and |
|
(2) may receive follow-on investments from any |
|
certified capital company. |
|
(b) Except as provided by Subsection (c), a follow-on |
|
investment made under Subsection (a) is a qualified investment even |
|
though the business may not meet the definition of a qualified |
|
business at the time of the follow-on investment. |
|
(c) A follow-on investment does not qualify as a qualified |
|
investment if, at the time of the follow-on investment, the |
|
qualified business no longer has the business's principal business |
|
operations in this state. (V.T.I.C. Art. 4.56, Sec. (e).) |
|
[Sections 228.205-228.250 reserved for expansion] |
|
SUBCHAPTER F. PREMIUM TAX CREDIT |
|
Sec. 228.251. PREMIUM TAX CREDIT. (a) A certified investor |
|
who makes an investment of certified capital shall earn in the year |
|
of investment a vested credit against state premium tax liability |
|
equal to 100 percent of the certified investor's investment of |
|
certified capital, subject to the limits imposed by this chapter. |
|
(b) Beginning with the tax report due March 1, 2009, for the |
|
2008 tax year, a certified investor may take up to 25 percent of the |
|
vested premium tax credit in any taxable year of the certified |
|
investor. The credit may not be applied to estimated payments due |
|
in 2008. (V.T.I.C. Art. 4.65, Sec. (a).) |
|
Sec. 228.252. LIMIT ON PREMIUM TAX CREDIT. (a) The credit |
|
to be applied against state premium tax liability of a certified |
|
investor in any one year may not exceed the state premium tax |
|
liability of the investor for the taxable year. |
|
(b) A certified investor may carry forward any unused credit |
|
against state premium tax liability indefinitely until the premium |
|
tax credits are used. (V.T.I.C. Art. 4.65, Sec. (b).) |
|
Sec. 228.253. PREMIUM TAX CREDIT ALLOCATION CLAIM REQUIRED. |
|
(a) A certified investor must prepare and execute a premium tax |
|
credit allocation claim on a form provided by the comptroller. |
|
(b) The certified capital company must have filed the claim |
|
with the comptroller on the date on which the comptroller accepted |
|
premium tax credit allocation claims on behalf of certified |
|
investors under the comptroller's rules. |
|
(c) The premium tax credit allocation claim form must |
|
include an affidavit of the certified investor under which the |
|
certified investor becomes legally bound and irrevocably committed |
|
to make an investment of certified capital in a certified capital |
|
company in the amount allocated even if the amount allocated is less |
|
than the amount of the claim, subject only to the receipt of an |
|
allocation under Section 228.255. |
|
(d) A certified investor may not claim a premium tax credit |
|
under Section 228.251 for an investment that has not been funded, |
|
without regard to whether the certified investor has committed to |
|
fund the investment. (V.T.I.C. Art. 4.66.) |
|
Sec. 228.254. TOTAL LIMIT ON PREMIUM TAX CREDITS. (a) The |
|
total amount of certified capital for which premium tax credits may |
|
be allowed under this chapter for all years in which premium tax |
|
credits are allowed is $200 million. |
|
(b) The total amount of certified capital for which premium |
|
tax credits may be allowed for all certified investors under this |
|
chapter may not exceed the amount that would entitle all certified |
|
investors in certified capital companies to take total credits of |
|
$50 million in a year. |
|
(c) A certified capital company and the company's |
|
affiliates may not file premium tax credit allocation claims in |
|
excess of the maximum amount of certified capital for which premium |
|
tax credits may be allowed as provided by this section. (V.T.I.C. |
|
Art. 4.67.) |
|
Sec. 228.255. ALLOCATION OF PREMIUM TAX CREDIT. (a) If the |
|
total premium tax credits claimed by all certified investors |
|
exceeds the total limits on premium tax credits established by |
|
Section 228.254(a), the comptroller shall allocate the total amount |
|
of premium tax credits allowed under this chapter to certified |
|
investors in certified capital companies on a pro rata basis in |
|
accordance with this section. |
|
(b) The pro rata allocation for each certified investor |
|
shall be the product of: |
|
(1) a fraction, the numerator of which is the amount of |
|
the premium tax credit allocation claim filed on behalf of the |
|
investor and the denominator of which is the total amount of all |
|
premium tax credit allocation claims filed on behalf of all |
|
certified investors; and |
|
(2) the total amount of certified capital for which |
|
premium tax credits may be allowed under this chapter. |
|
(c) The maximum amount of certified capital for which |
|
premium tax credit allocation may be allowed on behalf of a single |
|
certified investor and the investor's affiliates, whether by one or |
|
more certified capital companies, may not exceed the greater of: |
|
(1) $10 million; or |
|
(2) 15 percent of the maximum aggregate amount |
|
available under Section 228.254(a). (V.T.I.C. Art. 4.68, Secs. |
|
(a), (b), (e).) |
|
Sec. 228.256. TREATMENT OF CREDITS AND CAPITAL. In any case |
|
under this code or another insurance law of this state in which the |
|
assets of a certified investor are examined or considered, the |
|
certified capital may be treated as an admitted asset, subject to |
|
the applicable statutory valuation procedures. (V.T.I.C. Art. |
|
4.69.) |
|
Sec. 228.257. TRANSFERABILITY OF CREDIT. (a) A certified |
|
investor may transfer or assign premium tax credits only in |
|
compliance with the rules adopted under Section 228.052. |
|
(b) The transfer or assignment of a premium tax credit does |
|
not affect the schedule for taking the premium tax credit under this |
|
chapter. (V.T.I.C. Art. 4.71, Secs. (a) (part), (b).) |
|
Sec. 228.258. IMPACT OF PREMIUM TAX CREDIT ON INSURANCE |
|
RATEMAKING. A certified investor is not required to reduce the |
|
amount of premium tax included by the investor in connection with |
|
ratemaking for an insurance contract written in this state because |
|
of a reduction in the investor's Texas premium tax derived from |
|
premium tax credits granted under this chapter. (V.T.I.C. Art. |
|
4.70.) |
|
Sec. 228.259. RETALIATORY TAX. A certified investor |
|
claiming a credit against state premium tax liability earned |
|
through an investment in a company is not required to pay any |
|
additional retaliatory tax levied under Chapter 281 as a result of |
|
claiming that credit. (V.T.I.C. Art. 4.65, Sec. (c) (part).) |
|
[Sections 228.260-228.300 reserved for expansion] |
|
SUBCHAPTER G. ENFORCEMENT |
|
Sec. 228.301. ANNUAL REVIEW BY COMPTROLLER. (a) The |
|
comptroller shall conduct an annual review of each certified |
|
capital company to: |
|
(1) ensure that the company: |
|
(A) continues to satisfy the requirements of this |
|
chapter; and |
|
(B) has not made any investment in violation of |
|
this chapter; and |
|
(2) determine the eligibility status of the company's |
|
qualified investments. |
|
(b) Each certified capital company shall pay the cost of the |
|
annual review according to a reasonable fee schedule adopted by the |
|
comptroller. (V.T.I.C. Art. 4.61, Secs. (a), (b).) |
|
Sec. 228.302. DECERTIFICATION OF CERTIFIED CAPITAL |
|
COMPANY. (a) A material violation of Section 228.105, 228.106, |
|
228.107, 228.151, 228.152, 228.153, 228.154, 228.155, 228.156, |
|
228.202, or 228.204 is grounds for decertification of a certified |
|
capital company. |
|
(b) If the comptroller determines that a certified capital |
|
company is not in compliance with a law listed in Subsection (a), |
|
the comptroller shall notify the company's officers in writing that |
|
the company may be subject to decertification after the 120th day |
|
after the date the notice is mailed unless the company: |
|
(1) corrects the deficiencies; and |
|
(2) returns to compliance with the law. |
|
(c) The comptroller may decertify a certified capital |
|
company, after opportunity for hearing, if the comptroller finds |
|
that the company is not in compliance with a law listed in |
|
Subsection (a) at the end of the period established by Subsection |
|
(b). |
|
(d) Decertification under this section is effective on |
|
receipt of notice of decertification by the certified capital |
|
company. |
|
(e) The comptroller shall notify any appropriate state |
|
agency of a decertification of a certified capital company. |
|
(V.T.I.C. Art. 4.61, Secs. (c), (d).) |
|
Sec. 228.303. ADMINISTRATIVE PENALTY. (a) The comptroller |
|
may impose an administrative penalty on a certified capital company |
|
that violates this chapter. |
|
(b) The amount of the penalty may not exceed $25,000. Each |
|
day a violation continues or occurs is a separate violation for the |
|
purpose of imposing the penalty. The amount of the penalty shall be |
|
based on: |
|
(1) the seriousness of the violation, including the |
|
nature, circumstances, extent, and gravity of the violation; |
|
(2) the economic harm caused by the violation; |
|
(3) the history of previous violations; |
|
(4) the amount necessary to deter a future violation; |
|
(5) efforts to correct the violation; and |
|
(6) any other matter that justice may require. |
|
(c) A certified capital company assessed a penalty under |
|
this chapter may request a redetermination as provided by Chapter |
|
111, Tax Code. |
|
(d) The attorney general may sue to collect the penalty. |
|
(e) A proceeding to impose the penalty is a contested case |
|
under Chapter 2001, Government Code. (V.T.I.C. Art. 4.62.) |
|
[Sections 228.304-228.350 reserved for expansion] |
|
SUBCHAPTER H. RECAPTURE AND FORFEITURE OF PREMIUM TAX CREDITS |
|
Sec. 228.351. RECAPTURE AND FORFEITURE OF PREMIUM TAX |
|
CREDIT FOLLOWING DECERTIFICATION. (a) Decertification of a |
|
certified capital company may, in accordance with this section, |
|
cause: |
|
(1) the recapture of premium tax credits previously |
|
claimed by the company's certified investors; and |
|
(2) the forfeiture of future premium tax credits to be |
|
claimed by the investors. |
|
(b) Decertification of a certified capital company on or |
|
before the third anniversary of the company's allocation date |
|
causes the recapture of any premium tax credits previously claimed |
|
and the forfeiture of any future premium tax credits to be claimed |
|
by a certified investor with respect to the company. |
|
(c) For a certified capital company that meets the |
|
requirements for continued certification under Section 228.151(a) |
|
and subsequently fails to meet the requirements for continued |
|
certification under Subsection (b) of that section: |
|
(1) any premium tax credit that has been or will be |
|
taken by a certified investor on or before the third anniversary of |
|
the allocation date is not subject to recapture or forfeiture; and |
|
(2) any premium tax credit that has been or will be |
|
taken by a certified investor after the third anniversary of the |
|
company's allocation date is subject to recapture or forfeiture. |
|
(d) For a certified capital company that has met the |
|
requirements for continued certification under Section 228.151 and |
|
is subsequently decertified: |
|
(1) any premium tax credit that has been or will be |
|
taken by a certified investor on or before the fifth anniversary of |
|
the allocation date is not subject to recapture or forfeiture; and |
|
(2) any premium tax credit to be taken after the fifth |
|
anniversary of the allocation date is subject to forfeiture only if |
|
the company is decertified on or before the fifth anniversary of the |
|
company's allocation date. |
|
(e) For a certified capital company that has invested an |
|
amount cumulatively equal to 100 percent of the company's certified |
|
capital in qualified investments, any premium tax credit claimed or |
|
to be claimed by a certified investor is not subject to recapture or |
|
forfeiture under this section. (V.T.I.C. Art. 4.63, Sec. (a).) |
|
Sec. 228.352. NOTICE OF RECAPTURE AND FORFEITURE OF PREMIUM |
|
TAX CREDIT. The comptroller shall send written notice to the |
|
address of each certified investor whose premium tax credit is |
|
subject to recapture or forfeiture, using the address shown on the |
|
investor's last premium tax filing. (V.T.I.C. Art. 4.63, Sec. |
|
(b).) |
|
Sec. 228.353. INDEMNITY AGREEMENTS AND INSURANCE |
|
AUTHORIZED. (a) A certified capital company may agree to |
|
indemnify, or purchase insurance for the benefit of, a certified |
|
investor for losses resulting from the recapture or forfeiture of |
|
premium tax credits under Section 228.351. |
|
(b) Any guaranty, indemnity, bond, insurance policy, or |
|
other payment undertaking made under this section may not be |
|
provided by more than one certified investor of the certified |
|
capital company or affiliate of the certified investor. (V.T.I.C. |
|
Art. 4.64.) |
|
PART C. ADDITIONS TO TITLE 4, INSURANCE CODE |
|
SECTION 1C.001. ADDITION. Subtitle A, Title 4, Insurance |
|
Code, is amended by adding Chapter 406 to read as follows: |
|
CHAPTER 406. SPECIAL DEPOSITS REQUIRED UNDER POTENTIALLY |
|
HAZARDOUS CONDITIONS |
|
Sec. 406.001. DEFINITION. In this chapter, "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. (V.T.I.C. Art. 1.33, Sec. 1.) |
|
Sec. 406.002. APPLICABILITY OF CHAPTER. This chapter |
|
applies to a person or organization engaged in the business of |
|
insurance without regard to whether the person or organization is |
|
listed in Section 406.001, unless another statute specifically |
|
cites this chapter and exempts the person or organization from this |
|
chapter. (V.T.I.C. Art. 1.33, Sec. 2.) |
|
Sec. 406.003. REQUIRED DEPOSIT: STANDARDS AND CRITERIA. |
|
The commissioner, in the commissioner's sole discretion, may |
|
require an insurer to make a deposit under this chapter 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 insurer's financial or operating condition, |
|
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. (V.T.I.C. Art. 1.33, Sec. 3.) |
|
Sec. 406.004. REQUIRED DEPOSIT: FORM OF SECURITY. A |
|
deposit required under Section 406.003 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, and 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. (V.T.I.C. Art. 1.33, Sec. 4.) |
|
Sec. 406.005. DURATION OF DEPOSIT. Subject to Section |
|
406.006, the comptroller shall hold a deposit required under this |
|
chapter until the commissioner issues a written order finding that |
|
the condition for which the deposit was required no longer exists. |
|
(V.T.I.C. Art. 1.33, Sec. 5.) |
|
Sec. 406.006. SUBSTITUTION OR WITHDRAWAL OF DEPOSIT. (a) |
|
An insurer may file a written application with the commissioner |
|
requesting: |
|
(1) withdrawal of all or part of the deposit held by |
|
the comptroller under this chapter; or |
|
(2) substitution of all or part of the deposited |
|
securities held by the comptroller under this chapter. |
|
(b) The application must state the basis for the request to |
|
withdraw the deposit or to substitute the deposited security. |
|
(c) An insurer's application for the substitution of a |
|
deposited security 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 chapter, 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. (V.T.I.C. Art. |
|
1.33, Sec. 6.) |
|
Sec. 406.007. APPEAL. An insurer may appeal an action of |
|
the commissioner under this chapter in accordance with Subchapter |
|
D, Chapter 36. (V.T.I.C. Art. 1.33, Sec. 7.) |
|
Sec. 406.008. CUMULATIVE OF OTHER DEPOSITS. A deposit |
|
required to be made under this chapter is in addition to any other |
|
deposit that the insurer is required or authorized to make under |
|
this code. (V.T.I.C. Art. 1.33, Sec. 8.) |
|
PART D. ADDITIONS AND CONFORMING AMENDMENTS TO TITLE 5, INSURANCE |
|
CODE |
|
SECTION 1D.001. CONFORMING AMENDMENT. Section 542.103(a), |
|
Insurance Code, is amended to read as follows: |
|
(a) An insurer shall provide the information requested |
|
under Section 542.101 or 542.102 [this subchapter] in writing not |
|
later than the 30th day after the date the insurer receives the |
|
request for the information. |
|
SECTION 1D.002. CONFORMING AMENDMENT. Section 542.104, |
|
Insurance Code, is amended to read as follows: |
|
Sec. 542.104. RULES. The commissioner may by rule |
|
prescribe forms for requesting information and for providing |
|
requested information under Section 542.101 or 542.102 [this
|
|
subchapter]. |
|
SECTION 1D.003. ADDITION. Subchapter C, Chapter 542, |
|
Insurance Code, is amended by adding Section 542.105 to read as |
|
follows: |
|
Sec. 542.105. REQUEST BY CERTAIN OFFICIALS ENGAGED IN |
|
CRIMINAL INVESTIGATION. (a) This section applies only to a claim |
|
for a burglary or robbery loss or a death claim seeking life |
|
insurance proceeds that is filed with an insurance company on or |
|
after September 1, 2001. |
|
(b) In the course of a criminal investigation and subject to |
|
Subsection (c), the state fire marshal, the fire marshal of a |
|
political subdivision of this state, the chief of a fire department |
|
in this state, a chief of police of a municipality in this state, or |
|
a sheriff in this state may request in writing that an insurance |
|
company investigating a claimed burglary or robbery loss or a death |
|
claim seeking life insurance proceeds release information in the |
|
company's possession that relates to that claimed loss. The |
|
company shall release the information to any official authorized to |
|
request the information under this subsection if the company has |
|
reason to believe that the insurance claim is false or fraudulent. |
|
(c) An official who requests information under this section |
|
may not request anything other than: |
|
(1) an insurance policy relevant to an insurance claim |
|
under investigation and the application for that policy; |
|
(2) policy premium payment records; |
|
(3) the history of the insured's previous claims; and |
|
(4) material relating to the investigation of the |
|
insurance claim, including: |
|
(A) statements of any person; |
|
(B) proof of loss; or |
|
(C) other relevant evidence. |
|
(d) This section does not authorize a public official or |
|
agency to adopt or require any form of periodic report by an |
|
insurance company. |
|
(e) In the absence of fraud or malice, an insurance company |
|
or a person who releases information on behalf of an insurance |
|
company is not liable for damages in a civil action or subject to |
|
criminal prosecution for an oral or written statement made, or any |
|
other action taken, that relates to the information required to be |
|
released under this section. |
|
(f) An official or department employee receiving |
|
information under this section shall maintain the confidentiality |
|
of the information until the information is required to be released |
|
during a criminal or civil proceeding. |
|
(g) An insurance company or the company's representative |
|
may not intentionally refuse to release to an official described by |
|
Subsection (b) the information required to be released to that |
|
official under this section. (V.T.I.C. Art. 21.49C.) |
|
SECTION 1D.004. ADDITION. Subtitle C, Title 5, Insurance |
|
Code, is amended by adding Chapter 560 to read as follows: |
|
CHAPTER 560. PROHIBITED RATES |
|
Sec. 560.001. DEFINITION OF INSURER. In this chapter, |
|
"insurer" means an insurance company, reciprocal or interinsurance |
|
exchange, mutual insurance company, farm mutual insurance company, |
|
capital stock insurance company, county mutual insurance company, |
|
Lloyd's plan, surplus lines insurer, or other legal entity engaged |
|
in the business of insurance in this state. The term includes: |
|
(1) an affiliate described by Section 823.003(a); |
|
(2) the Texas Windstorm Insurance Association |
|
established under Chapter 2210; |
|
(3) the FAIR Plan Association established under |
|
Chapter 2211; and |
|
(4) the Texas Automobile Insurance Plan Association |
|
established under Chapter 2151. (V.T.I.C. Art. 1.02, Sec. (a).) |
|
Sec. 560.002. USE OF CERTAIN RATES PROHIBITED; RATE |
|
REQUIREMENTS. (a) An insurer may not use a rate that violates this |
|
chapter. |
|
(b) A rate used under this code: |
|
(1) must be just, fair, reasonable, and adequate; and |
|
(2) may not be: |
|
(A) confiscatory; |
|
(B) excessive for the risks to which the rate |
|
applies; or |
|
(C) unfairly discriminatory. |
|
(c) For purposes of this section, a rate is: |
|
(1) inadequate if the rate is insufficient to sustain |
|
projected losses and expenses to which the rate applies, and |
|
continued use of the rate: |
|
(A) endangers the solvency of an insurer using |
|
the rate; or |
|
(B) has the effect of substantially lessening |
|
competition or creating a monopoly in any market; |
|
(2) excessive if the rate is likely to produce a |
|
long-term profit that is unreasonably high in relation to the |
|
insurance coverage provided; or |
|
(3) unfairly discriminatory if the rate: |
|
(A) is not based on sound actuarial principles; |
|
(B) does not bear a reasonable relationship to |
|
the expected loss and expense experience among risks; or |
|
(C) is based wholly or partly on the race, creed, |
|
color, ethnicity, or national origin of the policyholder or an |
|
insured. (V.T.I.C. Art. 1.02, Secs. (b), (c).) |
|
PART E. ADDITIONS TO TITLE 6, INSURANCE CODE |
|
SECTION 1E.001. ADDITION. Subtitle H, Title 6, Insurance |
|
Code, is amended by adding Chapter 963 to read as follows: |
|
CHAPTER 963. AUTOMOBILE CLUBS |
|
Sec. 963.001. DEFINITION. In this chapter, "automobile |
|
club" has the meaning assigned by Section 722.002, Transportation |
|
Code. (V.T.I.C. Art. 21.80, Sec. (a) (part).) |
|
Sec. 963.002. PROVISION OF CERTAIN INSURANCE SERVICES BY |
|
AUTOMOBILE CLUB. (a) An automobile club may provide insurance |
|
services only as provided by this chapter. |
|
(b) An automobile club may provide accidental injury and |
|
death benefit insurance coverage to a member through purchase of a |
|
group policy of insurance issued to the automobile club for the |
|
benefit of its members. The coverage must be purchased from an |
|
insurance company authorized to engage in the business of that type |
|
of coverage in this state. (V.T.I.C. Art. 21.80, Secs. (a) |
|
(part), (b) (part).) |
|
Sec. 963.003. CERTIFICATE OF PARTICIPATION. (a) The |
|
automobile club shall provide each member covered by insurance |
|
described by Section 963.002 a certificate of participation. |
|
(b) The certificate of participation must state on its face |
|
in at least 14-point black boldfaced type that the certificate is |
|
only a certificate of participation in a group accidental injury |
|
and death policy and is not automobile liability insurance |
|
coverage. (V.T.I.C. Art. 21.80, Sec. (b) (part).) |
|
Sec. 963.004. CERTAIN ACTIVITIES PROHIBITED. An automobile |
|
club may endorse insurance products and refer members to agents or |
|
insurers authorized to provide the insurance products in this |
|
state. The automobile club or an agent of the automobile club may |
|
not receive consideration for the referral. (V.T.I.C. Art. 21.80, |
|
Sec. (c).) |
|
Sec. 963.005. CERTAIN TRANSPORTATION-RELATED SERVICES. In |
|
addition to reimbursement services described by Section |
|
722.002(2), Transportation Code, an automobile club may contract |
|
with a member to: |
|
(1) reimburse the member for expenses the member |
|
incurs for towing, emergency road service, and lockout or lost key |
|
services; and |
|
(2) provide immediate destination assistance and trip |
|
interruption service. (V.T.I.C. Art. 21.80, Sec. (f) (part).) |
|
Sec. 963.006. APPLICABILITY OF INSURANCE LAWS. (a) Except |
|
as provided by Subsection (b), an automobile club performing |
|
services permitted by this chapter is not subject to regulation |
|
under the insurance laws of this state because of the performance of |
|
those services. |
|
(b) An automobile club may sell insurance products to a |
|
member for a consideration separate from the amount that the member |
|
pays for membership in the automobile club if the automobile club is |
|
properly licensed as an agent under the applicable provisions of |
|
this code. |
|
(c) The insurance laws of this state do not apply to |
|
reimbursement provided under Section 963.005. (V.T.I.C. Art. |
|
21.80, Secs. (d), (e), (f) (part).) |
|
PART F. ADDITIONS TO TITLE 7, INSURANCE CODE |
|
SECTION 1F.001. ADDITION. Subtitle A, Title 7, Insurance |
|
Code, is amended by adding Chapters 1112 and 1113 to read as |
|
follows: |
|
CHAPTER 1112. CERTAIN GUARANTEES IN LIFE INSURANCE POLICIES |
|
Sec. 1112.001. CERTAIN GUARANTEES NOT PROHIBITED. Section |
|
841.253 does not prohibit the issuance of a life insurance policy |
|
that guarantees, by coupons or otherwise, definite payments or |
|
reductions in premiums. (V.T.I.C. Art. 3.11 (part).) |
|
Sec. 1112.002. CERTAIN GUARANTEES CONSTITUTE DEFINITE |
|
CONTRACT BENEFIT; VALUATION OF BENEFIT. (a) Except as provided by |
|
Subsection (e), a guarantee described by Section 1112.001 that is |
|
in a policy or coupon issued after September 5, 1955, shall be |
|
treated as a definite contract benefit and valued according to this |
|
section and the reserve requirements of Chapter 425. |
|
(b) Except as provided by Subsection (c), for a policy or |
|
coupon issued before the date determined under Section 1105.002(a) |
|
or (b), as applicable to the company, a contract benefit described |
|
by Subsection (a) shall be valued using the reserve valuation net |
|
premium for the benefits that is a uniform percentage of the gross |
|
premiums. |
|
(c) A policy described by Subsection (b) that contains a |
|
contract benefit described by Subsection (a) may be valued on a |
|
basis that provides for not more than one year preliminary term |
|
insurance. |
|
(d) For a policy or coupon issued on or after the date |
|
determined under Section 1105.002(a) or (b), as applicable to the |
|
company, a contract benefit described by Subsection (a) shall be |
|
valued using the commissioners reserve valuation method described |
|
by Section 425.064. |
|
(e) A provision of this section relating to reserves does |
|
not apply to a policy issued before September 7, 1955. (V.T.I.C. |
|
Art. 3.11 (part).) |
|
CHAPTER 1113. MANAGEMENT, CONTROL, AND DISPOSITION OF CERTAIN LIFE |
|
INSURANCE AND ANNUITY CONTRACTS |
|
Sec. 1113.001. LIFE INSURANCE AND ANNUITY CONTRACTS OF |
|
SPOUSE. A spouse, without the joinder or consent of the other |
|
spouse, has management, control, and disposition of any contract of |
|
life insurance or annuity issued in the spouse's name or to the |
|
extent provided by the contract or any assignment of the contract, |
|
regardless of whether the contract was issued before, on, or after |
|
January 1, 1968. (V.T.I.C. Art. 3.49-3.) |
|
PART G. ADDITIONS TO TITLE 8, INSURANCE CODE |
|
SECTION 1G.001. ADDITION. Subtitle A, Title 8, Insurance |
|
Code, is amended by adding Chapter 1214 to read as follows: |
|
CHAPTER 1214. ADVERTISING FOR CERTAIN HEALTH BENEFITS |
|
Sec. 1214.001. APPLICABILITY OF CHAPTER. This chapter |
|
applies only to a health benefit plan that provides benefits for |
|
medical or surgical expenses incurred as a result of a health |
|
condition, accident, or sickness, including an individual, group, |
|
blanket, or franchise insurance policy or agreement, a group |
|
hospital service contract, or an individual or group evidence of |
|
coverage issued by: |
|
(1) an insurance company; |
|
(2) a group hospital service corporation operating |
|
under Chapter 842; |
|
(3) a health maintenance organization operating under |
|
Chapter 843; or |
|
(4) an approved nonprofit health corporation holding a |
|
certificate of authority under Chapter 844. (V.T.I.C. |
|
Art. 21.20-2, Sec. 1(a).) |
|
Sec. 1214.002. EXCEPTION. This chapter does not apply to: |
|
(1) a health benefit plan that provides coverage: |
|
(A) only for a specified disease; |
|
(B) only for accidental death or dismemberment; |
|
or |
|
(C) for wages or payments in lieu of wages for a |
|
period during which an employee is absent from work because of |
|
sickness or injury; or |
|
(2) a long-term care insurance policy, including a |
|
nursing home fixed indemnity policy, unless the commissioner |
|
determines that the policy provides benefits so comprehensive that |
|
the policy is a health benefit plan as described by Section |
|
1214.001. (V.T.I.C. Art. 21.20-2, Sec. 1(b).) |
|
Sec. 1214.003. RATE INFORMATION DISCLAIMERS. (a) Subject |
|
to Chapter 541 and Section 543.001, an advertisement for a health |
|
benefit plan may include rate information without including |
|
information about each benefit exclusion or limitation if the |
|
advertisement includes prominent disclaimers clearly indicating |
|
that: |
|
(1) the rates are illustrative; |
|
(2) a person should not send money to the health |
|
benefit plan issuer in response to the advertisement; |
|
(3) a person cannot obtain coverage under the plan |
|
until the person completes an application for coverage; and |
|
(4) benefit exclusions or limitations may apply to the |
|
plan. |
|
(b) An advertisement that states a rate must also indicate |
|
the age, gender, and geographic location on which the rate is based. |
|
(V.T.I.C. Art. 21.20-2, Sec. 2.) |
|
SECTION 1G.002. ADDITION. Subtitle H, Title 8, Insurance |
|
Code, is amended by adding Chapter 1550 to read as follows: |
|
CHAPTER 1550. CERTAIN REQUIREMENTS FOR INSURERS CONTRACTING |
|
WITH GOVERNMENTAL ENTITIES |
|
SUBCHAPTER A. REPORTING REQUIREMENTS |
|
Sec. 1550.001. DEFINITIONS. In this subchapter: |
|
(1) "Governmental entity" means: |
|
(A) a state agency; or |
|
(B) a county, municipality, school district, |
|
special purpose district, or other subdivision of state government |
|
that has jurisdiction limited to a geographic portion of the state. |
|
(2) "Insurer" means: |
|
(A) an insurance company; |
|
(B) a health maintenance organization operating |
|
under Chapter 843; or |
|
(C) an approved nonprofit health corporation |
|
that holds a certificate of authority issued under Chapter 844. |
|
(V.T.I.C. Art. 21.49-15, Sec. 1.) |
|
Sec. 1550.002. REPORT REQUIRED. (a) This section applies |
|
to a contract subject to competitive bidding under which an insurer |
|
delivers, issues for delivery, or renews a health insurance policy |
|
or contract or an evidence of coverage. |
|
(b) An insurer that enters into a contract described by |
|
Subsection (a) with a governmental entity shall provide to the |
|
governmental entity a detailed report that includes: |
|
(1) the claims experience of the governmental entity |
|
during the preceding calendar year; and |
|
(2) the dollar amount of each large claim, as defined |
|
by the governmental entity, paid by the insurer under the contract |
|
during the preceding calendar year. (V.T.I.C. Art. 21.49-15, Sec. |
|
2(a).) |
|
Sec. 1550.003. CLAIM INFORMATION. (a) An insurer |
|
providing claim information to a governmental entity in the report |
|
under Section 1550.002 shall provide the information in the |
|
aggregate, without information through which a specific individual |
|
covered by the health insurance or evidence of coverage may be |
|
identified. |
|
(b) Claim information provided by an insurer to a |
|
governmental entity in the report under Section 1550.002: |
|
(1) may be viewed or used only for contract bidding |
|
purposes; and |
|
(2) is confidential for purposes of Chapter 552, |
|
Government Code. (V.T.I.C. Art. 21.49-15, Sec. 2(b).) |
|
[Sections 1550.004-1550.050 reserved for expansion] |
|
SUBCHAPTER B. CERTAIN CONTRACTS |
|
WITH MUNICIPALITIES |
|
Sec. 1550.051. DEFINITION OF INSURER. In this subchapter, |
|
"insurer" means: |
|
(1) an insurance company, including a company |
|
providing stop-loss or excess loss insurance; |
|
(2) a health maintenance organization operating under |
|
Chapter 843; |
|
(3) an approved nonprofit health corporation that |
|
holds a certificate of authority issued under Chapter 844; or |
|
(4) a third-party administrator that holds a |
|
certificate of authority under Chapter 4151. (V.T.I.C. Art. |
|
21.49-16, Sec. 1(1).) |
|
Sec. 1550.052. BID REQUIREMENTS. (a) Except as provided by |
|
Section 1550.054, an insurer that bids on a contract subject to the |
|
competitive bidding and competitive proposal requirements adopted |
|
under Section 252.021, Local Government Code, may not submit a bid |
|
for a contract to provide stop-loss or other insurance coverage |
|
that is subject to any qualification imposed by the insurer that |
|
permits the insurer to modify or limit the terms of insurance |
|
coverage to be provided after the contract has been made. |
|
(b) An insurer's bid submitted under Section 252.021, Local |
|
Government Code, must contain the insurer's entire offer. |
|
(V.T.I.C. Art. 21.49-16, Sec. 2(a).) |
|
Sec. 1550.053. CERTAIN EXCLUSIONS AND INCREASED |
|
DEDUCTIBLES PROHIBITED. Except as provided by Section 1550.054, an |
|
insurer that provides stop-loss or other insurance coverage for |
|
health benefits under a contract subject to this subchapter may |
|
not, based on an individual's prior medical history: |
|
(1) exclude from coverage an individual who is |
|
otherwise eligible for the health benefits coverage; or |
|
(2) assign a higher deductible to the individual. |
|
(V.T.I.C. Art. 21.49-16, Sec. 2(b).) |
|
Sec. 1550.054. EXCEPTION FOR WRITTEN WAIVER. By executing |
|
a written waiver in favor of the insurer, a municipality as defined |
|
by Section 1.005, Local Government Code, may waive a requirement of |
|
Section 1550.052 or 1550.053(2). (V.T.I.C. Art. 21.49-16, Secs. |
|
1(2), 2(c).) |
|
SECTION 1G.003. ADDITION. Subchapter C, Chapter 1579, |
|
Insurance Code, is amended by adding Sections 1579.106, 1579.107, |
|
and 1579.108 to read as follows: |
|
Sec. 1579.106. PRIOR AUTHORIZATION FOR CERTAIN DRUGS. (a) |
|
In this section, "drug formulary" means a list of drugs preferred |
|
for use and eligible for coverage by a health coverage plan. |
|
(b) A health coverage plan provided under this chapter that |
|
uses a drug formulary in providing a prescription drug benefit must |
|
require prior authorization for coverage of the following |
|
categories of prescribed drugs if the specific drug prescribed is |
|
not included in the formulary: |
|
(1) a gastrointestinal drug; |
|
(2) a cholesterol-lowering drug; |
|
(3) an anti-inflammatory drug; |
|
(4) an antihistamine drug; and |
|
(5) an antidepressant drug. |
|
(c) Every six months the trustee shall submit to the |
|
comptroller and the Legislative Budget Board a report regarding any |
|
cost savings achieved in the program through implementation of the |
|
prior authorization requirement of this section. The report must |
|
cover the previous six-month period. (V.T.I.C. Art. 3.50-7A, as |
|
added Acts 78th Leg., R.S., Ch. 213.) |
|
Sec. 1579.107. DISEASE MANAGEMENT SERVICES. (a) In this |
|
section, "disease management services" means services to assist an |
|
individual manage a disease or other chronic health condition, such |
|
as heart disease, diabetes, respiratory illness, end-stage renal |
|
disease, HIV infection, or AIDS, and with respect to which the |
|
trustee identifies populations requiring disease management. |
|
(b) A health coverage plan provided under this chapter must |
|
provide disease management services or coverage for disease |
|
management services in the manner required by the trustee, |
|
including: |
|
(1) patient self-management education; |
|
(2) provider education; |
|
(3) evidence-based models and minimum standards of |
|
care; |
|
(4) standardized protocols and participation |
|
criteria; and |
|
(5) physician-directed or physician-supervised care. |
|
(V.T.I.C. Art. 3.50-7B.) |
|
Sec. 1579.108. LIMITATIONS. The trustee may not contract |
|
for or provide a health coverage plan that excludes from |
|
participation in the network a general hospital that: |
|
(1) is located in the geographical service area or |
|
areas of the health coverage plan that includes a county that: |
|
(A) has a population of at least 100,000 and not |
|
more than 175,000; and |
|
(B) is located in the Texas-Louisiana border |
|
region, as that term is defined in Section 2056.002(e), Government |
|
Code; and |
|
(2) agrees to provide medical and health care services |
|
under the plan subject to the same terms as other hospital providers |
|
under the plan. (V.T.I.C. Art. 3.50-7A, Sec. (b), as added Acts |
|
78th Leg., R.S., Ch. 201.) |
|
PART H. ADDITIONS TO TITLE 10, INSURANCE CODE |
|
SECTION 1H.001. ADDITION. Subtitle C, Title 10, Insurance |
|
Code, is amended by adding Chapter 1953 to read as follows: |
|
CHAPTER 1953. RATE REGULATION AND RATEMAKING FOR AUTOMOBILE |
|
INSURANCE |
|
SUBCHAPTER A. RATE REGULATION |
|
Sec. 1953.001. EXCLUSION OF CERTAIN TYPES OR CLASSES OF |
|
INSURANCE FROM CERTAIN REGULATIONS. (a) This section applies only |
|
to insurance against liability for damages arising out of the |
|
ownership, operation, maintenance, or use of a motor vehicle |
|
described by Article 5.01 or against loss of or damage to a motor |
|
vehicle described by Article 5.01 that, in the judgment of the |
|
commissioner, is a type or class of insurance that is also the |
|
subject of or is more properly regulated under other insurance |
|
rating laws that cover that type or class of insurance. |
|
(b) A type or class of insurance to which this section |
|
applies is excluded from regulation under this chapter and: |
|
(1) Articles 5.01, 5.01B, 5.03, 5.04, 5.04-1, 5.06, |
|
5.10, and 5.11; |
|
(2) Chapters 251 and 254; |
|
(3) Subchapters A and B, Chapter 1806; and |
|
(4) Chapters 1951 and 1952. |
|
(c) If the commissioner finds that a type or class of |
|
insurance to which this section applies is also the subject of or is |
|
more properly regulated under other insurance rating laws that |
|
cover that type or class of insurance, the commissioner shall issue |
|
an order declaring which other insurance rating laws apply to: |
|
(1) the type or class of insurance; and |
|
(2) any motor vehicle equipment described by Article |
|
5.01. (V.T.I.C. Art. 5.02.) |
|
[Sections 1953.002-1953.050 reserved for expansion] |
|
SUBCHAPTER B. RATEMAKING |
|
Sec. 1953.051. CERTAIN RATING PLANS PROHIBITED. A rating |
|
plan regarding the writing of automobile insurance, other than |
|
insurance written under Chapter 2151, may not: |
|
(1) assign a rate consequence to a charge or |
|
conviction for a violation of Subtitle C, Title 7, Transportation |
|
Code; or |
|
(2) otherwise cause premiums for automobile insurance |
|
to be increased because of a charge or conviction described by |
|
Subdivision (1). (V.T.I.C. Art. 5.01-1.) |
|
Sec. 1953.052. PREMIUM SURCHARGE REQUIRED. (a) An insurer |
|
described by Section 1952.001 shall assess a premium surcharge in |
|
an amount prescribed by the department against an insured for no |
|
more than three years immediately following the date the insured is |
|
convicted of: |
|
(1) an offense relating to the operating of a motor |
|
vehicle while intoxicated in violation of Section 49.04 or 49.07, |
|
Penal Code; or |
|
(2) an offense under Section 49.08, Penal Code. |
|
(b) An insurer may apply the premium surcharge described by |
|
Subsection (a) only to a private passenger automobile policy, as |
|
defined by the department. |
|
(c) If an insured assessed a premium surcharge under |
|
Subsection (a) is convicted of an offense under one of the statutes |
|
listed in Subsection (a)(1) or (2) during the period the insured is |
|
assessed the premium surcharge, the period for which the premium |
|
surcharge is assessed is increased by three additional consecutive |
|
years for each conviction. (V.T.I.C. Art. 5.03-1.) |
|
[Sections 1953.053-1953.100 reserved for expansion] |
|
SUBCHAPTER C. LOSS AND EXPENSE EXPERIENCE |
|
Sec. 1953.101. RECORDING AND REPORTING OF LOSS AND EXPENSE |
|
EXPERIENCE AND OTHER DATA. (a) The commissioner shall adopt |
|
reasonable rules and statistical plans for the recording and |
|
reporting of loss experience and other required data by insurers. |
|
The rules and plans must ensure that each insurer's total loss and |
|
expense experience is made available at least as frequently as |
|
annually in the form and with the detail necessary to aid in |
|
determining whether rates and rating systems in use under the |
|
following provisions comply with the standards adopted under those |
|
provisions: |
|
(1) this chapter; |
|
(2) Articles 5.01, 5.03, and 5.04, if applicable; |
|
(3) Subchapters A and B, Chapter 1806; and |
|
(4) Chapters 1951 and 1952. |
|
(b) In adopting the rules, the commissioner shall adopt |
|
rules that are as uniform as is practicable to the rules and forms |
|
of statistical plans used in other states. |
|
(c) Each insurer shall use the statistical plans adopted |
|
under this section to record and report loss experience and other |
|
required data in accordance with the rules adopted by the |
|
commissioner. |
|
(d) The commissioner may modify statistical plans adopted |
|
under this section. (V.T.I.C. Art. 5.05, Sec. (a).) |
|
Sec. 1953.102. RULES ALLOWING INTERCHANGE OF LOSS |
|
EXPERIENCE INFORMATION. The commissioner may adopt reasonable |
|
rules to allow the interchange of loss experience information as |
|
necessary for the application of rating plans. (V.T.I.C. Art. |
|
5.05, Sec. (b).) |
|
Sec. 1953.103. EXCHANGE OF INFORMATION AND EXPERIENCE DATA |
|
WITH OTHER STATES. To further the uniform administration of rating |
|
laws, the department or an insurer may: |
|
(1) exchange information and experience data with |
|
insurance supervisory officials, insurers, and rating |
|
organizations in other states; and |
|
(2) consult and cooperate with the individuals or |
|
entities described by Subdivision (1) with respect to ratemaking |
|
and the application of rating systems. (V.T.I.C. Art. 5.05, Sec. |
|
(c).) |
|
Sec. 1953.104. SWORN STATEMENTS. (a) The department may |
|
require a sworn statement from an insurer affected by this |
|
subchapter that shows: |
|
(1) the insurer's experience on any classification or |
|
classifications of risks; and |
|
(2) other information that is necessary or helpful in |
|
performing duties or exercising authority imposed by law. |
|
(b) The department shall prescribe the necessary forms for |
|
statements and reports required under Subsection (a) with due |
|
regard for the rules, methods, and forms in use in other states for |
|
similar purposes so that uniformity of statistics is not disturbed. |
|
(V.T.I.C. Art. 5.05, Sec. (d).) |
|
SECTION 1H.002. ADDITION. Subtitle D, Title 10, Insurance |
|
Code, is amended by adding Chapter 2008 to read as follows: |
|
CHAPTER 2008. COVERAGE FOR CERTAIN DAMAGE |
|
TO PROPERTY BUILT WHOLLY OR PARTIALLY OVER WATER |
|
Sec. 2008.001. APPLICABILITY OF CHAPTER. This chapter |
|
applies only to an insurer described by Section 2251.003(a). |
|
(V.T.I.C. Art. 5.14, Sec. (a).) |
|
Sec. 2008.002. COVERAGE; LIMITS AND DEDUCTIBLES. (a) An |
|
insurance policy written by an insurer against loss or damage by |
|
windstorm, hurricane, or hail may include coverage for: |
|
(1) a building or other structure that is built wholly |
|
or partially over water; and |
|
(2) the corporeal movable property contained in a |
|
building or structure described by Subdivision (1). |
|
(b) An insurer that writes coverage described by Subsection |
|
(a) may impose appropriate limits of coverage and deductibles for |
|
the coverage. (V.T.I.C. Art. 5.14, Secs. (b), (c).) |
|
PART I. ADDITIONS TO TITLE 13, INSURANCE CODE |
|
SECTION 1I.001. ADDITION. Subtitle A, Title 13, Insurance |
|
Code, is amended by adding Chapter 4007 to read as follows: |
|
CHAPTER 4007. NOTICE TO DEPARTMENT BY CERTAIN PROPERTY AND |
|
CASUALTY INSURANCE COMPANIES REGARDING AGENTS |
|
Sec. 4007.001. APPLICABILITY OF CHAPTER. This chapter |
|
applies only to an insurance company authorized to engage in the |
|
business of insurance in this state under: |
|
(1) a provision of: |
|
(A) Chapter 5, 1805, or 2171; or |
|
(B) Subtitle B, C, D, E, F, H, or I, Title 10; or |
|
(2) Chapter 861, 862, 883, 911, 912, 941, 942, 984, or |
|
3503. (V.T.I.C. Art. 21.70, Sec. (a) (part).) |
|
Sec. 4007.002. NOTICE TO DEPARTMENT REQUIRED. (a) On forms |
|
prescribed by the commissioner, an insurance company shall notify |
|
the department not later than the 30th day after the date on which: |
|
(1) balances due from an insurance agent for more than |
|
90 days exceed $1 million or 10 percent of the company's |
|
policyholder surplus computed on December 31 of the preceding year |
|
or the most recent quarter if a report is specifically required by |
|
the department; |
|
(2) an agent's authority to settle claims for the |
|
company is withdrawn; or |
|
(3) the contract with an agent is canceled or |
|
terminated. |
|
(b) An insurance company may comply with the notification |
|
requirement of Subsection (a)(1) by submitting a single annual |
|
report if: |
|
(1) the company routinely operates above the limit |
|
established by Subsection (a)(1); and |
|
(2) the commissioner verifies that fact under a |
|
procedure adopted by the commissioner. (V.T.I.C. Art. 21.70, Secs. |
|
(a) (part), (b).) |
|
PART J. ADDITION OF TITLE 20, INSURANCE CODE |
|
SECTION 1J.001. TITLE 20. The Insurance Code is amended by |
|
adding Title 20 to read as follows: |
|
TITLE 20. REGULATION OF OTHER OCCUPATIONS |
|
CHAPTER 6001. FIRE EXTINGUISHER SERVICE AND INSTALLATION |
|
SUBCHAPTER A. GENERAL PROVISIONS |
|
Sec. 6001.001. PURPOSE |
|
Sec. 6001.002. DEFINITIONS |
|
[Sections 6001.003-6001.050 reserved for expansion] |
|
SUBCHAPTER B. POWERS AND DUTIES OF COMMISSIONER, |
|
DEPARTMENT, AND STATE FIRE MARSHAL |
|
Sec. 6001.051. ADMINISTRATION OF CHAPTER |
|
Sec. 6001.052. ADOPTION OF RULES |
|
Sec. 6001.053. RULES RESTRICTING ADVERTISING OR |
|
COMPETITIVE BIDDING |
|
Sec. 6001.054. GENERAL POWERS AND DUTIES OF DEPARTMENT |
|
Sec. 6001.055. FEES |
|
Sec. 6001.056. DEPOSIT IN OPERATING ACCOUNT |
|
[Sections 6001.057-6001.100 reserved for expansion] |
|
SUBCHAPTER C. FIRE EXTINGUISHER ADVISORY COUNCIL |
|
Sec. 6001.101. ADVISORY COUNCIL; APPOINTMENT |
|
Sec. 6001.102. ADVISORY COUNCIL DUTIES |
|
[Sections 6001.103-6001.150 reserved for expansion] |
|
SUBCHAPTER D. REGISTRATION, LICENSE, AND PERMIT REQUIREMENTS |
|
Sec. 6001.151. FIRM REGISTRATION CERTIFICATE REQUIRED |
|
Sec. 6001.152. BRANCH OFFICE REGISTRATION CERTIFICATE |
|
REQUIRED |
|
Sec. 6001.153. HYDROSTATIC TESTING; REGISTRATION |
|
CERTIFICATE REQUIRED |
|
Sec. 6001.154. REQUIRED INSURANCE COVERAGE FOR |
|
REGISTRATION CERTIFICATE |
|
Sec. 6001.155. EMPLOYEE LICENSE REQUIRED |
|
Sec. 6001.156. ACTIVITIES NOT REGULATED BY CHAPTER |
|
Sec. 6001.157. LICENSE EXAMINATION |
|
Sec. 6001.158. EXAMINATION RESULTS |
|
Sec. 6001.159. CONTINUING EDUCATION REQUIREMENTS |
|
Sec. 6001.160. RECIPROCAL LICENSE |
|
Sec. 6001.161. APPRENTICE PERMIT REQUIRED |
|
Sec. 6001.162. NOT TRANSFERABLE |
|
[Sections 6001.163-6001.200 reserved for expansion] |
|
SUBCHAPTER E. RENEWAL OF REGISTRATION, LICENSE, OR PERMIT |
|
Sec. 6001.201. RENEWAL REQUIRED; FEE |
|
Sec. 6001.202. NOTICE OF EXPIRATION |
|
Sec. 6001.203. RENEWAL PROCEDURES |
|
[Sections 6001.204-6001.250 reserved for expansion] |
|
SUBCHAPTER F. PROHIBITED PRACTICES |
|
AND DISCIPLINARY PROCEDURES |
|
Sec. 6001.251. PROHIBITED PRACTICES |
|
Sec. 6001.252. DISCIPLINARY ACTIONS |
|
Sec. 6001.253. DISCIPLINARY HEARING |
|
Sec. 6001.254. REAPPLICATION REQUIREMENTS |
|
Sec. 6001.255. REEXAMINATION AFTER REVOCATION |
|
[Sections 6001.256-6001.300 reserved for expansion] |
|
SUBCHAPTER G. CRIMINAL PENALTY |
|
Sec. 6001.301. CRIMINAL PENALTY |
|
CHAPTER 6001. FIRE EXTINGUISHER SERVICE AND INSTALLATION |
|
SUBCHAPTER A. GENERAL PROVISIONS |
|
Sec. 6001.001. PURPOSE. The purpose of this chapter is to |
|
safeguard lives and property by: |
|
(1) regulating: |
|
(A) the leasing, selling, installing, and |
|
servicing of portable fire extinguishers; and |
|
(B) the planning, certifying, installing, and |
|
servicing of fixed fire extinguisher systems; and |
|
(2) prohibiting portable fire extinguishers, fixed |
|
fire extinguisher systems, or extinguisher equipment that is not |
|
labeled or listed by a testing laboratory approved by the |
|
department. (V.T.I.C. Art. 5.43-1, Sec. 1.) |
|
Sec. 6001.002. DEFINITIONS. In this chapter: |
|
(1) "Firm" means an individual, partnership, |
|
corporation, or association. |
|
(2) "Fixed fire extinguisher system" means an assembly |
|
of piping, conduits, or containers that convey liquid, powder, or |
|
gases to dispersal openings or devices protecting one or more |
|
hazards by suppressing or extinguishing fires. |
|
(3) "Hydrostatic testing" means pressure testing by |
|
hydrostatic methods. |
|
(4) "Insurance agent" means: |
|
(A) an individual, firm, or corporation licensed |
|
under: |
|
(i) Subchapter E, Chapter 981; or |
|
(ii) Subchapter A, B, C, D, E, or G, Chapter |
|
4051; or |
|
(B) an individual authorized to represent an |
|
insurance fund or pool created by a municipality, county, or other |
|
political subdivision of this state under Chapter 791, Government |
|
Code. |
|
(5) "Portable fire extinguisher" means any device that |
|
contains liquid, powder, or gases for suppressing or extinguishing |
|
fires. |
|
(6) "Registered firm" means a firm that holds a |
|
registration certificate. |
|
(7) "Service" and "servicing" mean servicing a |
|
portable fire extinguisher or a fixed fire extinguisher system by |
|
inspecting, charging, filling, maintaining, recharging, refilling, |
|
repairing, or testing. (V.T.I.C. Art. 5.43-1, Sec. 3.) |
|
[Sections 6001.003-6001.050 reserved for expansion] |
|
SUBCHAPTER B. POWERS AND DUTIES OF COMMISSIONER, |
|
DEPARTMENT, AND STATE FIRE MARSHAL |
|
Sec. 6001.051. ADMINISTRATION OF CHAPTER. (a) The |
|
department shall administer this chapter. |
|
(b) The commissioner may issue rules the commissioner |
|
considers necessary to administer this chapter through the state |
|
fire marshal. (V.T.I.C. Art. 5.43-1, Sec. 2 (part).) |
|
Sec. 6001.052. ADOPTION OF RULES. (a) In adopting |
|
necessary rules, the commissioner may use recognized standards, |
|
including standards: |
|
(1) published by the National Fire Protection |
|
Association; |
|
(2) recognized by federal law or regulation; |
|
(3) published by any nationally recognized |
|
standards-making organization; or |
|
(4) contained in the manufacturer's installation |
|
manuals. |
|
(b) The commissioner shall adopt and administer rules |
|
determined essentially necessary for the protection and |
|
preservation of life and property regarding: |
|
(1) registration of firms engaged in the business of: |
|
(A) installing or servicing portable fire |
|
extinguishers or planning, certifying, installing, or servicing |
|
fixed fire extinguisher systems; or |
|
(B) hydrostatic testing of fire extinguisher |
|
cylinders; |
|
(2) the examination and licensing of individuals to: |
|
(A) install or service portable fire |
|
extinguishers; and |
|
(B) plan, certify, install, or service fixed fire |
|
extinguisher systems; and |
|
(3) requirements for: |
|
(A) installing or servicing portable fire |
|
extinguishers; and |
|
(B) planning, certifying, installing, or |
|
servicing fixed fire extinguisher systems. |
|
(c) The commissioner by rule shall prescribe requirements |
|
for applications and qualifications for licenses, permits, and |
|
certificates issued under this chapter. (V.T.I.C. Art. 5.43-1, |
|
Secs. 2 (part), 7(a), 8 (part).) |
|
Sec. 6001.053. RULES RESTRICTING ADVERTISING OR |
|
COMPETITIVE BIDDING. (a) The commissioner may not adopt rules |
|
restricting advertising or competitive bidding by the holder of a |
|
license, permit, certificate, or approval issued under this chapter |
|
except to prohibit false, misleading, or deceptive practices. |
|
(b) In the commissioner's rules to prohibit false, |
|
misleading, or deceptive practices, the commissioner may not |
|
include a rule that: |
|
(1) restricts the use of any medium for advertising; |
|
(2) restricts the use of a license, permit, |
|
certificate, or approval holder's personal appearance or voice in |
|
an advertisement; |
|
(3) relates to the size or duration of an |
|
advertisement by the license, permit, certificate, or approval |
|
holder; or |
|
(4) restricts the license, permit, certificate, or |
|
approval holder's advertisement under a trade name. (V.T.I.C. Art. |
|
5.43-1, Sec. 8A.) |
|
Sec. 6001.054. GENERAL POWERS AND DUTIES OF DEPARTMENT. |
|
(a) The department shall evaluate the qualifications of a firm: |
|
(1) applying for a registration certificate to engage |
|
in the business of installing or servicing portable fire |
|
extinguishers or planning, certifying, installing, or servicing |
|
fixed fire extinguisher systems; or |
|
(2) seeking approval as a testing laboratory. |
|
(b) The department shall issue: |
|
(1) registration certificates for firms that qualify |
|
under commissioner rules to engage in the business of installing or |
|
servicing portable fire extinguishers or planning, certifying, |
|
installing, or servicing fixed fire extinguisher systems; and |
|
(2) licenses, apprentice permits, and authorizations |
|
to perform hydrostatic testing to firms or individuals that |
|
qualify. (V.T.I.C. Art. 5.43-1, Sec. 8 (part).) |
|
Sec. 6001.055. FEES. (a) The commissioner shall set the |
|
fee for: |
|
(1) an initial firm registration certificate in an |
|
amount not to exceed $450; |
|
(2) the renewal of a firm registration certificate in |
|
an amount not to exceed $300 annually; |
|
(3) an initial branch office registration certificate |
|
in an amount not to exceed $100; |
|
(4) the renewal of a branch office registration |
|
certificate in an amount not to exceed $100 annually; |
|
(5) an initial registration certificate to perform |
|
hydrostatic testing of fire extinguishers manufactured in |
|
accordance with the specifications and procedures of the United |
|
States Department of Transportation in an amount not to exceed |
|
$250; |
|
(6) the renewal of a registration certificate to |
|
perform hydrostatic testing of fire extinguishers manufactured in |
|
accordance with the specifications and procedures of the United |
|
States Department of Transportation in an amount not to exceed $150 |
|
annually; |
|
(7) an initial employee license fee in an amount not to |
|
exceed $70; |
|
(8) the annual renewal of an employee license in an |
|
amount not to exceed $50; and |
|
(9) an apprentice permit in an amount not to exceed |
|
$30. |
|
(b) Unless the examination or reexamination for an employee |
|
license is administered by a testing service, the commissioner |
|
shall set a nonrefundable fee for: |
|
(1) the initial examination in an amount not to exceed |
|
$30; and |
|
(2) each reexamination in an amount not to exceed $20. |
|
(c) The commissioner shall set a fee in an amount not to |
|
exceed $20 for: |
|
(1) a duplicate registration certificate, license, or |
|
apprentice permit issued under this chapter; or |
|
(2) any request requiring changes to a registration |
|
certificate, license, or permit. |
|
(d) On a change of ownership of a registered firm, the |
|
department shall issue a new registration certificate with a new |
|
number for a fee set by the commissioner in an amount not to exceed |
|
$450. On a change of ownership of a branch office, the commissioner |
|
shall charge a fee in an amount not to exceed $100. (V.T.I.C. Art. |
|
5.43-1, Secs. 4(a) (part), (b), (c-1), (d) (part), (e) (part), |
|
(f).) |
|
Sec. 6001.056. DEPOSIT IN OPERATING ACCOUNT. All money |
|
collected under this chapter, other than penalties and monetary |
|
forfeitures, shall be paid to the department and deposited in the |
|
state treasury to the credit of the Texas Department of Insurance |
|
operating account for use in administering this chapter. (V.T.I.C. |
|
Art. 5.43-1, Sec. 11.) |
|
[Sections 6001.057-6001.100 reserved for expansion] |
|
SUBCHAPTER C. FIRE EXTINGUISHER ADVISORY COUNCIL |
|
Sec. 6001.101. ADVISORY COUNCIL; APPOINTMENT. (a) The |
|
commissioner may delegate the exercise of all or part of the |
|
commissioner's functions, powers, and duties under this chapter, |
|
other than the issuance of licenses, certificates, and permits, to |
|
a fire extinguisher advisory council. |
|
(b) The commissioner shall appoint the members of the |
|
advisory council. The members of the council must: |
|
(1) be experienced and knowledgeable in one or more of |
|
the following: |
|
(A) fire services; |
|
(B) fire extinguisher manufacturing; |
|
(C) fire insurance inspection or underwriting; |
|
or |
|
(D) fire extinguisher servicing; or |
|
(2) be members of a fire protection association or |
|
industrial safety association. (V.T.I.C. Art. 5.43-1, Secs. 9(a) |
|
(part), (b).) |
|
Sec. 6001.102. ADVISORY COUNCIL DUTIES. (a) The fire |
|
extinguisher advisory council shall assist in the formulation and |
|
review of rules adopted under this chapter. |
|
(b) The advisory council shall periodically: |
|
(1) review rules implementing this chapter; and |
|
(2) recommend rule changes to the commissioner. |
|
(V.T.I.C. Art. 5.43-1, Sec. 9(a) (part).) |
|
[Sections 6001.103-6001.150 reserved for expansion] |
|
SUBCHAPTER D. REGISTRATION, LICENSE, AND PERMIT REQUIREMENTS |
|
Sec. 6001.151. FIRM REGISTRATION CERTIFICATE REQUIRED. |
|
Unless the firm holds a registration certificate issued by the |
|
department, a firm may not engage in the business of: |
|
(1) installing or servicing portable fire |
|
extinguishers; or |
|
(2) planning, certifying, installing, or servicing |
|
fixed fire extinguisher systems. (V.T.I.C. Art. 5.43-1, Sec. 4(a) |
|
(part).) |
|
Sec. 6001.152. BRANCH OFFICE REGISTRATION CERTIFICATE |
|
REQUIRED. (a) Each separate office location of a firm holding a |
|
registration certificate, other than the location identified on the |
|
firm's certificate, must have a branch office registration |
|
certificate issued by the department. |
|
(b) Before issuing a branch office registration |
|
certificate, the department must determine that the branch office |
|
location is part of a registered firm. (V.T.I.C. Art. 5.43-1, Sec. |
|
4(a) (part).) |
|
Sec. 6001.153. HYDROSTATIC TESTING; REGISTRATION |
|
CERTIFICATE REQUIRED. (a) A firm may not perform hydrostatic |
|
testing of fire extinguishers manufactured in accordance with the |
|
specifications and procedures of the United States Department of |
|
Transportation unless the firm: |
|
(1) complies with the procedures specified by that |
|
department for compressed gas cylinders; and |
|
(2) holds a registration certificate issued by the |
|
state fire marshal authorizing hydrostatic testing. |
|
(b) The license of an individual qualified to do work |
|
described by Subsection (a) must indicate the authority of the |
|
individual to perform that work. |
|
(c) Hydrostatic testing of fire extinguishers that is not |
|
performed under the specifications of the United States Department |
|
of Transportation must be performed in the manner recommended by |
|
the National Fire Protection Association. (V.T.I.C. Art. 5.43-1, |
|
Sec. 4(e) (part).) |
|
Sec. 6001.154. REQUIRED INSURANCE COVERAGE FOR |
|
REGISTRATION CERTIFICATE. (a) The department may not issue a |
|
registration certificate under this chapter unless the applicant |
|
files with the department evidence of a general liability insurance |
|
policy that includes products and completed operations coverage. |
|
The policy must be conditioned to pay on behalf of the insured those |
|
amounts that the insured becomes legally obligated to pay as |
|
damages because of bodily injury and property damage caused by an |
|
occurrence involving the insured or the insured's officer, agent, |
|
or employee in the conduct of any activity that requires a |
|
registration certificate or license under this chapter. |
|
(b) Unless the commissioner, after notice and an |
|
opportunity for a hearing, increases or decreases the limits, the |
|
limits of insurance coverage required by Subsection (a) must be at |
|
least: |
|
(1) $100,000 combined single limits for bodily injury |
|
and property damage for each occurrence; and |
|
(2) $300,000 aggregate for all occurrences for each |
|
policy year. |
|
(c) The evidence of insurance required by this section must |
|
be in the form of a certificate of insurance executed by an insurer |
|
authorized to engage in the business of insurance in this state and |
|
countersigned by an insurance agent licensed in this state. A |
|
certificate of insurance for surplus lines coverage procured in |
|
compliance with Chapter 981 through a surplus lines agent that is |
|
licensed under Subchapter E, Chapter 981, and resident in this |
|
state may be filed with the department as evidence of the coverage |
|
required by this section. |
|
(d) An insurance certificate executed and filed with the |
|
department under this section remains in force until the insurer |
|
has terminated future liability by the notice required by the |
|
department. |
|
(e) Failure to maintain the liability insurance required by |
|
this section constitutes grounds for the denial, suspension, or |
|
revocation, after notice and opportunity for hearing, of a |
|
registration certificate issued under this chapter. (V.T.I.C. Art. |
|
5.43-1, Secs. 4A, 8 (part).) |
|
Sec. 6001.155. EMPLOYEE LICENSE REQUIRED. (a) Except as |
|
provided by Section 6001.156, an individual, other than an |
|
apprentice, must hold a license issued by the department before: |
|
(1) installing or servicing portable fire |
|
extinguishers; |
|
(2) installing, servicing, or certifying |
|
preengineered fixed fire extinguisher systems; or |
|
(3) planning, supervising, servicing, or certifying |
|
the installation of fixed fire extinguisher systems other than |
|
preengineered systems. |
|
(b) An individual who holds a license to install or service |
|
portable fire extinguishers or install and service fixed fire |
|
extinguisher systems must be an employee or agent of a registered |
|
firm. (V.T.I.C. Art. 5.43-1, Secs. 4(c), 5(c).) |
|
Sec. 6001.156. ACTIVITIES NOT REGULATED BY CHAPTER. (a) |
|
The licensing provisions of this chapter do not apply to: |
|
(1) the filling or charging of a portable fire |
|
extinguisher by the manufacturer before initial sale of the fire |
|
extinguisher; |
|
(2) the servicing by a firm of the firm's portable fire |
|
extinguishers or fixed systems by the firm's personnel who are |
|
specially trained for that servicing; |
|
(3) the installation of portable fire extinguishers in |
|
a building by the building owner, the owner's managing agent, or an |
|
employee of the building owner or the owner's managing agent; |
|
(4) the installation or servicing of water sprinkler |
|
systems installed in compliance with the National Fire Protection |
|
Association's Standards for the Installation of Sprinkler Systems; |
|
(5) a firm that is engaged in the retail or wholesale |
|
sale of portable fire extinguishers that carry an approval label or |
|
listing of a testing laboratory approved by the department, but |
|
that is not engaged in the installation or servicing of those |
|
extinguishers; |
|
(6) a fire department that services portable fire |
|
extinguishers as a public service without charge, if the members of |
|
the fire department are trained in the proper servicing of the fire |
|
extinguishers; |
|
(7) a firm that is a party to a contract under which: |
|
(A) the installation of portable fire |
|
extinguishers or a fixed fire extinguisher system is performed |
|
under the direct supervision of and certified by a firm |
|
appropriately registered to install and certify portable |
|
extinguishers or fixed systems; and |
|
(B) the registered firm assumes full |
|
responsibility for the installation; or |
|
(8) an engineer licensed under Chapter 1001, |
|
Occupations Code, while acting solely in the engineer's |
|
professional capacity. |
|
(b) Except as provided by Subsection (a), only the holder of |
|
a license or an apprentice permit issued under this chapter may: |
|
(1) install or service portable fire extinguishers; or |
|
(2) install and maintain fixed fire extinguisher |
|
systems. (V.T.I.C. Art. 5.43-1, Secs. 5(b), 6.) |
|
Sec. 6001.157. LICENSE EXAMINATION. (a) The state fire |
|
marshal shall: |
|
(1) establish the scope and type of an examination |
|
required by this chapter; and |
|
(2) examine each applicant for a license under this |
|
chapter. |
|
(b) The state fire marshal may administer the examination or |
|
may enter into an agreement with a testing service. |
|
(c) If a testing service is used, the state fire marshal may |
|
contract with the testing service regarding requirements for the |
|
examination, including: |
|
(1) examination development; |
|
(2) scheduling; |
|
(3) site arrangements; |
|
(4) grading; |
|
(5) reporting; |
|
(6) analysis; or |
|
(7) other administrative duties. |
|
(d) The state fire marshal may require the testing service |
|
to: |
|
(1) correspond directly with a license applicant |
|
regarding the administration of the examination; |
|
(2) collect a reasonable fee from an applicant for |
|
administering the examination; or |
|
(3) administer the examination at a specific location |
|
or time. |
|
(e) The state fire marshal shall adopt rules as necessary to |
|
implement examination requirements under this chapter. (V.T.I.C. |
|
Art. 5.43-1, Secs. 7(e), (f), (j), 8 (part).) |
|
Sec. 6001.158. EXAMINATION RESULTS. (a) Not later than |
|
the 30th day after the date on which a licensing examination is |
|
administered under this chapter, the state fire marshal shall send |
|
notice to each examinee of the results of the examination. |
|
(b) If an examination is conducted, graded, or reviewed by a |
|
testing service, the state fire marshal shall send notice to the |
|
examinees of the results of the examination not later than the 14th |
|
day after the date on which the state fire marshal receives the |
|
results from the testing service. |
|
(c) If the notice of the examination results will be delayed |
|
for more than 90 days after the examination date, the state fire |
|
marshal, before the 90th day, shall send notice to the examinee of |
|
the reason for the delay. |
|
(d) The state fire marshal may require a testing service to |
|
notify an examinee of the results of the examinee's examination |
|
under Subsections (a) and (b). |
|
(e) If requested in writing by an individual who fails the |
|
licensing examination administered under this chapter, the state |
|
fire marshal shall send to the individual an analysis of the |
|
individual's performance on the examination. (V.T.I.C. Art. |
|
5.43-1, Secs. 7(g), (g-1).) |
|
Sec. 6001.159. CONTINUING EDUCATION REQUIREMENTS. (a) The |
|
commissioner may adopt procedures for certifying and may certify |
|
continuing education programs for individuals licensed under this |
|
chapter. |
|
(b) Participation in the continuing education programs is |
|
voluntary. (V.T.I.C. Art. 5.43-1, Sec. 7(h).) |
|
Sec. 6001.160. RECIPROCAL LICENSE. The department may waive |
|
any license requirement for an applicant who holds a license issued |
|
by another state that has license requirements substantially |
|
equivalent to the license requirements of this state. (V.T.I.C. |
|
Art. 5.43-1, Sec. 7(i).) |
|
Sec. 6001.161. APPRENTICE PERMIT REQUIRED. (a) An |
|
individual may not install or service portable fire extinguishers |
|
or fixed fire extinguisher systems as an apprentice unless the |
|
individual holds an apprentice permit issued by the department. |
|
(b) An apprentice may perform a service described by |
|
Subsection (a) only under the direct supervision of an individual |
|
who holds a license issued under this chapter and who works for the |
|
same firm as the apprentice. (V.T.I.C. Art. 5.43-1, Secs. 4(d) |
|
(part), 5(b) (part).) |
|
Sec. 6001.162. NOT TRANSFERABLE. A registration |
|
certificate, license, or permit issued under this chapter is not |
|
transferable. (V.T.I.C. Art. 5.43-1, Sec. 5(d).) |
|
[Sections 6001.163-6001.200 reserved for expansion] |
|
SUBCHAPTER E. RENEWAL OF REGISTRATION, LICENSE, OR PERMIT |
|
Sec. 6001.201. RENEWAL REQUIRED; FEE. (a) A renewal of a |
|
registration certificate or license issued under this chapter is |
|
valid for a period of two years. The license or registration fee |
|
for each year of the two-year period is payable on renewal. |
|
(b) An apprentice permit expires on the first anniversary of |
|
the date of issuance. |
|
(c) The commissioner by rule may adopt a system under which |
|
registration certificates, licenses, and permits expire on various |
|
dates during the year. For the year in which an expiration date of a |
|
registration certificate, license, or permit is less than one year |
|
from its issuance or anniversary date, the fee shall be prorated on |
|
a monthly basis so that each holder of a registration certificate, |
|
license, or permit pays only that portion of the renewal fee that is |
|
allocable to the number of months during which the registration |
|
certificate, license, or permit is valid. On each subsequent |
|
renewal, the total renewal fee is payable. (V.T.I.C. Art. 5.43-1, |
|
Secs. 4(d) (part), 7A(a), (c).) |
|
Sec. 6001.202. NOTICE OF EXPIRATION. At least 30 days |
|
before the expiration date of a registration certificate or |
|
license, the state fire marshal shall send written notice of the |
|
impending expiration to the holder of the registration certificate |
|
or license at the holder's last known address. (V.T.I.C. Art. |
|
5.43-1, Sec. 7A(b) (part).) |
|
Sec. 6001.203. RENEWAL PROCEDURES. (a) The holder of an |
|
unexpired registration certificate or license may renew the |
|
certificate or license by paying the required renewal fee to the |
|
department before the expiration date of the certificate or |
|
license. |
|
(b) A firm or individual whose registration certificate or |
|
license has been expired for 90 days or less may renew the |
|
certificate or license by paying to the department: |
|
(1) the required renewal fee; and |
|
(2) a fee equal to one-half of the initial fee for the |
|
certificate or license. |
|
(c) A firm or individual whose registration certificate or |
|
license has been expired for more than 90 days but less than two |
|
years may renew the certificate or license by paying to the |
|
department: |
|
(1) all unpaid renewal fees; and |
|
(2) a fee that is equal to the initial fee for the |
|
certificate or license. |
|
(d) A firm or individual whose registration certificate or |
|
license has been expired for two years or longer may not renew the |
|
certificate or license. The firm or individual may obtain a new |
|
registration certificate or license by complying with the |
|
requirements and procedures for obtaining an initial registration |
|
certificate or license. |
|
(e) This section may not be construed to prevent the |
|
department from denying or refusing to renew a license under |
|
applicable law or commissioner rules. (V.T.I.C. Art. 5.43-1, Sec. |
|
7A(b) (part).) |
|
[Sections 6001.204-6001.250 reserved for expansion] |
|
SUBCHAPTER F. PROHIBITED PRACTICES |
|
AND DISCIPLINARY PROCEDURES |
|
Sec. 6001.251. PROHIBITED PRACTICES. (a) An individual or |
|
firm may not: |
|
(1) engage in the business of installing or servicing |
|
portable fire extinguishers without holding a registration |
|
certificate; |
|
(2) engage in the business of planning, certifying, |
|
installing, or servicing fixed fire extinguisher systems without |
|
holding a registration certificate; |
|
(3) install, service, or certify the servicing of |
|
portable fire extinguishers or plan, certify, service, or install |
|
fixed fire extinguisher systems without holding a license; |
|
(4) perform hydrostatic testing of fire extinguisher |
|
cylinders manufactured in accordance with the specifications and |
|
requirements of the United States Department of Transportation |
|
without holding a hydrostatic testing registration certificate; |
|
(5) obtain or attempt to obtain a registration |
|
certificate or license by fraudulent representation; |
|
(6) install or service portable fire extinguishers or |
|
plan, certify, service, or install fixed fire extinguisher systems |
|
in violation of this chapter or the rules adopted and administered |
|
under this chapter; |
|
(7) except as provided by Subsection (b), install, |
|
service, or hydrostatically test a fire extinguisher that does not |
|
have the proper identifying labels; |
|
(8) sell, install, service, or recharge a carbon |
|
tetrachloride fire extinguisher; or |
|
(9) except as provided by Subsection (b), lease, sell, |
|
service, or install a portable fire extinguisher, a fixed fire |
|
extinguisher system, or extinguisher equipment unless it carries an |
|
approval label or listing label issued by a testing laboratory |
|
approved by the department. |
|
(b) The commissioner by rule shall permit an individual or |
|
firm to service a portable fire extinguisher regardless of whether |
|
the extinguisher carries a label described by Subsection (a). |
|
(V.T.I.C. Art. 5.43-1, Secs. 5(a), (e), 10.) |
|
Sec. 6001.252. DISCIPLINARY ACTIONS. (a) The state fire |
|
marshal may suspend, revoke, or refuse to issue or renew a |
|
registration certificate, license, or permit if, after notice and |
|
hearing, the state fire marshal finds that the applicant, |
|
registrant, license holder, or permit holder has engaged in acts |
|
that: |
|
(1) violate this chapter; |
|
(2) violate rules or standards adopted under this |
|
chapter; or |
|
(3) constitute misrepresentation made in connection |
|
with: |
|
(A) the sale of products; or |
|
(B) services rendered. |
|
(b) Subject to Section 6001.253, the commissioner may |
|
suspend, revoke, or refuse to issue or renew a certificate, |
|
license, permit, or approval. (V.T.I.C. Art. 5.43-1, Secs. 7(b), |
|
12(a).) |
|
Sec. 6001.253. DISCIPLINARY HEARING. (a) If the state fire |
|
marshal proposes to suspend, revoke, or refuse to renew a license, |
|
permit, certificate, or approval issued under this chapter, the |
|
holder of the license, permit, certificate, or approval is entitled |
|
to a hearing conducted by the State Office of Administrative |
|
Hearings. |
|
(b) Proceedings for a disciplinary action are governed by |
|
Chapter 2001, Government Code. |
|
(c) Rules of practice adopted by the commissioner |
|
applicable to the proceedings for a disciplinary action may not |
|
conflict with rules adopted by the State Office of Administrative |
|
Hearings. (V.T.I.C. Art. 5.43-1, Sec. 13.) |
|
Sec. 6001.254. REAPPLICATION REQUIREMENTS. (a) An |
|
applicant or holder of a registration certificate, license, or |
|
permit whose certificate, license, or permit has been refused or |
|
revoked under this chapter, other than for failure to pass a |
|
required written examination, may not file another application for |
|
a registration certificate, license, or permit before the first |
|
anniversary of the effective date of the refusal or revocation. |
|
(b) After the first anniversary of the effective date of the |
|
refusal or revocation, the applicant may: |
|
(1) reapply; and |
|
(2) in a public hearing, show good cause why the |
|
issuance of the registration certificate, license, or permit is not |
|
against the public safety and welfare. (V.T.I.C. Art. 5.43-1, Sec. |
|
7(c).) |
|
Sec. 6001.255. REEXAMINATION AFTER REVOCATION. An |
|
individual whose license to service portable fire extinguishers or |
|
to install or service fixed fire extinguisher systems has been |
|
revoked must retake and pass the required written examination |
|
before a new license may be issued. (V.T.I.C. Art. 5.43-1, Sec. |
|
7(d).) |
|
[Sections 6001.256-6001.300 reserved for expansion] |
|
SUBCHAPTER G. CRIMINAL PENALTY |
|
Sec. 6001.301. CRIMINAL PENALTY. (a) A person commits an |
|
offense if the person knowingly violates Section 6001.251(a). |
|
(b) An offense under this section is a Class B misdemeanor. |
|
(c) Venue for an offense under this section is in Travis |
|
County or the county in which the offense is committed. (V.T.I.C. |
|
Art. 5.43-1, Secs. 12(b), (c); New.) |
|
CHAPTER 6002. FIRE DETECTION AND ALARM DEVICE INSTALLATION |
|
SUBCHAPTER A. GENERAL PROVISIONS |
|
Sec. 6002.001. PURPOSE |
|
Sec. 6002.002. DEFINITIONS |
|
Sec. 6002.003. EFFECT ON LOCAL REGULATION |
|
Sec. 6002.004. PROVISION OF CERTAIN SERVICES BY |
|
POLITICAL SUBDIVISION |
|
[Sections 6002.005-6002.050 reserved for expansion] |
|
SUBCHAPTER B. POWERS AND DUTIES OF COMMISSIONER, DEPARTMENT, |
|
AND STATE FIRE MARSHAL |
|
Sec. 6002.051. ADMINISTRATION OF CHAPTER; RULES |
|
Sec. 6002.052. ADOPTION OF RULES; STANDARDS |
|
Sec. 6002.053. RULES RESTRICTING ADVERTISING OR |
|
COMPETITIVE BIDDING |
|
Sec. 6002.054. FEES |
|
Sec. 6002.055. DEPOSIT IN OPERATING ACCOUNT |
|
[Sections 6002.056-6002.100 reserved for expansion] |
|
SUBCHAPTER C. FIRE DETECTION AND ALARM DEVICES ADVISORY COUNCIL |
|
Sec. 6002.101. ADVISORY COUNCIL; APPOINTMENT |
|
Sec. 6002.102. ADVISORY COUNCIL DUTIES |
|
[Sections 6002.103-6002.150 reserved for expansion] |
|
SUBCHAPTER D. REGISTRATION, LICENSE, AND APPROVAL REQUIREMENTS |
|
Sec. 6002.151. FIRM REGISTRATION CERTIFICATE REQUIRED; |
|
LIMITED CERTIFICATE |
|
Sec. 6002.152. BRANCH OFFICE REGISTRATION CERTIFICATE |
|
REQUIRED |
|
Sec. 6002.153. REQUIRED INSURANCE COVERAGE FOR |
|
REGISTRATION CERTIFICATE |
|
Sec. 6002.154. FIRE ALARM TECHNICIAN, RESIDENTIAL FIRE |
|
ALARM SUPERINTENDENT, AND FIRE ALARM |
|
PLANNING SUPERINTENDENT |
|
Sec. 6002.155. ACTIVITIES NOT REGULATED BY CHAPTER |
|
Sec. 6002.156. LICENSE EXAMINATION |
|
Sec. 6002.157. EXAMINATION RESULTS |
|
Sec. 6002.158. TRAINING SCHOOLS AND INSTRUCTORS; |
|
APPROVAL |
|
Sec. 6002.159. CONTINUING EDUCATION PROGRAMS |
|
Sec. 6002.160. RECIPROCAL LICENSE |
|
Sec. 6002.161. NOT TRANSFERABLE |
|
[Sections 6002.162-6002.200 reserved for expansion] |
|
SUBCHAPTER E. RENEWAL OF REGISTRATION CERTIFICATE OR LICENSE |
|
Sec. 6002.201. RENEWAL REQUIRED; FEE |
|
Sec. 6002.202. NOTICE OF EXPIRATION |
|
Sec. 6002.203. RENEWAL PROCEDURES |
|
Sec. 6002.204. RENEWAL OF CERTAIN LICENSES |
|
[Sections 6002.205-6002.250 reserved for expansion] |
|
SUBCHAPTER F. SELLING OR LEASING OF FIRE ALARM |
|
OR FIRE DETECTION DEVICES |
|
Sec. 6002.251. REQUIRED LABEL; EXCEPTIONS |
|
Sec. 6002.252. REQUIRED PURCHASE AND INSTALLATION |
|
INFORMATION |
|
Sec. 6002.253. TRAINING AND SUPERVISION OF CERTAIN |
|
EXEMPT EMPLOYEES |
|
[Sections 6002.254-6002.300 reserved for expansion] |
|
SUBCHAPTER G. PROHIBITED PRACTICES AND DISCIPLINARY PROCEDURES |
|
Sec. 6002.301. PROHIBITED PRACTICES |
|
Sec. 6002.302. DISCIPLINARY ACTIONS |
|
Sec. 6002.303. DISCIPLINARY HEARING |
|
Sec. 6002.304. REAPPLICATION REQUIREMENTS |
|
[Sections 6002.305-6002.350 reserved for expansion] |
|
SUBCHAPTER H. CRIMINAL PENALTY |
|
Sec. 6002.351. CRIMINAL PENALTY |
|
CHAPTER 6002. FIRE DETECTION AND ALARM DEVICE INSTALLATION |
|
SUBCHAPTER A. GENERAL PROVISIONS |
|
Sec. 6002.001. PURPOSE. The purpose of this chapter is to |
|
safeguard lives and property by: |
|
(1) regulating the planning, certifying, leasing, |
|
selling, servicing, installing, monitoring, and maintaining of |
|
fire detection and fire alarm devices and systems; and |
|
(2) except as provided by rules adopted under Section |
|
6002.051 or 6002.052, prohibiting fire detection and fire alarm |
|
devices, equipment, and systems not labeled or listed by a |
|
nationally recognized testing laboratory. (V.T.I.C. Art. 5.43-2, |
|
Sec. 1.) |
|
Sec. 6002.002. DEFINITIONS. Except as otherwise provided |
|
by this chapter, in this chapter: |
|
(1) "Fire alarm device" means any device capable, |
|
through audible or visible means, of warning that fire or |
|
combustion has occurred or is occurring. |
|
(2) "Fire alarm planning superintendent" means a |
|
licensed individual designated by a registered firm to: |
|
(A) plan a fire alarm or detection system that |
|
conforms to applicable adopted National Fire Protection |
|
Association standards or other adopted standards; and |
|
(B) certify that each fire alarm or detection |
|
system as planned meets the standards as provided by law. |
|
(3) "Fire alarm technician" means a licensed |
|
individual designated by a registered firm to: |
|
(A) inspect and certify that each fire alarm or |
|
detection system as installed meets the standards provided by law; |
|
or |
|
(B) perform or directly supervise the servicing |
|
or maintaining of a previously installed fire alarm device or |
|
system and certify that service or maintenance. |
|
(4) "Fire detection device" means any arrangement of |
|
materials, the sole function of which is to indicate the existence |
|
of fire, smoke, or combustion in its incipient stages. |
|
(5) "Individual" means a natural person, including an |
|
owner, manager, officer, employee, occupant, or other individual. |
|
(6) "Installation" means: |
|
(A) the initial placement of equipment; or |
|
(B) the extension, modification, or alteration |
|
of equipment already in place. |
|
(7) "Insurance agent" means: |
|
(A) an individual, firm, or corporation licensed |
|
under: |
|
(i) Subchapter E, Chapter 981; or |
|
(ii) Subchapter A, B, C, D, E, or G, Chapter |
|
4051; or |
|
(B) an individual authorized to represent an |
|
insurance fund or pool created by a municipality, county, or other |
|
political subdivision of this state under Chapter 791, Government |
|
Code. |
|
(8) "Maintenance" means the maintenance of a fire |
|
alarm device or a fire detection device in a condition of repair |
|
that provides performance as originally designed or intended. |
|
(9) "Monitoring" means the receipt of fire alarm and |
|
supervisory signals and the retransmission or communication of |
|
those signals to a fire service communications center in this state |
|
or serving property in this state. |
|
(10) "Organization" means a corporation, a government |
|
or a governmental subdivision or agency, a business trust, an |
|
estate, a trust, a partnership, a firm or association, two or more |
|
individuals with a joint or common interest, or any other legal or |
|
commercial entity. |
|
(11) "Registered firm" means an individual or |
|
organization that holds a registration certificate. |
|
(12) "Residential fire alarm superintendent" means a |
|
licensed individual designated by a registered firm to: |
|
(A) plan a residential single-family or |
|
two-family fire alarm or detection system that conforms to |
|
applicable adopted National Fire Protection Association standards |
|
or other adopted standards; and |
|
(B) certify that each fire alarm or detection |
|
system as planned meets the standards as provided by law. |
|
(13) "Sale" means the sale or offer for sale, lease, or |
|
rent of any merchandise, equipment, or service at wholesale or |
|
retail, to the public or any individual, for an agreed sum of money |
|
or other consideration. |
|
(14) "Service" or "servicing" means inspection, |
|
maintenance, repair, or testing of a fire alarm device or a fire |
|
detection device. (V.T.I.C. Art. 5.43-2, Secs. 2(1), (2), (5), |
|
(6), (7), (8), (9), (10), (11), (12) (part), (13) (part), (14), |
|
(15), (16) (part).) |
|
Sec. 6002.003. EFFECT ON LOCAL REGULATION. (a) This |
|
chapter and the rules adopted under this chapter have uniform force |
|
and effect throughout this state. A municipality or county may not |
|
enact an ordinance or rule inconsistent with this chapter or rules |
|
adopted under this chapter. An inconsistent ordinance or rule is |
|
void and has no effect. |
|
(b) Notwithstanding Subsection (a), a municipality or |
|
county may: |
|
(1) mandate that a fire alarm or detection system be |
|
installed in certain facilities, if the installation conforms to |
|
applicable state law; |
|
(2) require a better type of alarm or detection system |
|
or otherwise safer condition than the minimum required by state |
|
law; and |
|
(3) require regular inspections by local officials of |
|
smoke detectors in dwelling units, as that term is defined by |
|
Section 92.251, Property Code, and require the smoke detectors to |
|
be operational at the time of inspection. |
|
(c) A municipality, county, or other political subdivision |
|
of this state may not require, as a condition of engaging in |
|
business or performing any activity authorized under this chapter, |
|
that a registered firm, a license holder, or an employee of a |
|
license holder: |
|
(1) obtain a registration, franchise, or license from |
|
the political subdivision; |
|
(2) pay any fee or franchise tax to the political |
|
subdivision; or |
|
(3) post a bond. |
|
(d) Notwithstanding any other provision of this section or |
|
Section 6002.155, a municipality or county may require a registered |
|
firm to obtain a permit and pay a permit fee for the installation of |
|
a fire alarm or fire detection device or system and require that the |
|
installation of such a system be in conformance with the building |
|
code or other construction requirements of the municipality or |
|
county and state law. |
|
(e) Notwithstanding Subsection (d), a municipality or |
|
county may not impose qualification or financial responsibility |
|
requirements other than proof of a registration certificate. |
|
(V.T.I.C. Art. 5.43-2, Secs. 3(a), (c).) |
|
Sec. 6002.004. PROVISION OF CERTAIN SERVICES BY POLITICAL |
|
SUBDIVISION. (a) In this section, "monitoring" means the receipt |
|
of fire alarm or supervisory signals or retransmission or |
|
communication of those signals to a fire service communications |
|
center that is located in this state or serves property in this |
|
state. |
|
(b) Except as provided by Subsection (c), a political |
|
subdivision may not offer residential alarm system sales, service, |
|
installation, or monitoring unless the political subdivision has |
|
been providing monitoring services to residences within the |
|
boundaries of the political subdivision as of September 1, 1999. |
|
Any fee charged by the political subdivision under this subsection |
|
may not exceed the cost of the monitoring. |
|
(c) A political subdivision may: |
|
(1) offer service, installation, or monitoring for |
|
property owned by the political subdivision or another political |
|
subdivision; |
|
(2) allow for the response to an alarm or detection |
|
device by: |
|
(A) a law enforcement agency or fire department; |
|
or |
|
(B) a law enforcement officer or firefighter |
|
acting in an official capacity; or |
|
(3) offer monitoring to a financial institution, as |
|
defined by Section 59.301, Finance Code, that requests, in writing, |
|
that the political subdivision provide monitoring service to the |
|
financial institution. |
|
(d) Subsection (b) does not apply to a political |
|
subdivision: |
|
(1) in a county with a population of less than 80,000; |
|
or |
|
(2) in which monitoring is not otherwise provided or |
|
available. |
|
(e) This section is not intended to require a political |
|
subdivision to hold a license under this chapter. (V.T.I.C. Art. |
|
5.43-2, Secs. 7(b), (c), (d), (e).) |
|
[Sections 6002.005-6002.050 reserved for expansion] |
|
SUBCHAPTER B. POWERS AND DUTIES OF COMMISSIONER, DEPARTMENT, |
|
AND STATE FIRE MARSHAL |
|
Sec. 6002.051. ADMINISTRATION OF CHAPTER; RULES. (a) The |
|
department shall administer this chapter. |
|
(b) The commissioner may adopt rules as necessary to |
|
administer this chapter, including rules the commissioner |
|
considers necessary to administer this chapter through the state |
|
fire marshal. (V.T.I.C. Art. 5.43-2, Secs. 4 (part), 6(a) (part).) |
|
Sec. 6002.052. ADOPTION OF RULES; STANDARDS. (a) In |
|
adopting necessary rules, the commissioner may use: |
|
(1) recognized standards, such as, but not limited to: |
|
(A) standards of the National Fire Protection |
|
Association; |
|
(B) standards recognized by federal law or |
|
regulation; or |
|
(C) standards published by a nationally |
|
recognized standards-making organization; |
|
(2) the National Electrical Code; or |
|
(3) information provided by individual manufacturers. |
|
(b) Under rules adopted under Section 6002.051, the |
|
department may create specialized licenses or registration |
|
certificates for an organization or individual engaged in the |
|
business of planning, certifying, leasing, selling, servicing, |
|
installing, monitoring, or maintaining fire alarm or fire detection |
|
devices or systems. The rules must establish appropriate training |
|
and qualification standards for each kind of license and |
|
certificate. |
|
(c) The commissioner shall also adopt standards applicable |
|
to fire alarm devices, equipment, or systems regulated under this |
|
chapter. In adopting standards under this subsection, the |
|
commissioner may allow the operation of a fire alarm monitoring |
|
station that relies on fire alarm devices or equipment approved or |
|
listed by a nationally recognized testing laboratory without regard |
|
to whether the monitoring station is approved or listed by a |
|
nationally recognized testing laboratory if the operator of the |
|
station demonstrates that the station operating standards are |
|
substantially equivalent to those required to be approved or |
|
listed. (V.T.I.C. Art. 5.43-2, Secs. 4 (part), 6(a) (part), (b).) |
|
Sec. 6002.053. RULES RESTRICTING ADVERTISING OR |
|
COMPETITIVE BIDDING. (a) The commissioner may not adopt rules |
|
restricting advertising or competitive bidding by the holder of a |
|
license or registration certificate issued under this chapter |
|
except to prohibit false, misleading, or deceptive practices. |
|
(b) In the commissioner's rules to prohibit false, |
|
misleading, or deceptive practices, the commissioner may not |
|
include a rule that: |
|
(1) restricts the use of any medium for advertising; |
|
(2) restricts the use of a license or registration |
|
certificate holder's personal appearance or voice in an |
|
advertisement; |
|
(3) relates to the size or duration of an |
|
advertisement by the license or registration certificate holder; or |
|
(4) restricts the license or registration certificate |
|
holder's advertisement under a trade name. (V.T.I.C. Art. 5.43-2, |
|
Sec. 6A.) |
|
Sec. 6002.054. FEES. (a) The commissioner shall set the |
|
fee for: |
|
(1) an initial registration certificate in an amount |
|
not to exceed $500; |
|
(2) the renewal of a registration certificate for each |
|
year in an amount not to exceed $500; |
|
(3) the renewal of a registration certificate for an |
|
individual or organization engaged in the business of planning, |
|
certifying, leasing, selling, servicing, installing, monitoring, |
|
or maintaining exclusively single station devices in an amount not |
|
to exceed $250 annually; |
|
(4) an initial branch office registration certificate |
|
in an amount not to exceed $150; |
|
(5) the renewal of a branch office registration |
|
certificate for each year in an amount not to exceed $150; |
|
(6) an initial or renewal training school approval in |
|
an amount not to exceed $500 annually; |
|
(7) an initial or renewal of a training school |
|
instructor approval in an amount not to exceed $50 annually; |
|
(8) an initial license in an amount not to exceed $120; |
|
and |
|
(9) the renewal of a license for each year in an amount |
|
not to exceed $100. |
|
(b) Unless the examination or reexamination for a license is |
|
administered by a testing service, the commissioner shall set a |
|
nonrefundable fee for: |
|
(1) the initial examination in an amount not to exceed |
|
$30; and |
|
(2) each reexamination in an amount not to exceed $20. |
|
(c) The commissioner shall set a fee in an amount not to |
|
exceed $20 for: |
|
(1) a duplicate registration certificate or license |
|
issued under this chapter; and |
|
(2) any request requiring changes to a registration |
|
certificate or license. (V.T.I.C. Art. 5.43-2, Secs. 5(a) (part), |
|
(b) (part), (c) (part), (d), (i), 5D(b) (part), (c) (part).) |
|
Sec. 6002.055. DEPOSIT IN OPERATING ACCOUNT. The fees |
|
collected under this chapter shall be deposited in the state |
|
treasury to the credit of the Texas Department of Insurance |
|
operating account. (V.T.I.C. Art. 5.43-2, Sec. 8.) |
|
[Sections 6002.056-6002.100 reserved for expansion] |
|
SUBCHAPTER C. FIRE DETECTION AND ALARM DEVICES ADVISORY COUNCIL |
|
Sec. 6002.101. ADVISORY COUNCIL; APPOINTMENT. The |
|
commissioner shall appoint an advisory council consisting of seven |
|
individuals as follows: |
|
(1) three individuals who are employed by a registered |
|
firm in the fire protection industry and who have at least three |
|
years' experience in the sale, installation, maintenance, or |
|
manufacture of fire alarm or fire detection devices; |
|
(2) two individuals who: |
|
(A) are experienced in the engineering of fire |
|
prevention services; or |
|
(B) are members of a fire protection association; |
|
(3) one individual who is an experienced fire |
|
prevention officer employed by a municipality or county; and |
|
(4) one individual who: |
|
(A) is employed by a registered firm; and |
|
(B) has at least three years' experience in the |
|
operation of a central fire alarm monitoring station. (V.T.I.C. |
|
Art. 5.43-2, Sec. 6(d).) |
|
Sec. 6002.102. ADVISORY COUNCIL DUTIES. The advisory |
|
council shall periodically: |
|
(1) review rules implementing this chapter; and |
|
(2) recommend rule changes to the commissioner. |
|
(V.T.I.C. Art. 5.43-2, Sec. 6(c).) |
|
[Sections 6002.103-6002.150 reserved for expansion] |
|
SUBCHAPTER D. REGISTRATION, LICENSE, AND APPROVAL REQUIREMENTS |
|
Sec. 6002.151. FIRM REGISTRATION CERTIFICATE REQUIRED; |
|
LIMITED CERTIFICATE. (a) An individual or organization may not |
|
engage in the business of planning, certifying, leasing, selling, |
|
installing, servicing, monitoring, or maintaining fire alarm or |
|
fire detection devices or systems unless the individual or |
|
organization holds a registration certificate issued by the |
|
department. |
|
(b) The department may issue a limited registration |
|
certificate to an individual or organization whose business is |
|
restricted to monitoring. |
|
(c) Applications for registration certificates and |
|
qualifications for those certificates are subject to rules adopted |
|
by the commissioner. (V.T.I.C. Art. 5.43-2, Secs. 5(a) (part), |
|
7(a) (part), 10(a) (part).) |
|
Sec. 6002.152. BRANCH OFFICE REGISTRATION CERTIFICATE |
|
REQUIRED. (a) Except as provided by Subsection (c), each separate |
|
office location of a registered firm, other than the location |
|
identified on the firm's registration certificate, must have a |
|
branch office registration certificate issued by the department. |
|
(b) Before issuing a branch office registration |
|
certificate, the department must determine that the branch office |
|
location is part of a registered firm. |
|
(c) A registered firm that is engaged in the business of |
|
planning, certifying, leasing, selling, servicing, installing, |
|
monitoring, or maintaining exclusively single station devices is |
|
not required to apply for or obtain a branch office registration |
|
certificate for a separate office or location of the firm. |
|
(V.T.I.C. Art. 5.43-2, Sec. 5(b) (part).) |
|
Sec. 6002.153. REQUIRED INSURANCE COVERAGE FOR |
|
REGISTRATION CERTIFICATE. (a) The department may not issue a |
|
registration certificate under this chapter unless the applicant |
|
files with the department evidence of a general liability insurance |
|
policy that includes products and completed operations coverage. |
|
The policy must be conditioned to pay on behalf of the insured those |
|
amounts that the insured becomes legally obligated to pay as |
|
damages because of bodily injury and property damage caused by an |
|
occurrence involving the insured or the insured's officer, agent, |
|
or employee in the conduct of any business that requires a |
|
registration certificate or license under this chapter. |
|
(b) Unless the commissioner increases or decreases the |
|
limits under rules adopted under Section 6002.051(b), the limits of |
|
insurance coverage required by Subsection (a) must be at least: |
|
(1) $100,000 combined single limits for bodily injury |
|
and property damage for each occurrence; and |
|
(2) $300,000 aggregate for all occurrences for each |
|
policy year. |
|
(c) The evidence of insurance required by this section must |
|
be in the form of a certificate of insurance executed by an insurer |
|
authorized to engage in the business of insurance in this state and |
|
countersigned by an insurance agent licensed in this state. A |
|
certificate of insurance for surplus lines coverage procured in |
|
compliance with Chapter 981 through a surplus lines agent that is |
|
licensed under Subchapter E, Chapter 981, and resident in this |
|
state may be filed with the department as evidence of the coverage |
|
required by this section. |
|
(d) An insurance certificate executed and filed with the |
|
department under this section remains in force until the insurer |
|
has terminated future liability by the notice required by the |
|
department. |
|
(e) Failure to maintain the liability insurance required by |
|
this section constitutes grounds for the denial, suspension, or |
|
revocation, after notice and opportunity for hearing, of a |
|
registration certificate issued under this chapter. |
|
(f) For an individual or organization licensed to install or |
|
service burglar alarms under Chapter 1702, Occupations Code, |
|
compliance with the insurance requirements of that chapter |
|
constitutes compliance with the insurance requirements of this |
|
section if the insurance held by the individual or organization |
|
complies with the requirements of this section in amounts and types |
|
of coverage. |
|
(g) This section does not affect the rights of the insured |
|
to negotiate or contract for limitations of liability with a third |
|
party, including a customer of the insured. (V.T.I.C. Art. 5.43-2, |
|
Secs. 5B(a), (b), (c), (d), (e), (g).) |
|
Sec. 6002.154. FIRE ALARM TECHNICIAN, RESIDENTIAL FIRE |
|
ALARM SUPERINTENDENT, AND FIRE ALARM PLANNING SUPERINTENDENT. (a) |
|
Each registered firm, including a firm engaged in the business of |
|
planning, certifying, leasing, selling, servicing, installing, |
|
monitoring, or maintaining exclusively single station devices, |
|
must employ at least one employee who is a fire alarm technician, |
|
residential fire alarm superintendent, or fire alarm planning |
|
superintendent. |
|
(b) A fire alarm technician, residential fire alarm |
|
superintendent, or fire alarm planning superintendent must hold a |
|
license issued by the department, conditioned on the successful |
|
completion of a written license examination. |
|
(c) To engage in the activity for which the license is |
|
granted, an individual licensed under this chapter must be an |
|
employee or agent of an individual or entity that holds a |
|
registration certificate. |
|
(d) A fire alarm technician may perform or supervise |
|
monitoring. A fire alarm planning superintendent may act as a fire |
|
alarm technician or a residential fire alarm superintendent. A |
|
residential fire alarm superintendent may act as a fire alarm |
|
technician. |
|
(e) Applications for licenses and qualifications for those |
|
licenses are subject to rules adopted by the commissioner. |
|
(V.T.I.C. Art. 5.43-2, Secs. 2(12) (part), (13) (part), (16) |
|
(part), 5(a) (part), (c) (part), (f), 5D(a) (part), 10(a) (part).) |
|
Sec. 6002.155. ACTIVITIES NOT REGULATED BY CHAPTER. The |
|
licensing provisions of this chapter do not apply to: |
|
(1) an individual or organization in the business of |
|
building construction that installs electrical wiring and devices |
|
that may include, in part, the installation of a fire alarm or |
|
detection system if: |
|
(A) the individual or organization is a party to |
|
a contract that provides that: |
|
(i) the installation will be performed |
|
under the direct supervision of and certified by a licensed |
|
employee or agent of a firm registered to install and certify such |
|
an alarm or detection device; and |
|
(ii) the registered firm assumes full |
|
responsibility for the installation of the alarm or detection |
|
device; and |
|
(B) the individual or organization does not plan, |
|
certify, lease, sell, service, or maintain fire alarms or detection |
|
devices or systems; |
|
(2) an individual or organization that: |
|
(A) owns and installs a fire detection or fire |
|
alarm device on the individual's or organization's own property; or |
|
(B) if the individual or organization does not |
|
charge for the device or its installation, installs the device for |
|
the protection of the individual's or organization's personal |
|
property located on another's property and does not install the |
|
device as a normal business practice on the property of another; |
|
(3) an individual who holds a license or other |
|
authority issued by a municipality to practice as an electrician |
|
and who installs fire or smoke detection and alarm devices only in a |
|
single family or multifamily residence if: |
|
(A) the devices installed are: |
|
(i) single station detectors; or |
|
(ii) multiple station detectors capable of |
|
being connected in a manner that actuation of one detector causes |
|
all integral or separate alarms to operate if the detectors are not |
|
connected to a control panel or to an outside alarm, do not transmit |
|
a signal off the premises, and do not use more than 120 volts; and |
|
(B) all installations comply with the adopted |
|
edition of Household Fire Warning Equipment, National Fire |
|
Protection Association Standard No. 74; |
|
(4) an individual or organization that: |
|
(A) sells fire detection or fire alarm devices |
|
exclusively over-the-counter or by mail order; and |
|
(B) does not plan, certify, install, service, or |
|
maintain the devices; |
|
(5) a law enforcement agency or fire department or a |
|
law enforcement officer or firefighter acting in an official |
|
capacity that responds to a fire alarm or detection device; |
|
(6) an engineer licensed under Chapter 1001, |
|
Occupations Code, acting solely in the engineer's professional |
|
capacity; |
|
(7) an individual or organization that provides and |
|
installs at no charge to the property owners or residents a |
|
battery-powered smoke detector in a single-family or two-family |
|
residence if: |
|
(A) the smoke detector bears a label of listing |
|
or approval by a testing laboratory approved by the department; |
|
(B) the installation complies with the adopted |
|
edition of National Fire Protection Association Standard No. 74; |
|
(C) the installers are knowledgeable in fire |
|
protection and the proper use of smoke detectors; and |
|
(D) the detector is a single station installation |
|
and not a part of or connected to any other detection device or |
|
system; |
|
(8) a regular employee of a registered firm who is |
|
under the direct supervision of a license holder; |
|
(9) a building owner, the owner's managing agent, or an |
|
employee of the owner or agent who installs battery-operated single |
|
station smoke detectors or monitor fire alarm or fire detection |
|
devices or systems in the owner's building, and in which the |
|
monitoring: |
|
(A) is performed at the owner's property at no |
|
charge to the occupants of the building; |
|
(B) complies with applicable standards of the |
|
National Fire Protection Association as may be adopted by rule |
|
under this chapter; and |
|
(C) uses equipment approved by a testing |
|
laboratory approved by the department for fire alarm monitoring; |
|
(10) an individual employed by a registered firm that |
|
sells and installs a smoke or heat detector in a single-family or |
|
two-family residence if: |
|
(A) the detector bears a label of listing or |
|
approval by a testing laboratory approved by the department; |
|
(B) the installation complies with the adopted |
|
edition of National Fire Protection Association Standard No. 74; |
|
(C) the installers are knowledgeable in fire |
|
protection and the proper use and placement of detectors; and |
|
(D) the detector is a single station installation |
|
and not a part of or connected to any other detection device or |
|
system; or |
|
(11) an individual or organization licensed to install |
|
or service burglar alarms under Chapter 1702, Occupations Code, |
|
that provides and installs in a single-family or two-family |
|
residence a combination keypad that includes a panic button to |
|
initiate a fire alarm signal if the fire alarm signal: |
|
(A) is monitored by a fire alarm firm registered |
|
under this chapter; and |
|
(B) is not initiated by a fire or smoke detection |
|
device. (V.T.I.C. Art. 5.43-2, Sec. 3(b).) |
|
Sec. 6002.156. LICENSE EXAMINATION. (a) The state fire |
|
marshal shall establish the scope and type of an examination |
|
required by this chapter. The examination must cover this chapter |
|
and commissioner rules and include specific testing of all license |
|
categories. |
|
(b) The state fire marshal may administer the examination or |
|
may enter into an agreement with a testing service. |
|
(c) If a testing service is used, the state fire marshal may |
|
contract with the testing service regarding requirements for the |
|
examination, including: |
|
(1) examination development; |
|
(2) scheduling; |
|
(3) site arrangements; |
|
(4) grading; |
|
(5) reporting; |
|
(6) analysis; or |
|
(7) other administrative duties. |
|
(d) The state fire marshal may require the testing service |
|
to: |
|
(1) correspond directly with an applicant regarding |
|
the administration of the examination; |
|
(2) collect a reasonable fee from an applicant for |
|
administering the examination; or |
|
(3) administer the examination at a specific location |
|
or time. |
|
(e) Approval for a testing service is valid for one year. |
|
(f) The state fire marshal shall adopt rules as necessary to |
|
implement examination requirements under this chapter. (V.T.I.C. |
|
Art. 5.43-2, Secs. 5D(a) (part), (b) (part), (f), (g), (h).) |
|
Sec. 6002.157. EXAMINATION RESULTS. (a) Not later than the |
|
30th day after the date on which an examination is administered |
|
under this chapter, the state fire marshal shall send notice to each |
|
examinee of the results of the examination. |
|
(b) If an examination is conducted, graded, or reviewed by a |
|
testing service, the state fire marshal shall send notice to each |
|
examinee of the results of the examination within two weeks after |
|
the date on which the state fire marshal receives the results from |
|
the testing service. |
|
(c) If the notice of the examination results will be delayed |
|
for more than 90 days after the examination date, the state fire |
|
marshal shall send notice to the examinee of the reason for the |
|
delay before the 90th day. |
|
(d) The state fire marshal may require a testing service to |
|
notify an examinee of the results of the examinee's examination |
|
under this section. |
|
(e) If requested in writing by an individual who fails the |
|
examination administered under this chapter, the state fire marshal |
|
shall send to the individual an analysis of the individual's |
|
performance on the examination. (V.T.I.C. Art. 5.43-2, Secs. 5D(a) |
|
(part), (a-1).) |
|
Sec. 6002.158. TRAINING SCHOOLS AND INSTRUCTORS; APPROVAL. |
|
(a) An applicant for approval as a training school must submit an |
|
application to the state fire marshal, accompanied by the |
|
applicant's complete course or testing curriculum. A registered |
|
firm, or an affiliate of a registered firm, is not eligible for |
|
approval as a training school. |
|
(b) The state fire marshal shall review the materials |
|
submitted for course approval and shall approve or deny approval in |
|
a letter provided not later than the 60th day after the date of |
|
receipt of the application. A denial of approval must disclose |
|
specific reasons for the denial. An applicant whose approval is |
|
denied may reapply at any time. |
|
(c) Training school instructors must be approved by the |
|
state fire marshal. To be eligible for approval, an instructor must |
|
hold a fire alarm planning superintendent license and have at least |
|
three years of experience in fire alarm installation, service, or |
|
monitoring. |
|
(d) Approval for a training school or instructor is valid |
|
for one year. |
|
(e) The curriculum for a fire alarm technician course or a |
|
residential fire alarm superintendent course must consist of 16 |
|
hours of classroom instruction for each license category. |
|
(f) After approval, each training school must annually |
|
conduct, within 125 miles of each county with a population greater |
|
than 500,000, at least two classes that are open to the public. |
|
(V.T.I.C. Art. 5.43-2, Secs. 5D(b) (part), (c) (part), (d), (e); |
|
New.) |
|
Sec. 6002.159. CONTINUING EDUCATION PROGRAMS. (a) The |
|
commissioner may adopt procedures for certifying and may certify |
|
continuing education programs. |
|
(b) Participation in the continuing education programs is |
|
voluntary. (V.T.I.C. Art. 5.43-2, Sec. 5E.) |
|
Sec. 6002.160. RECIPROCAL LICENSE. The department may |
|
waive any license requirement for an applicant who holds a license |
|
issued by another state that has license requirements substantially |
|
equivalent to the license requirements of this state. (V.T.I.C. |
|
Art. 5.43-2, Sec. 5F.) |
|
Sec. 6002.161. NOT TRANSFERABLE. A registration |
|
certificate or license issued under this chapter is not |
|
transferable. (V.T.I.C. Art. 5.43-2, Sec. 5(h).) |
|
[Sections 6002.162-6002.200 reserved for expansion] |
|
SUBCHAPTER E. RENEWAL OF REGISTRATION CERTIFICATE OR LICENSE |
|
Sec. 6002.201. RENEWAL REQUIRED; FEE. (a) A renewal of a |
|
registration certificate or license issued under this chapter is |
|
valid for a period of two years. The license or registration |
|
renewal fee for each year of the two-year period is payable on |
|
renewal. |
|
(b) The commissioner by rule may adopt a system under which |
|
registration certificates and licenses expire on various dates |
|
during the year. For the year in which an expiration date of a |
|
registration certificate or license is less than one year from its |
|
issuance or anniversary date, the fee shall be prorated on a monthly |
|
basis so that each holder of a registration certificate or license |
|
pays only that portion of the renewal fee that is allocable to the |
|
number of months during which the registration certificate or |
|
license is valid. The total renewal fee is payable on renewal on |
|
the new expiration date. (V.T.I.C. Art. 5.43-2, Secs. 5A, 5C(b).) |
|
Sec. 6002.202. NOTICE OF EXPIRATION. At least 30 days |
|
before the expiration date of a registration certificate or |
|
license, the state fire marshal shall send written notice of the |
|
impending expiration to the holder of the registration certificate |
|
or license at the holder's last known address. (V.T.I.C. Art. |
|
5.43-2, Sec. 5C(a) (part).) |
|
Sec. 6002.203. RENEWAL PROCEDURES. (a) The holder of an |
|
unexpired registration certificate or license may renew the |
|
certificate or license by paying the required renewal fee to the |
|
department before the expiration date of the certificate or |
|
license. |
|
(b) An individual or organization whose registration |
|
certificate or license has been expired for 90 days or less may |
|
renew the certificate or license by paying to the department: |
|
(1) the required renewal fee; and |
|
(2) a fee that does not exceed one-fourth of the |
|
initial fee for the certificate or license. |
|
(c) An individual or organization whose registration |
|
certificate or license has been expired for more than 90 days but |
|
less than two years may renew the certificate or license by paying |
|
to the department: |
|
(1) all unpaid renewal fees; and |
|
(2) a fee that does not exceed the initial fee for the |
|
certificate or license. |
|
(d) An individual or organization whose registration |
|
certificate or license has been expired for two years or longer may |
|
not renew the certificate or license. The individual or |
|
organization may obtain a new registration certificate or license |
|
by complying with the requirements and procedures for obtaining an |
|
initial registration certificate or license. |
|
(e) This section may not be construed to prevent the |
|
department from denying or refusing to renew a license under |
|
applicable law or commissioner rules. |
|
(f) A license or registration certificate issued under this |
|
chapter expires at midnight on the date printed on the license or |
|
certificate. A renewal application and fee for the license or |
|
registration certificate must be postmarked on or before the |
|
expiration date to be accepted as timely. |
|
(g) If a renewal application is not complete but there has |
|
been no lapse in the required insurance, the applicant is entitled |
|
to 30 days from the date that the applicant is notified by the |
|
department of the deficiencies in the renewal application to comply |
|
with any additional requirement. If an applicant fails to respond |
|
and correct all deficiencies in the renewal application within the |
|
30-day period, the department may charge a late fee. (V.T.I.C. Art. |
|
5.43-2, Secs. 5C(a) (part), (c).) |
|
Sec. 6002.204. RENEWAL OF CERTAIN LICENSES. A license |
|
holder with an unexpired license who is not employed by a registered |
|
firm at the time of the license renewal may renew that license, but |
|
the license holder may not engage in any activity for which the |
|
license was granted until the license holder is employed by a |
|
registered firm. (V.T.I.C. Art. 5.43-2, Sec. 5C(a) (part).) |
|
[Sections 6002.205-6002.250 reserved for expansion] |
|
SUBCHAPTER F. SELLING OR LEASING OF FIRE ALARM |
|
OR FIRE DETECTION DEVICES |
|
Sec. 6002.251. REQUIRED LABEL; EXCEPTIONS. (a) Except as |
|
provided by Subsections (b) and (c), a detection or alarm device, |
|
alarm system, or item of monitoring equipment, a purpose of which is |
|
to detect or give alarm of fire, may not be sold, offered for sale, |
|
leased, installed, or used to monitor property in this state unless |
|
the device, system, or item of equipment carries a label of approval |
|
or listing of a testing laboratory approved by the department. |
|
(b) Except as provided by Subsection (c), a detection or |
|
alarm device, alarm system, or item of monitoring equipment in a |
|
one-family or two-family residence, a purpose of which is to detect |
|
or give alarm of fire, may not be sold, offered for sale, leased, |
|
installed, or used to monitor property in this state after April 14, |
|
1989, unless the device, system, or equipment carries a label of |
|
approval or listing of a testing laboratory approved by the |
|
department. |
|
(c) Subsections (a) and (b) do not prohibit the continued |
|
use or monitoring of equipment in place if the equipment: |
|
(1) complied with the law applicable on the date of the |
|
equipment's original placement; and |
|
(2) has not been extended, modified, or altered. |
|
(d) Fire alarm devices that are not required by this chapter |
|
or rules adopted under this chapter and that do not impair the |
|
operation of fire alarm or fire detection devices required by this |
|
chapter or the rules adopted under this chapter are exempt from the |
|
label and listing requirements described by Subsections (a) and (b) |
|
if the devices are approved by the local authority with |
|
jurisdiction. (V.T.I.C. Art. 5.43-2, Secs. 9(a), (b), (c).) |
|
Sec. 6002.252. REQUIRED PURCHASE AND INSTALLATION |
|
INFORMATION. A fire detection or fire alarm device may not be sold |
|
or installed in this state unless the device is accompanied by |
|
printed information that: |
|
(1) is supplied to the owner by the supplier or |
|
installing contractor; and |
|
(2) concerns: |
|
(A) instructions describing the installation, |
|
operation, testing, and proper maintenance of the device; |
|
(B) information to aid in establishing an |
|
emergency evacuation plan for the protected premises; and |
|
(C) the telephone number and location, including |
|
notification procedures, of the nearest fire department. (V.T.I.C. |
|
Art. 5.43-2, Sec. 9(d).) |
|
Sec. 6002.253. TRAINING AND SUPERVISION OF CERTAIN EXEMPT |
|
EMPLOYEES. Each registered firm that employs an individual who is |
|
exempt from the licensing requirements of this chapter under |
|
Section 6002.155(10) shall appropriately train and supervise the |
|
individual to ensure that: |
|
(1) each installation complies with the adopted |
|
provisions of National Fire Protection Standard No. 74 or other |
|
adopted standards; |
|
(2) each smoke or heat detector installed or sold |
|
carries a label or listing of approval by a testing laboratory |
|
approved by the department; and |
|
(3) the individual is knowledgeable in fire protection |
|
and the proper use and placement of detectors. (V.T.I.C. Art. |
|
5.43-2, Sec. 9(e).) |
|
[Sections 6002.254-6002.300 reserved for expansion] |
|
SUBCHAPTER G. PROHIBITED PRACTICES AND DISCIPLINARY PROCEDURES |
|
Sec. 6002.301. PROHIBITED PRACTICES. An individual or |
|
organization may not: |
|
(1) plan, certify, lease, sell, service, install, |
|
monitor, or maintain a fire alarm or fire detection device or system |
|
without a license or registration certificate; |
|
(2) obtain or attempt to obtain a registration |
|
certificate or license by fraudulent representation; or |
|
(3) plan, certify, lease, sell, service, install, |
|
monitor, or maintain a fire alarm or fire detection device or system |
|
in violation of this chapter or the rules adopted under this |
|
chapter. (V.T.I.C. Art. 5.43-2, Sec. 7(a).) |
|
Sec. 6002.302. DISCIPLINARY ACTIONS. (a) The state fire |
|
marshal may suspend, revoke, or refuse to issue or renew a |
|
registration certificate or license if, after notice and hearing, |
|
the state fire marshal finds that the applicant, registrant, or |
|
license holder has engaged in acts that: |
|
(1) violate this chapter; |
|
(2) violate rules or standards adopted under this |
|
chapter; or |
|
(3) constitute misrepresentation made in connection |
|
with the sale of products or services rendered. |
|
(b) An original or renewal registration certificate, |
|
license, or testing laboratory approval may be denied, suspended, |
|
or revoked, if after notice and public hearing the commissioner, |
|
through the state fire marshal, determines from the evidence |
|
presented at the hearing that this chapter or a rule adopted under |
|
this chapter has been violated. (V.T.I.C. Art. 5.43-2, Secs. |
|
10(b), (c).) |
|
Sec. 6002.303. DISCIPLINARY HEARING. (a) If the state fire |
|
marshal proposes to suspend, revoke, or refuse to renew a license or |
|
registration certificate issued under this chapter, the holder of |
|
the license or certificate is entitled to a hearing conducted by the |
|
State Office of Administrative Hearings. |
|
(b) Proceedings for a disciplinary action are governed by |
|
Chapter 2001, Government Code. |
|
(c) Rules of practice adopted by the commissioner |
|
applicable to the proceedings for a disciplinary action may not |
|
conflict with rules adopted by the State Office of Administrative |
|
Hearings. (V.T.I.C. Art. 5.43-2, Sec. 10A.) |
|
Sec. 6002.304. REAPPLICATION REQUIREMENTS. (a) A holder |
|
of a registration certificate, license, or testing laboratory |
|
approval that has been revoked under this chapter may not file |
|
another application for a registration certificate, license, or |
|
approval before the first anniversary of the effective date of the |
|
revocation. |
|
(b) An individual or organization reapplying under this |
|
section must request a public hearing to show cause why the issuance |
|
of a new registration certificate, license, or approval should not |
|
be denied. (V.T.I.C. Art. 5.43-2, Sec. 10(d).) |
|
[Sections 6002.305-6002.350 reserved for expansion] |
|
SUBCHAPTER H. CRIMINAL PENALTY |
|
Sec. 6002.351. CRIMINAL PENALTY. (a) An individual or |
|
organization commits an offense if the individual or organization |
|
violates Section 6002.151, 6002.152, or 6002.154. |
|
(b) An offense under this section is a Class B misdemeanor. |
|
(c) Venue for an offense under this section is in Travis |
|
County or the county in which the offense is committed. (V.T.I.C. |
|
Art. 5.43-2, Sec. 11.) |
|
CHAPTER 6003. FIRE PROTECTION SPRINKLER SYSTEM SERVICE AND |
|
INSTALLATION |
|
SUBCHAPTER A. GENERAL PROVISIONS |
|
Sec. 6003.001. DEFINITIONS |
|
Sec. 6003.002. APPLICABILITY OF CHAPTER |
|
Sec. 6003.003. EFFECT ON LOCAL REGULATION |
|
[Sections 6003.004-6003.050 reserved for expansion] |
|
SUBCHAPTER B. POWERS AND DUTIES OF COMMISSIONER, |
|
DEPARTMENT, AND STATE FIRE MARSHAL |
|
Sec. 6003.051. ADMINISTRATION OF CHAPTER |
|
Sec. 6003.052. ADOPTION OF RULES |
|
Sec. 6003.053. RULES RESTRICTING ADVERTISING OR |
|
COMPETITIVE BIDDING |
|
Sec. 6003.054. GENERAL POWERS AND DUTIES OF |
|
COMMISSIONER, STATE FIRE MARSHAL, AND |
|
DEPARTMENT |
|
Sec. 6003.055. FEES |
|
Sec. 6003.056. DEPOSIT IN OPERATING ACCOUNT |
|
[Sections 6003.057-6003.100 reserved for expansion] |
|
SUBCHAPTER C. FIRE PROTECTION ADVISORY COUNCIL |
|
Sec. 6003.101. ADVISORY COUNCIL; APPOINTMENT |
|
Sec. 6003.102. ADVISORY COUNCIL DUTIES |
|
[Sections 6003.103-6003.150 reserved for expansion] |
|
SUBCHAPTER D. REGISTRATION AND LICENSE REQUIREMENTS |
|
Sec. 6003.151. FIRE PROTECTION SPRINKLER SYSTEM |
|
CONTRACTOR; REGISTRATION CERTIFICATE |
|
REQUIRED |
|
Sec. 6003.152. REQUIRED INSURANCE COVERAGE FOR |
|
REGISTRATION CERTIFICATE |
|
Sec. 6003.153. RESPONSIBLE MANAGING EMPLOYEE: LICENSE |
|
REQUIRED |
|
Sec. 6003.154. POSTING OF LICENSE OR CERTIFICATE |
|
REQUIRED |
|
Sec. 6003.155. DISPLAY OF REGISTRATION CERTIFICATE |
|
NUMBER ON CERTAIN DOCUMENTS REQUIRED |
|
Sec. 6003.156. LICENSE EXAMINATION |
|
Sec. 6003.157. EXAMINATION RESULTS |
|
Sec. 6003.158. CONTINUING EDUCATION REQUIREMENTS |
|
Sec. 6003.159. RECIPROCAL LICENSE |
|
Sec. 6003.160. NOT TRANSFERABLE |
|
[Sections 6003.161-6003.200 reserved for expansion] |
|
SUBCHAPTER E. RENEWAL OF REGISTRATION CERTIFICATE OR LICENSE |
|
Sec. 6003.201. RENEWAL REQUIRED; FEE |
|
Sec. 6003.202. NOTICE OF EXPIRATION |
|
Sec. 6003.203. RENEWAL PROCEDURES |
|
[Sections 6003.204-6003.250 reserved for expansion] |
|
SUBCHAPTER F. PROHIBITED PRACTICES |
|
AND DISCIPLINARY PROCEDURES |
|
Sec. 6003.251. PROHIBITED PRACTICES |
|
Sec. 6003.252. DISCIPLINARY ACTIONS |
|
Sec. 6003.253. DISCIPLINARY HEARING |
|
Sec. 6003.254. APPLICABILITY OF ADMINISTRATIVE |
|
PROCEDURE ACT |
|
Sec. 6003.255. REAPPLICATION REQUIREMENTS |
|
[Sections 6003.256-6003.300 reserved for expansion] |
|
SUBCHAPTER G. CRIMINAL PENALTY |
|
Sec. 6003.301. CRIMINAL PENALTY |
|
CHAPTER 6003. FIRE PROTECTION SPRINKLER SYSTEM SERVICE AND |
|
INSTALLATION |
|
SUBCHAPTER A. GENERAL PROVISIONS |
|
Sec. 6003.001. DEFINITIONS. In this chapter: |
|
(1) "Fire protection sprinkler system" means an |
|
assembly of underground or overhead piping or conduits that conveys |
|
water with or without other agents to dispersal openings or devices |
|
to: |
|
(A) extinguish, control, or contain fire; and |
|
(B) provide protection from exposure to fire or |
|
the products of combustion. |
|
(2) "Fire protection sprinkler system contractor" |
|
means an individual or organization that offers to undertake, |
|
represents itself as being able to undertake, or undertakes the |
|
plan, sale, installation, maintenance, or servicing of: |
|
(A) a fire protection sprinkler system; or |
|
(B) any part of a fire protection sprinkler |
|
system. |
|
(3) "Individual" means a natural person, including an |
|
owner, manager, officer, employee, or occupant. |
|
(4) "Installation" means: |
|
(A) the initial placement of equipment; or |
|
(B) the extension, modification, or alteration |
|
of equipment after initial placement. |
|
(5) "Insurance agent" means: |
|
(A) an individual, firm, or corporation licensed |
|
under: |
|
(i) Subchapter E, Chapter 981; or |
|
(ii) Subchapter A, B, C, D, E, or G, Chapter |
|
4051; or |
|
(B) an individual authorized to represent an |
|
insurance fund or pool created by a municipality, county, or other |
|
political subdivision of this state under Chapter 791, Government |
|
Code. |
|
(6) "License" means the document issued to a |
|
responsible managing employee authorizing the employee to engage in |
|
the fire protection sprinkler system business in this state. |
|
(7) "Maintenance" means the maintenance of a fire |
|
protection sprinkler system or any part of a fire protection |
|
sprinkler system in the condition of repair that provides |
|
performance as originally planned. |
|
(8) "Organization" means a corporation, a partnership |
|
or other business association, a governmental entity, or any other |
|
legal or commercial entity. |
|
(9) "Registration certificate" means the document |
|
issued to a fire protection sprinkler system contractor authorizing |
|
the contractor to engage in business in this state. |
|
(10) "Responsible managing employee" means an |
|
individual designated by a company that plans, sells, installs, |
|
maintains, or services fire protection sprinkler systems to ensure |
|
that each fire protection sprinkler system, as installed, |
|
maintained, or serviced, meets the standards for the system as |
|
provided by law. |
|
(11) "Service" means maintenance, repair, or testing. |
|
(V.T.I.C. Art. 5.43-3, Secs. 1(1), (2), (5), (6), (7), (8), (9), |
|
(10), (11), (12), (13) as added Acts 71st Leg., R.S., Ch. 823.) |
|
Sec. 6003.002. APPLICABILITY OF CHAPTER. (a) This chapter |
|
does not apply to: |
|
(1) an employee of the United States, this state, or |
|
any political subdivision of this state who acts as a fire |
|
protection sprinkler system contractor for the employing |
|
governmental entity; |
|
(2) the plan, sale, installation, maintenance, or |
|
servicing of a fire protection sprinkler system in any property |
|
owned by the United States or this state; |
|
(3) an individual or organization acting under court |
|
order as authorization; |
|
(4) an individual or organization that sells or |
|
supplies products or materials to a registered fire protection |
|
sprinkler system contractor; |
|
(5) an installation, maintenance, or service project |
|
for which the total contract price for labor, materials, and all |
|
other services is less than $100, if: |
|
(A) the project is not a part of a complete or |
|
more costly project, whether the complete project is to be |
|
undertaken by one or more fire protection sprinkler system |
|
contractors; or |
|
(B) the project is not divided into contracts of |
|
less than $100 for the purpose of evading this chapter; |
|
(6) an engineer licensed under Chapter 1001, |
|
Occupations Code, acting solely in the engineer's professional |
|
capacity; |
|
(7) a regular employee of a registered fire protection |
|
sprinkler system contractor; or |
|
(8) an owner or lessee of property that: |
|
(A) installs a fire protection sprinkler system |
|
on the owned or leased property for the owner's or lessee's own use |
|
or for family members' use; and |
|
(B) does not offer the property for sale or lease |
|
before the first anniversary of the date of installation of the fire |
|
protection sprinkler system. |
|
(b) This chapter does not authorize an individual or |
|
organization to practice professional engineering other than in |
|
compliance with Chapter 1001, Occupations Code. (V.T.I.C. Art. |
|
5.43-3, Secs. 2(b), 11.) |
|
Sec. 6003.003. EFFECT ON LOCAL REGULATION. (a) This |
|
chapter and the rules adopted under this chapter have uniform force |
|
and effect throughout this state. A municipality or county may not |
|
enact an order, ordinance, or rule requiring a fire protection |
|
sprinkler system contractor to obtain a registration certificate |
|
from the municipality or county. A municipality or county may not |
|
impose on a fire protection sprinkler system contractor |
|
qualification or financial responsibility requirements other than |
|
proof of a registration certificate. |
|
(b) Notwithstanding any other provision of this chapter, a |
|
municipality or county may require a fire protection sprinkler |
|
system contractor to obtain a permit and pay a permit fee for the |
|
installation of a fire protection sprinkler system and require the |
|
installation of a fire protection sprinkler system to conform to |
|
the building code or other construction requirements of the |
|
municipality or county. |
|
(c) A municipal or county order, ordinance, or rule in |
|
effect on September 1, 1983, is not invalidated because of any |
|
provision of this chapter. (V.T.I.C. Art. 5.43-3, Sec. 2(a).) |
|
[Sections 6003.004-6003.050 reserved for expansion] |
|
SUBCHAPTER B. POWERS AND DUTIES OF COMMISSIONER, |
|
DEPARTMENT, AND STATE FIRE MARSHAL |
|
Sec. 6003.051. ADMINISTRATION OF CHAPTER. (a) The |
|
department shall administer this chapter. |
|
(b) The commissioner may issue rules necessary to |
|
administer this chapter through the state fire marshal. (V.T.I.C. |
|
Art. 5.43-3, Sec. 3(a) (part).) |
|
Sec. 6003.052. ADOPTION OF RULES. (a) In adopting |
|
necessary rules, the commissioner may use recognized standards, |
|
including standards: |
|
(1) adopted by federal law or regulation; |
|
(2) published by a nationally recognized |
|
standards-making organization; or |
|
(3) developed by individual manufacturers. |
|
(b) Under rules adopted under Section 6003.051(b), the |
|
department may create a specialized licensing or registration |
|
program for fire protection sprinkler system contractors. |
|
(V.T.I.C. Art. 5.43-3, Secs. 3(a) (part), (b).) |
|
Sec. 6003.053. RULES RESTRICTING ADVERTISING OR |
|
COMPETITIVE BIDDING. (a) The commissioner may not adopt rules |
|
restricting advertising or competitive bidding by the holder of a |
|
license or registration certificate issued under this chapter |
|
except to prohibit false, misleading, or deceptive practices. |
|
(b) In the commissioner's rules to prohibit false, |
|
misleading, or deceptive practices, the commissioner may not |
|
include a rule that: |
|
(1) restricts the use of any medium for advertising; |
|
(2) restricts the use of a license or registration |
|
certificate holder's personal appearance or voice in an |
|
advertisement; |
|
(3) relates to the size or duration of an |
|
advertisement by the license or registration certificate holder; or |
|
(4) restricts the license or registration certificate |
|
holder's advertisement under a trade name. (V.T.I.C. Art. 5.43-3, |
|
Sec. 7A.) |
|
Sec. 6003.054. GENERAL POWERS AND DUTIES OF COMMISSIONER, |
|
STATE FIRE MARSHAL, AND DEPARTMENT. (a) The commissioner may |
|
delegate authority to exercise all or part of the commissioner's |
|
functions, powers, and duties under this chapter, including the |
|
issuance of licenses and registration certificates, to the state |
|
fire marshal. The state fire marshal shall implement the rules |
|
adopted by the commissioner for the protection and preservation of |
|
life and property in controlling: |
|
(1) the registration of an individual or an |
|
organization engaged in the business of planning, selling, |
|
installing, maintaining, or servicing fire protection sprinkler |
|
systems; and |
|
(2) the requirements for the plan, sale, installation, |
|
maintenance, or servicing of fire protection sprinkler systems by: |
|
(A) determining the criteria and qualifications |
|
for registration certificate and license holders; |
|
(B) evaluating the qualifications of an |
|
applicant for a registration certificate to engage in the business |
|
of planning, selling, installing, maintaining, or servicing fire |
|
protection sprinkler systems; |
|
(C) conducting examinations and evaluating the |
|
qualifications of a license applicant; and |
|
(D) issuing registration certificates and |
|
licenses to qualified applicants. |
|
(b) The commissioner shall establish a procedure for |
|
reporting and processing complaints relating to the business of |
|
planning, selling, installing, maintaining, or servicing fire |
|
protection sprinkler systems in this state. (V.T.I.C. Art. 5.43-3, |
|
Secs. 7(a), (b).) |
|
Sec. 6003.055. FEES. (a) The commissioner shall set the |
|
fee for: |
|
(1) a registration certificate application in an |
|
amount not to exceed $100; |
|
(2) an initial or renewal registration certificate in |
|
an amount not to exceed $1,200 annually; and |
|
(3) an initial or renewal responsible managing |
|
employee license fee in an amount not to exceed $200 annually. |
|
(b) Unless the examination for a responsible managing |
|
employee license is administered by a testing service, the |
|
commissioner shall set a nonrefundable fee for each examination in |
|
an amount not to exceed $100. |
|
(c) The commissioner shall set a fee in an amount not to |
|
exceed $70 for: |
|
(1) a duplicate registration certificate or license |
|
issued under this chapter; or |
|
(2) any request requiring changes to a registration |
|
certificate or license. (V.T.I.C. Art. 5.43-3, Secs. 4(a) (part), |
|
(c) (part), (d) (part), (e), (i) (part), 5A(a) (part).) |
|
Sec. 6003.056. DEPOSIT IN OPERATING ACCOUNT. All fees |
|
collected under this chapter shall be deposited in the state |
|
treasury to the credit of the Texas Department of Insurance |
|
operating account for use in administering this chapter. (V.T.I.C. |
|
Art. 5.43-3, Sec. 4(i) (part).) |
|
[Sections 6003.057-6003.100 reserved for expansion] |
|
SUBCHAPTER C. FIRE PROTECTION ADVISORY COUNCIL |
|
Sec. 6003.101. ADVISORY COUNCIL; APPOINTMENT. (a) The |
|
commissioner shall appoint the members of the fire protection |
|
advisory council, who serve at the pleasure of the commissioner. |
|
(b) The advisory council is composed of seven members as |
|
follows: |
|
(1) three members who have been actively engaged in |
|
the management of a fire protection sprinkler system business for |
|
not less than five years preceding appointment; |
|
(2) one member who represents the engineering section |
|
of the department's property and casualty program; |
|
(3) one member who is a volunteer firefighter; and |
|
(4) two members who each represent a different |
|
municipal fire department in this state. |
|
(c) The State Firemen's and Fire Marshals' Association of |
|
Texas, on the commissioner's request, may recommend a volunteer |
|
firefighter for appointment to the advisory council. (V.T.I.C. |
|
Art. 5.43-3, Secs. 6(a) (part), (c), (e).) |
|
Sec. 6003.102. ADVISORY COUNCIL DUTIES. (a) In addition to |
|
other duties delegated by the commissioner, the fire protection |
|
advisory council shall: |
|
(1) advise the state fire marshal regarding practices |
|
in the fire protection sprinkler system industry and the rules |
|
necessary to implement and administer this chapter; and |
|
(2) make recommendations to the state fire marshal |
|
regarding forms and procedures for registration certificates and |
|
licenses. |
|
(b) The advisory council shall periodically: |
|
(1) review rules implementing this chapter; and |
|
(2) recommend rule changes to the commissioner. |
|
(V.T.I.C. Art. 5.43-3, Secs. 6(b), (d).) |
|
[Sections 6003.103-6003.150 reserved for expansion] |
|
SUBCHAPTER D. REGISTRATION AND LICENSE REQUIREMENTS |
|
Sec. 6003.151. FIRE PROTECTION SPRINKLER SYSTEM |
|
CONTRACTOR; REGISTRATION CERTIFICATE REQUIRED. (a) Unless the |
|
individual or organization holds a registration certificate issued |
|
by the department, an individual or organization may not plan, |
|
sell, install, maintain, or service a fire protection sprinkler |
|
system. |
|
(b) An applicant for a registration certificate must apply |
|
to the department on a form prescribed by the commissioner. |
|
(c) An organization that is a partnership or joint venture |
|
is not required to register under the name of the organization if |
|
each partner or joint venturer holds a registration certificate. |
|
(V.T.I.C. Art. 5.43-3, Secs. 4(a) (part), 8 (part).) |
|
Sec. 6003.152. REQUIRED INSURANCE COVERAGE FOR |
|
REGISTRATION CERTIFICATE. (a) The department may not issue a |
|
registration certificate under this chapter unless the applicant |
|
files with the department evidence of a general liability insurance |
|
policy that includes products and completed operations coverage. |
|
The policy must be conditioned to pay on behalf of the insured those |
|
amounts that the insured becomes legally obligated to pay as |
|
damages because of bodily injury and property damage caused by an |
|
occurrence involving the insured or the insured's officer, agent, |
|
or employee in the conduct of any activity that requires a |
|
registration certificate or license under this chapter. |
|
(b) Unless the commissioner, after notice and an |
|
opportunity for a hearing, increases or decreases the limits, the |
|
limits of insurance coverage required by Subsection (a) must be at |
|
least: |
|
(1) $100,000 combined single limits for bodily injury |
|
and property damage for each occurrence; and |
|
(2) $300,000 aggregate for all occurrences for each |
|
policy year. |
|
(c) The evidence of insurance required by this section must |
|
be in the form of a certificate of insurance executed by an insurer |
|
authorized to engage in the business of insurance in this state and |
|
countersigned by an insurance agent licensed in this state. A |
|
certificate of insurance for surplus lines coverage procured in |
|
compliance with Chapter 981 through a surplus lines agent that is |
|
licensed under Subchapter E, Chapter 981, and resident in this |
|
state may be filed with the department as evidence of the coverage |
|
required by this section. |
|
(d) An insurance certificate executed and filed with the |
|
department under this section remains in force until the insurer |
|
has terminated future liability by the notice required by the |
|
department. |
|
(e) Failure to maintain the liability insurance required by |
|
this section constitutes grounds for the denial, suspension, or |
|
revocation, after notice and opportunity for hearing, of a |
|
registration certificate issued under this chapter. (V.T.I.C. Art. |
|
5.43-3, Secs. 5, 7(c).) |
|
Sec. 6003.153. RESPONSIBLE MANAGING EMPLOYEE: LICENSE |
|
REQUIRED. (a) Each fire protection sprinkler system contractor |
|
must employ at least one licensed responsible managing employee on |
|
a full-time basis. |
|
(b) A responsible managing employee must hold a license |
|
issued by the department, conditioned on the successful completion |
|
of the license examination and compliance with the requirements of |
|
the rules adopted under this chapter. |
|
(c) Notwithstanding Subsection (a), an individual or |
|
organization with a current registration certificate may act as a |
|
fire protection sprinkler system contractor for 30 days after the |
|
death or dissociation of its licensed responsible managing employee |
|
or for a longer period approved by the commissioner under the rules |
|
adopted under this chapter. (V.T.I.C. Art. 5.43-3, Secs. 4(b), (c) |
|
(part), 8 (part).) |
|
Sec. 6003.154. POSTING OF LICENSE OR CERTIFICATE REQUIRED. |
|
Each registration certificate and license issued under this chapter |
|
must be posted in a conspicuous place in the fire protection |
|
sprinkler system contractor's place of business. (V.T.I.C. Art. |
|
5.43-3, Sec. 4(f).) |
|
Sec. 6003.155. DISPLAY OF REGISTRATION CERTIFICATE NUMBER |
|
ON CERTAIN DOCUMENTS REQUIRED. Each bid, proposal, offer, and |
|
installation drawing for a fire protection sprinkler system must |
|
prominently display the registration certificate number of the fire |
|
protection sprinkler system contractor. (V.T.I.C. Art. 5.43-3, |
|
Sec. 4(g).) |
|
Sec. 6003.156. LICENSE EXAMINATION. (a) The state fire |
|
marshal shall establish the scope and type of an examination |
|
required by this chapter. |
|
(b) The state fire marshal may administer the examination or |
|
may enter into an agreement with a testing service. |
|
(c) If a testing service is used, the state fire marshal may |
|
contract with the testing service regarding requirements for the |
|
examination, including: |
|
(1) examination development; |
|
(2) scheduling; |
|
(3) site arrangements; |
|
(4) grading; |
|
(5) reporting; |
|
(6) analysis; or |
|
(7) other administrative duties. |
|
(d) The state fire marshal may require the testing service |
|
to: |
|
(1) correspond directly with an applicant regarding |
|
the administration of the examination; |
|
(2) collect a reasonable fee from an applicant for |
|
administering the examination; or |
|
(3) administer the examination at a specific location |
|
or time. |
|
(e) The state fire marshal shall adopt rules as necessary to |
|
implement examination requirements under this chapter. (V.T.I.C. |
|
Art. 5.43-3, Secs. 5B(a), (b), (e).) |
|
Sec. 6003.157. EXAMINATION RESULTS. (a) Not later than the |
|
30th day after the date on which an examination is administered |
|
under this chapter, the state fire marshal shall send notice to each |
|
examinee of the results of the examination. |
|
(b) If an examination is graded or reviewed by a testing |
|
service, the state fire marshal shall send notice to each examinee |
|
of the results of the examination not later than the 14th day after |
|
the date on which the state fire marshal receives the results from |
|
the testing service. |
|
(c) If the notice of the examination results will be delayed |
|
for more than 90 days after the examination date, the state fire |
|
marshal, before the 90th day, shall send notice to the examinee of |
|
the reason for the delay. |
|
(d) The state fire marshal may require a testing service to |
|
notify an examinee of the results of the examinee's examination. |
|
(e) If requested in writing by an individual who fails the |
|
examination administered under this chapter, the state fire marshal |
|
shall send to the individual an analysis of the individual's |
|
performance on the examination. (V.T.I.C. Art. 5.43-3, Secs. |
|
5B(c), (d).) |
|
Sec. 6003.158. CONTINUING EDUCATION REQUIREMENTS. (a) The |
|
commissioner may adopt procedures for certifying and may certify |
|
continuing education programs. |
|
(b) Participation in the continuing education programs is |
|
voluntary. (V.T.I.C. Art. 5.43-3, Sec. 5C.) |
|
Sec. 6003.159. RECIPROCAL LICENSE. The department may waive |
|
any license requirement for an applicant who holds a license issued |
|
by another state that has license requirements substantially |
|
equivalent to the license requirements of this state. (V.T.I.C. |
|
Art. 5.43-3, Sec. 5D.) |
|
Sec. 6003.160. NOT TRANSFERABLE. A registration |
|
certificate or license issued under this chapter is not |
|
transferable. (V.T.I.C. Art. 5.43-3, Sec. 4(h).) |
|
[Sections 6003.161-6003.200 reserved for expansion] |
|
SUBCHAPTER E. RENEWAL OF REGISTRATION CERTIFICATE OR LICENSE |
|
Sec. 6003.201. RENEWAL REQUIRED; FEE. (a) Except as |
|
otherwise provided by this subsection, an initial registration |
|
certificate or license is valid for a period of one year from the |
|
date of issue and is renewable on payment of the renewal fee. An |
|
initial registration certificate or license issued on or after |
|
September 1, 1983, may be issued for a period of less than one year |
|
and the renewal fee shall be prorated proportionally. |
|
(b) A renewal of a registration certificate or license |
|
issued under this chapter is valid for a period of two years. The |
|
license or registration fee for each year of the two-year period is |
|
payable on renewal. |
|
(c) The commissioner by rule may adopt a system under which |
|
registration certificates and licenses expire on various dates |
|
during the year. For the year in which an expiration date of a |
|
registration certificate or license is less than one year from its |
|
issuance or anniversary date, the fee shall be prorated on a monthly |
|
basis so that each holder of a registration certificate or license |
|
pays only that portion of the renewal fee that is allocable to the |
|
number of months during which the registration certificate or |
|
license is valid. On renewal on the new expiration date, the total |
|
renewal fee is payable. (V.T.I.C. Art. 5.43-3, Secs. 4(d) (part), |
|
5A(a), (c).) |
|
Sec. 6003.202. NOTICE OF EXPIRATION. At least 30 days |
|
before the expiration date of a registration certificate or |
|
license, the department shall send written notice of the impending |
|
expiration to the holder of the registration certificate or |
|
license at the holder's last known address. (V.T.I.C. Art. 5.43-3, |
|
Sec. 5A(b) (part).) |
|
Sec. 6003.203. RENEWAL PROCEDURES. (a) The holder of an |
|
unexpired registration certificate or license may renew the |
|
certificate or license by paying the required renewal fee to the |
|
department before the expiration date of the certificate or |
|
license. |
|
(b) An individual or organization whose registration |
|
certificate or license has been expired for 90 days or less may |
|
renew the certificate or license by paying to the department: |
|
(1) the required renewal fee; and |
|
(2) a fee equal to one-half of the initial fee for the |
|
certificate or license. |
|
(c) An individual or organization whose registration |
|
certificate or license has been expired for more than 90 days but |
|
less than two years may renew the certificate or license by paying |
|
to the department: |
|
(1) all unpaid renewal fees; and |
|
(2) a fee that is equal to the initial fee for the |
|
certificate or license. |
|
(d) An individual or organization whose registration |
|
certificate or license has been expired for two years or longer may |
|
not renew the certificate or license. The individual or |
|
organization may obtain a new registration certificate or license |
|
by complying with the requirements and procedures for obtaining an |
|
initial registration certificate or license. |
|
(e) This section may not be construed to prevent the |
|
department from denying or refusing to renew a license under |
|
applicable law or commissioner rules. (V.T.I.C. Art. 5.43-3, Sec. |
|
5A(b) (part).) |
|
[Sections 6003.204-6003.250 reserved for expansion] |
|
SUBCHAPTER F. PROHIBITED PRACTICES |
|
AND DISCIPLINARY PROCEDURES |
|
Sec. 6003.251. PROHIBITED PRACTICES. An individual or |
|
organization may not: |
|
(1) obtain or attempt to obtain a registration |
|
certificate or license by fraudulent representation; or |
|
(2) plan, sell, install, maintain, or service a fire |
|
protection sprinkler system in violation of this chapter or the |
|
rules adopted under this chapter. (V.T.I.C. Art. 5.43-3, Sec. 8 |
|
(part).) |
|
Sec. 6003.252. DISCIPLINARY ACTIONS. The state fire |
|
marshal may suspend, revoke, or refuse to issue or renew a |
|
registration certificate or license if, after notice and hearing, |
|
the state fire marshal finds that the applicant, registrant, or |
|
license holder has engaged in acts that: |
|
(1) violate this chapter; |
|
(2) violate rules or standards adopted under this |
|
chapter; or |
|
(3) constitute misrepresentation made in connection |
|
with: |
|
(A) the sale of products; or |
|
(B) services rendered. (V.T.I.C. Art. 5.43-3, |
|
Sec. 9(a).) |
|
Sec. 6003.253. DISCIPLINARY HEARING. (a) If the state fire |
|
marshal proposes to suspend, revoke, or refuse to renew a license or |
|
registration certificate issued under this chapter, the holder of |
|
the license or certificate is entitled to a hearing conducted by the |
|
State Office of Administrative Hearings. |
|
(b) Rules of practice adopted by the commissioner |
|
applicable to the proceedings for a disciplinary action may not |
|
conflict with rules adopted by the State Office of Administrative |
|
Hearings. (V.T.I.C. Art. 5.43-3, Sec. 9A (part).) |
|
Sec. 6003.254. APPLICABILITY OF ADMINISTRATIVE PROCEDURE |
|
ACT. Proceedings for the denial, suspension, or revocation of a |
|
registration certificate or license, appeals from those |
|
proceedings, and any other proceedings for a disciplinary action |
|
are governed by Chapter 2001, Government Code. (V.T.I.C. Art. |
|
5.43-3, Secs. 9(b), 9A (part).) |
|
Sec. 6003.255. REAPPLICATION REQUIREMENTS. (a) An |
|
applicant or holder of a registration certificate or license whose |
|
certificate or license has been denied, refused, or revoked under |
|
this chapter, other than for failure to pass a required written |
|
examination, may not file another application for a registration |
|
certificate or license before: |
|
(1) the first anniversary of the effective date of the |
|
denial, refusal, or revocation; or |
|
(2) if judicial review of the denial, refusal, or |
|
revocation is sought, before the first anniversary of the date of |
|
the final court order or decree affirming the action. |
|
(b) The commissioner may deny an application described by |
|
Subsection (a) unless the applicant shows good cause why the |
|
denial, refusal, or revocation of the registration certificate or |
|
license should not be considered a bar to the issuance of a new |
|
registration certificate or license. (V.T.I.C. Art. 5.43-3, Sec. |
|
9(c).) |
|
[Sections 6003.256-6003.300 reserved for expansion] |
|
SUBCHAPTER G. CRIMINAL PENALTY |
|
Sec. 6003.301. CRIMINAL PENALTY. (a) A person commits an |
|
offense if the person knowingly violates Section 6003.151(a), |
|
6003.153, or 6003.251. |
|
(b) An offense under this section is a Class B misdemeanor. |
|
(c) Venue for an offense under this section is in Travis |
|
County or the county in which the offense is committed. (V.T.I.C. |
|
Art. 5.43-3, Sec. 10; New.) |
|
PART K. ADDITIONS TO GOVERNMENT CODE AND LOCAL GOVERNMENT CODE |
|
SECTION 1K.001. ADDITION. Subchapter A, Chapter 533, |
|
Government Code, is amended by adding Section 533.019 to read as |
|
follows: |
|
Sec. 533.019. MANAGED CARE ORGANIZATIONS: FISCAL SOLVENCY |
|
AND COMPLAINT SYSTEM GUIDELINES. (a) The Texas Department of |
|
Insurance, in conjunction with the commission, shall establish |
|
fiscal solvency standards and complaint system guidelines for |
|
managed care organizations that serve Medicaid recipients. |
|
(b) The guidelines must require that information regarding |
|
a managed care organization's complaint process be made available |
|
to a recipient in an appropriate communication format when the |
|
recipient enrolls in the Medicaid managed care program. (V.T.I.C. |
|
Art. 1.61.) |
|
SECTION 1K.002. ADDITION. Subtitle C, Title 5, Local |
|
Government Code, is amended by adding Chapter 177 to read as |
|
follows: |
|
CHAPTER 177. LIFE, HEALTH, AND ACCIDENT INSURANCE FOR OFFICIALS, |
|
EMPLOYEES, AND RETIREES OF POLITICAL SUBDIVISIONS |
|
SUBCHAPTER A. GENERAL PROVISIONS |
|
Sec. 177.001. CERTAIN COVERAGE AUTHORIZED. (a) A county or |
|
other political subdivision of this state may procure contracts |
|
insuring the political subdivision's officials, employees, and |
|
retirees or any class of the political subdivision's officials, |
|
employees, and retirees under a policy of group life, group health, |
|
accident, accidental death and dismemberment, or hospital, |
|
surgical, or medical expense insurance. |
|
(b) The dependents of those officials, employees, and |
|
retirees may be insured under a group policy that provides: |
|
(1) health insurance; or |
|
(2) hospital, surgical, or medical expense insurance. |
|
(V.T.I.C. Art. 3.51-2, Sec. (a) (part).) |
|
Sec. 177.002. PAYMENT OF PREMIUMS. (a) A county or other |
|
political subdivision of this state that is authorized to procure a |
|
contract insuring the political subdivision's officials, |
|
employees, and retirees or any class of the political subdivision's |
|
officials, employees, and retirees under a policy of group |
|
insurance that covers one or more risks may pay from the local funds |
|
of the political subdivision all or any portion of the premiums for |
|
the policy. The political subdivision may also pay all or any |
|
portion of the premiums on group health, hospital, surgical, or |
|
medical expense insurance for dependents of the political |
|
subdivision's officials, employees, and retirees. |
|
(b) If authorized by the official, employee, or retiree in |
|
writing to make the deduction, the county or other political |
|
subdivision may deduct from the person's salary an amount equal to |
|
any required contribution by the person to the premiums for the |
|
insurance issued under Section 177.001 to the political |
|
subdivision as the policyholder. (V.T.I.C. Art. 3.51-2, Secs. |
|
(a) (part), (b), (c) (part).) |
|
Sec. 177.003. USE OF STATE FUNDS. State funds may not be |
|
used to procure a contract under this subchapter or pay premiums |
|
under that contract. (V.T.I.C. Art. 3.51-2, Sec. (a) (part).) |
|
[Sections 177.004-177.050 reserved for expansion] |
|
SUBCHAPTER B. HEALTH AND INSURANCE FUND |
|
Sec. 177.051. FUND AUTHORIZED. (a) A county or other |
|
political subdivision of this state may establish a fund to provide |
|
insurance authorized by Subchapter A. |
|
(b) A fund established under Subsection (a) shall be known |
|
as the "health and insurance fund--employees and dependents." |
|
(V.T.I.C. Art. 3.51-2, Sec. (c) (part).) |
|
Sec. 177.052. PAYMENT OF MONEY INTO FUND. There shall be |
|
credited to a fund established under this subchapter: |
|
(1) any salary deduction to which an official, |
|
employee, or retiree agrees in writing; and |
|
(2) contributions from the county or other political |
|
subdivision. (V.T.I.C. Art. 3.51-2, Sec. (c) (part).) |
|
Sec. 177.053. USE OF MONEY IN FUND. Payment from a fund |
|
established under this subchapter: |
|
(1) is authorized only for the payment of premiums on |
|
life, group health, accident, accidental death and dismemberment, |
|
or hospital, surgical, or medical expense insurance for officials, |
|
employees, retirees, and their dependents; and |
|
(2) must be made in accordance with rules adopted by |
|
the county or other political subdivision establishing the fund. |
|
(V.T.I.C. Art. 3.51-2, Sec. (c) (part).) |
|
Sec. 177.054. PAYMENT OF CLAIMS FROM FUND. A claim against |
|
a fund established under this subchapter shall be payable in the |
|
same manner as other claims of the county or other political |
|
subdivision. (V.T.I.C. Art. 3.51-2, Sec. (c) (part).) |
|
PART L. REPEALER |
|
SECTION 1L.001. REPEALER. (a) The following Acts and |
|
articles as compiled in Vernon's Texas Insurance Code are repealed: |
|
(1) 1.01, 1.02, 1.10, 1.12, 1.13, 1.33, and 1.61; |
|
(2) 3.11, 3.38, 3.49-3, 3.50-7B, and 3.51-2; |
|
(3) 3.50-7A, as added by Chapter 201, Acts of the 78th |
|
Legislature, Regular Session, 2003; |
|
(4) 3.50-7A, as added by Chapter 213, Acts of the 78th |
|
Legislature, Regular Session, 2003; |
|
(5) 5.01-1, 5.02, 5.03-1, 5.05, 5.14, 5.43-1, 5.43-2, |
|
5.43-3, and 5.66; and |
|
(6) 21.20-2, 21.49-15, 21.49-16, 21.49C, 21.70, and |
|
21.80. |
|
(b) Subsection (b), Article 1.09-1, Insurance Code, is |
|
repealed. |
|
(c) Subchapter B, Chapter 4, Insurance Code, is repealed. |
|
PART M. LEGISLATIVE INTENT |
|
SECTION 1M.001. LEGISLATIVE INTENT. This article is |
|
enacted under Section 43, Article III, Texas Constitution. This |
|
article is intended as a recodification only, and no substantive |
|
change in law is intended by this article. |
|
PART N. EFFECTIVE DATE |
|
SECTION 1N.001. EFFECTIVE DATE. This article takes effect |
|
April 1, 2009. |
|
ARTICLE 2. UPDATES OF CROSS-REFERENCES IN TITLES 2, 3, 5, 6, 7, 8, |
|
10, 11, AND 13, INSURANCE CODE |
|
PART A. GENERAL PROVISIONS |
|
SECTION 2A.001. This article is enacted as part of the |
|
state's continuing statutory revision program under Chapter 323, |
|
Government Code. This article is a revision for purposes of Section |
|
43, Article III, Texas Constitution, and has the purpose of making |
|
necessary corrections to enacted codifications of the Insurance |
|
Code. |
|
SECTION 2A.002. If any provision of this article conflicts |
|
with a statute enacted by the 80th Legislature, Regular Session, |
|
2007, the statute controls. |
|
PART B. CROSS-REFERENCE UPDATES: TITLE 2, INSURANCE CODE |
|
SECTION 2B.001. Section 34.004(a), Insurance Code, is |
|
amended to correct a cross-reference to read as follows: |
|
(a) A person is not liable in a civil action, including an |
|
action for libel or slander, for collecting, reviewing, analyzing, |
|
disseminating, or reporting information collected from annual |
|
statements filed under Chapter 802 [Article 1.11] if the person is: |
|
(1) the department, the commissioner, or an employee |
|
of the department; |
|
(2) a member or employee of or delegate to the National |
|
Association of Insurance Commissioners or an authorized committee, |
|
subcommittee, or task force of that association; or |
|
(3) another person who is responsible for collecting, |
|
reviewing, analyzing, and disseminating information from filed |
|
annual statement convention blanks. |
|
SECTION 2B.002. Section 36.002, Insurance Code, is amended |
|
to correct cross-references to read as follows: |
|
Sec. 36.002. ADDITIONAL RULEMAKING AUTHORITY. The |
|
commissioner may adopt reasonable rules that are: |
|
(1) necessary to effect the purposes of a provision |
|
of: |
|
(A) Subchapter B, Chapter 5; |
|
(B) Subchapter C, Chapter 1806; |
|
(C) Subchapter A, Chapter 2301; |
|
(D) Chapter 251, as that chapter relates to |
|
casualty insurance and fidelity, guaranty, and surety bond |
|
insurance; |
|
(E) Chapter 253; |
|
(F) Chapter 2008, 2251, or 2252; or |
|
(G) Subtitle B, Title 10; or |
|
(2) appropriate to accomplish the purposes of a |
|
provision of: |
|
(A) Section 37.051(a), 403.002, 492.051(b) or |
|
(c), 501.159, 941.003(b)(1) [941.003(b)(3)] or (c), or |
|
942.003(b)(1) [942.003(b)(3)] or (c); |
|
(B) Subchapter H, Chapter 544; |
|
(C) Chapter 251, as that chapter relates to: |
|
(i) automobile insurance; |
|
(ii) casualty insurance and fidelity, |
|
guaranty, and surety bond insurance; |
|
(iii) fire insurance and allied lines; |
|
(iv) workers' compensation insurance; or |
|
(v) aircraft insurance; |
|
(D) Chapter 5, 252, 253, 254, 255, 256, 426, 493, |
|
494, 1804, 1805, 1806, [or] 2171, 6001, 6002, or 6003; |
|
(E) Subtitle B, C, D, E, F, H, or I, Title 10; |
|
(F) Section 417.008, Government Code; or |
|
(G) [Chapter 406A, Labor Code; or
|
|
[(H)] Chapter 2154, Occupations Code. |
|
SECTION 2B.003. Section 36.106, Insurance Code, is amended |
|
to correct cross-references to read as follows: |
|
Sec. 36.106. WAIVER OF CERTAIN NOTICE REQUIREMENTS. The |
|
commissioner may, on written agreement or stipulation of each party |
|
and any intervenor, waive or modify the notice publication |
|
requirement of Section 822.059 [Article 2.01], 822.157 [2.03], |
|
841.060 [3.04], or 884.058 [22.03]. |
|
SECTION 2B.004. Section 38.002(a)(1), Insurance Code, is |
|
amended to correct a cross-reference to read as follows: |
|
(1) "Insurer" means an insurance company, reciprocal |
|
or interinsurance exchange, mutual insurance company, capital |
|
stock company, county mutual insurance company, Lloyd's plan, or |
|
other legal entity engaged in the business of personal automobile |
|
insurance or residential property insurance in this state. The |
|
term includes: |
|
(A) an affiliate as described by [Section 2,
|
|
Article 21.49-1, or] Section 823.003(a) if that affiliate is |
|
authorized to write and is writing personal automobile insurance or |
|
residential property insurance in this state; |
|
(B) the Texas Windstorm Insurance Association |
|
created and operated under Chapter 2210 [Article 21.49]; |
|
(C) the FAIR Plan Association under Chapter 2211 |
|
[Article 21.49A]; and |
|
(D) the Texas Automobile Insurance Plan |
|
Association under Chapter 2151 [Article 21.81]. |
|
SECTION 2B.005. Section 38.003(b), Insurance Code, is |
|
amended to correct a cross-reference to read as follows: |
|
(b) For purposes of this section, "insurer" means a |
|
reciprocal or interinsurance exchange, mutual insurance company, |
|
capital stock company, county mutual insurance company, Lloyd's |
|
plan, life, accident, or health or casualty insurance company, |
|
health maintenance organization, mutual life insurance company, |
|
mutual insurance company other than life, mutual, or natural |
|
premium life insurance company, general casualty company, |
|
fraternal benefit society, group hospital service company, or other |
|
legal entity engaged in the business of insurance in this state. |
|
The term includes an affiliate as described by [Section 2, Article
|
|
21.49-1, or] Section 823.003(a) if that affiliate is authorized to |
|
write and is writing insurance in this state. |
|
SECTION 2B.006. Section 38.051, Insurance Code, is amended |
|
to correct cross-references to read as follows: |
|
Sec. 38.051. DEFINITION. In this subchapter, "health |
|
benefit plan provider" means an insurance company, group hospital |
|
service corporation, or health maintenance organization that |
|
issues: |
|
(1) an individual, group, blanket, or franchise |
|
insurance policy, an insurance agreement, a group hospital service |
|
contract, or an evidence of coverage, that provides benefits for |
|
medical or surgical expenses incurred as a result of an accident or |
|
sickness; or |
|
(2) a long-term care benefit plan [insurance policy], |
|
as defined by Section 1651.003 [2, Article 3.70-12]. |
|
SECTION 2B.007. Section 38.101(2), Insurance Code, is |
|
amended to correct cross-references to read as follows: |
|
(2) "Health benefit plan coverage" means a group |
|
policy, contract, or certificate of health insurance or benefits |
|
delivered, issued for delivery, or renewed in this state by: |
|
(A) an insurance company subject to a law |
|
described by Section 841.002 [Chapter 3]; |
|
(B) a group hospital service corporation under |
|
Chapter 842 [20]; |
|
(C) a health maintenance organization under |
|
Section 1367.053, Subchapter A, Chapter 1452, Subchapter B, Chapter |
|
1507, Chapters 222, 251, and 258, as applicable to a health |
|
maintenance organization, and Chapters 843, 1271, and 1272 [the
|
|
Texas Health Maintenance Organization Act (Chapter 20A, Vernon's
|
|
Texas Insurance Code)]; or |
|
(D) a self-insurance trust or mechanism |
|
providing health care benefits. |
|
SECTION 2B.008. Section 38.152, Insurance Code, is amended |
|
to correct a cross-reference to read as follows: |
|
Sec. 38.152. EXEMPTION. This subchapter does not apply to |
|
a farm mutual insurance company or to a county mutual fire insurance |
|
company writing exclusively industrial fire insurance as described |
|
by Section 912.310 [Article 17.02]. |
|
SECTION 2B.009. Section 38.252(c), Insurance Code, is |
|
amended to correct a cross-reference to read as follows: |
|
(c) The commissioner shall not require reporting of data: |
|
(1) that could reasonably be used to identify a |
|
specific enrollee in a health benefit plan; |
|
(2) in any way that violates confidentiality |
|
requirements of state or federal law applicable to an enrollee in a |
|
health benefit plan; or |
|
(3) in which the health maintenance organization |
|
operating under [the Texas Health Maintenance Organization Act (] |
|
Chapter 843 [20A, Vernon's Texas Insurance Code)] does not directly |
|
process the claim or does not receive complete and accurate |
|
encounter data. |
|
SECTION 2B.010. Section 82.002(a), Insurance Code, is |
|
amended to correct cross-references to read as follows: |
|
(a) This chapter applies to each company regulated by the |
|
commissioner, including: |
|
(1) a domestic or foreign, stock or mutual, life, |
|
health, or accident insurance company; |
|
(2) a domestic or foreign, stock or mutual, fire or |
|
casualty insurance company; |
|
(3) a Mexican casualty company; |
|
(4) a domestic or foreign Lloyd's plan insurer; |
|
(5) a domestic or foreign reciprocal or interinsurance |
|
exchange; |
|
(6) a domestic or foreign fraternal benefit society; |
|
(7) a domestic or foreign title insurance company; |
|
(8) an attorney's title insurance company; |
|
(9) a stipulated premium insurance company; |
|
(10) a nonprofit legal service corporation; |
|
(11) a health maintenance organization; |
|
(12) a statewide mutual assessment company; |
|
(13) a local mutual aid association; |
|
(14) a local mutual burial association; |
|
(15) an association exempt under Section 887.102 |
|
[Article 14.17]; |
|
(16) a nonprofit hospital, medical, or dental service |
|
corporation, including a company subject to Chapter 842 [20]; |
|
(17) a county mutual insurance company; and |
|
(18) a farm mutual insurance company. |
|
SECTION 2B.011. Section 83.001(4), Insurance Code, is |
|
amended to correct cross-references to read as follows: |
|
(4) "Unfair act" means an unfair method of |
|
competition, an unfair or deceptive act or practice, or an unfair |
|
claim settlement practice as defined under Chapter 541 [Article
|
|
21.21] or 542 [21.21-2] or a rule adopted under either chapter |
|
[article]. |
|
SECTION 2B.012. Section 83.002(a), Insurance Code, is |
|
amended to correct cross-references to read as follows: |
|
(a) This chapter applies to each company regulated by the |
|
commissioner, including: |
|
(1) a domestic or foreign, stock or mutual, life, |
|
health, or accident insurance company; |
|
(2) a domestic or foreign, stock or mutual, fire or |
|
casualty insurance company; |
|
(3) a Mexican casualty company; |
|
(4) a domestic or foreign Lloyd's plan insurer; |
|
(5) a domestic or foreign reciprocal or interinsurance |
|
exchange; |
|
(6) a domestic or foreign fraternal benefit society; |
|
(7) a domestic or foreign title insurance company; |
|
(8) an attorney's title insurance company; |
|
(9) a stipulated premium insurance company; |
|
(10) a nonprofit legal service corporation; |
|
(11) a statewide mutual assessment company; |
|
(12) a local mutual aid association; |
|
(13) a local mutual burial association; |
|
(14) an association exempt under Section 887.102 |
|
[Article 14.17]; |
|
(15) a nonprofit hospital, medical, or dental service |
|
corporation, including a company subject to Chapter 842 [20]; |
|
(16) a county mutual insurance company; and |
|
(17) a farm mutual insurance company. |
|
SECTION 2B.013. Section 83.051(a), Insurance Code, is |
|
amended to correct cross-references to read as follows: |
|
(a) The commissioner ex parte may issue an emergency cease |
|
and desist order if: |
|
(1) the commissioner believes that: |
|
(A) an authorized person engaging in the business |
|
of insurance is: |
|
(i) committing an unfair act; or |
|
(ii) in a hazardous condition or a |
|
hazardous financial condition under Section 843.406 [19, Texas
|
|
Health Maintenance Organization Act (Article 20A.19, Vernon's
|
|
Texas Insurance Code),] or Subchapter A, Chapter 404 [Article
|
|
1.32], as determined by the commissioner; or |
|
(B) an unauthorized person: |
|
(i) is engaging in the business of |
|
insurance in violation of Chapter 101 or in violation of a rule |
|
adopted under that chapter; or |
|
(ii) is engaging in the business of |
|
insurance in violation of Chapter 101 and is committing an unfair |
|
act; and |
|
(2) it appears to the commissioner that the alleged |
|
conduct: |
|
(A) is fraudulent; |
|
(B) is hazardous or creates an immediate danger |
|
to the public safety; or |
|
(C) is causing or can be reasonably expected to |
|
cause public injury that: |
|
(i) is likely to occur at any moment; |
|
(ii) is incapable of being repaired or |
|
rectified; and |
|
(iii) has or is likely to have influence or |
|
effect. |
|
SECTION 2B.014. Section 101.001(a), Insurance Code, is |
|
amended to correct a cross-reference to read as follows: |
|
(a) It is a state concern that many residents of this state |
|
hold insurance policies issued by persons or insurers who are not |
|
authorized to do insurance business in this state and who are not |
|
qualified as eligible surplus lines insurers under Chapter 981 |
|
[Article 1.14-2]. These residents face often insurmountable |
|
obstacles in asserting legal rights under the policies in foreign |
|
forums under unfamiliar laws and rules of practice. |
|
SECTION 2B.015. Section 101.002(2), Insurance Code, is |
|
amended to correct a cross-reference to read as follows: |
|
(2) "Unfair act" means an unfair method of competition |
|
or an unfair or deceptive act or practice as defined under Chapter |
|
541 [Article 21.21] or a rule adopted under that chapter [article]. |
|
SECTION 2B.016. Section 101.052, Insurance Code, is amended |
|
to correct cross-references to read as follows: |
|
Sec. 101.052. ADVERTISING RELATING TO MEDICARE SUPPLEMENT |
|
BENEFIT PLANS [POLICIES]. With respect to a Medicare supplement |
|
benefit plan [policy] authorized under Chapter 1652 [Article 3.74], |
|
the business of insurance in this state includes using, creating, |
|
publishing, mailing, or disseminating in this state an |
|
advertisement relating to an act that constitutes the business of |
|
insurance under Section 101.051 unless the advertisement is used, |
|
created, published, mailed, or disseminated on behalf of an insurer |
|
or person who: |
|
(1) is authorized under this code to engage in the |
|
business of insurance in this state; |
|
(2) has actual knowledge of the content of the |
|
advertisement; |
|
(3) has authorized the advertisement to be used, |
|
created, published, mailed, or disseminated on that insurer's or |
|
person's behalf; and |
|
(4) is clearly identified by name in the advertisement |
|
as the sponsor of the advertisement. |
|
SECTION 2B.017. Section 101.101, Insurance Code, is amended |
|
to correct a cross-reference to read as follows: |
|
Sec. 101.101. DEFINITION. In this subchapter, "person" |
|
means an individual or entity that is a person for purposes of |
|
Section 541.002 [2(a), Article 21.21]. |
|
SECTION 2B.018. Section 101.203(c), Insurance Code, is |
|
amended to correct cross-references to read as follows: |
|
(c) This section does not apply to: |
|
(1) a transaction in this state that: |
|
(A) involves a policy that: |
|
(i) is lawfully solicited, negotiated, |
|
written, and delivered outside this state; and |
|
(ii) covers, at the time the policy is |
|
issued, only subjects of insurance that are not resident, located, |
|
or expressly to be performed in this state; and |
|
(B) takes place after the policy is issued; or |
|
(2) surplus lines insurance procured through eligible |
|
surplus lines insurers [carriers] as defined by Section 981.002 |
|
[Article 1.14-2]. |
|
SECTION 2B.019. Section 101.301(b), Insurance Code, is |
|
amended to correct cross-references to read as follows: |
|
(b) This section does not apply to: |
|
(1) a transaction described by Section 101.053(b)(4); |
|
or |
|
(2) surplus lines insurance procured through eligible |
|
surplus lines insurers [carriers] as defined by Section 981.002 |
|
[Article 1.14-2]. |
|
PART C. CROSS-REFERENCE UPDATES: TITLE 3, INSURANCE CODE |
|
SECTION 2C.001. Section 252.002(b), Insurance Code, is |
|
amended to correct a cross-reference to read as follows: |
|
(b) The commissioner shall annually adjust the rate of |
|
assessment of the maintenance tax so that the tax imposed that year, |
|
together with any unexpended funds produced by the tax, produces |
|
the amount the commissioner determines is necessary to pay the |
|
expenses during the succeeding year of regulating all classes of |
|
insurance specified under: |
|
(1) Chapters 1807, 2001-2006, 2171, 6001, 6002, and |
|
6003; |
|
(2) Subchapter C, Chapter 5; |
|
(3) Subchapter H, Chapter 544; |
|
(4) Subchapter D, Chapter 1806; |
|
(5) Section 403.002; |
|
(6) Sections 417.007, 417.008, and 417.009, |
|
Government Code; and |
|
(7) Chapter 2154, Occupations Code. |
|
SECTION 2C.002. Section 252.003, Insurance Code, is amended |
|
to correct a cross-reference to read as follows: |
|
Sec. 252.003. PREMIUMS SUBJECT TO TAXATION. An insurer |
|
shall pay maintenance taxes under this chapter on the correctly |
|
reported gross premiums collected from writing insurance in this |
|
state against loss or damage by: |
|
(1) bombardment; |
|
(2) civil war or commotion; |
|
(3) cyclone; |
|
(4) earthquake; |
|
(5) excess or deficiency of moisture; |
|
(6) explosion as defined by Section 2002.006(b) |
|
[Article 5.52]; |
|
(7) fire; |
|
(8) flood; |
|
(9) frost and freeze; |
|
(10) hail; |
|
(11) insurrection; |
|
(12) invasion; |
|
(13) lightning; |
|
(14) military or usurped power; |
|
(15) an order of a civil authority made to prevent the |
|
spread of a conflagration, epidemic, or catastrophe; |
|
(16) rain; |
|
(17) riot; |
|
(18) the rising of the waters of the ocean or its |
|
tributaries; |
|
(19) smoke or smudge; |
|
(20) strike or lockout; |
|
(21) tornado; |
|
(22) vandalism or malicious mischief; |
|
(23) volcanic eruption; |
|
(24) water or other fluid or substance resulting from |
|
the breakage or leakage of sprinklers, pumps, or other apparatus |
|
erected for extinguishing fires, water pipes, or other conduits or |
|
containers; |
|
(25) weather or climatic conditions; or |
|
(26) windstorm. |
|
SECTION 2C.003. Section 253.002(b), Insurance Code, is |
|
amended to correct a cross-reference to read as follows: |
|
(b) The commissioner shall annually adjust the rate of |
|
assessment of the maintenance tax so that the tax imposed that year, |
|
together with any unexpended funds produced by the tax, produces |
|
the amount the commissioner determines is necessary to pay the |
|
expenses during the succeeding year of regulating all classes of |
|
insurance specified under Section 253.003 [Subchapter B, Chapter
|
|
5]. |
|
SECTION 2C.004. Section 253.003, Insurance Code, is amended |
|
to correct a cross-reference to read as follows: |
|
Sec. 253.003. PREMIUMS SUBJECT TO TAXATION. An insurer |
|
shall pay maintenance taxes under this chapter on the correctly |
|
reported gross premiums from writing a class of insurance specified |
|
under: |
|
(1) Chapters 2008, 2251, and 2252; |
|
(2) Subchapter B, Chapter 5; |
|
(3) Subchapter C, Chapter 1806; |
|
(4) Subchapter A, Chapter 2301; and |
|
(5) Subtitle B, Title 10. |
|
SECTION 2C.005. Section 255.003(a), Insurance Code, is |
|
amended to correct a cross-reference to read as follows: |
|
(a) An insurer shall pay maintenance taxes under this |
|
chapter on the correctly reported gross workers' compensation |
|
insurance premiums from writing workers' compensation insurance in |
|
this state, including the modified annual premium of a policyholder |
|
that purchases an optional deductible plan under Subchapter E, |
|
Chapter 2053 [Article 5.55C]. |
|
SECTION 2C.006. Section 256.002(b), Insurance Code, is |
|
amended to correct a cross-reference to read as follows: |
|
(b) The commissioner shall annually adjust the rate of |
|
assessment of the maintenance tax so that the tax imposed that year, |
|
together with any unexpended funds produced by the tax, produces |
|
the amount the commissioner determines is necessary to pay the |
|
expenses during the succeeding year of regulating all classes of |
|
insurance specified under Chapter 2101 [Subchapter K, Chapter 5]. |
|
SECTION 2C.007. Section 256.003, Insurance Code, is amended |
|
to correct a cross-reference to read as follows: |
|
Sec. 256.003. PREMIUMS SUBJECT TO TAXATION. An insurer |
|
shall pay maintenance taxes under this chapter on the correctly |
|
reported gross premiums from writing a class of insurance specified |
|
under Chapter 2101 [Subchapter K, Chapter 5]. |
|
SECTION 2C.008. Section 261.003(b), Insurance Code, is |
|
amended to correct a cross-reference to read as follows: |
|
(b) The commissioner shall annually adjust the rate of |
|
assessment of the maintenance tax so that the tax imposed that year, |
|
together with any unexpended funds produced by the tax, produces |
|
the amount the commissioner determines is necessary to pay the |
|
expenses during the succeeding year of regulating all classes of |
|
insurance specified under Chapter 2204 [Article 1.14-3]. |
|
SECTION 2C.009. Section 261.004, Insurance Code, is amended |
|
to correct a cross-reference to read as follows: |
|
Sec. 261.004. PREMIUMS SUBJECT TO TAXATION. The exchange |
|
shall pay maintenance taxes under this chapter on the correctly |
|
reported gross premiums paid through the exchange on all classes of |
|
insurance specified under Chapter 2204 [Article 1.14-3]. |
|
PART D. CROSS-REFERENCE UPDATES: TITLE 5, INSURANCE CODE |
|
SECTION 2D.001. Section 501.158, Insurance Code, is amended |
|
to correct cross-references to read as follows: |
|
Sec. 501.158. CONFIDENTIALITY REQUIREMENTS. |
|
Confidentiality requirements applicable to examination reports |
|
under Sections 401.105 and 401.106 [Article 1.18] and to the |
|
commissioner under Section 441.201 [3A, Article 21.28-A,] apply to |
|
the public counsel. |
|
SECTION 2D.002. Section 501.204(a), Insurance Code, is |
|
amended to correct a cross-reference to read as follows: |
|
(a) This section applies to each insurer authorized to |
|
engage in business in this state under: |
|
(1) [Chapter 25;
|
|
[(2)] Chapter 841; |
|
(2) [(3)] Chapter 842; |
|
(3) [(4)] Chapter 843; |
|
(4) [(5)] Chapter 882; |
|
(5) [(6)] Chapter 884; |
|
(6) [(7)] Chapter 885; |
|
(7) [(8)] Chapter 887; |
|
(8) [(9)] Chapter 888; |
|
(9) [(10)] Chapter 961; |
|
(10) Chapter 962; |
|
(11) Chapter 982; |
|
(12) Subchapter B, Chapter 1103; |
|
(13) Subchapter A, Chapter 1104; |
|
(14) Chapter 1201, or a provision listed in Section |
|
1201.005; |
|
(15) Chapter 1551; |
|
(16) Chapter 1578; or |
|
(17) Chapter 1601. |
|
SECTION 2D.003. Sections 523.051(a) and (c), Insurance |
|
Code, are amended to correct a cross-reference to read as follows: |
|
(a) The market assistance program is a voluntary program |
|
designed to assist applicants for insurance and insureds in this |
|
state in obtaining residential property insurance coverage in |
|
underserved areas. The commissioner by rule shall designate |
|
underserved areas using the standards described by Section 2004.002 |
|
[1, Article 5.35-3]. |
|
(c) The market assistance program may not provide |
|
assistance regarding windstorm and hail insurance coverage for a |
|
risk eligible for that coverage under Chapter 2210 [Article 21.49]. |
|
SECTION 2D.004. Section 523.202(b), Insurance Code, is |
|
amended to correct a cross-reference to read as follows: |
|
(b) After each review, the executive committee shall report |
|
to the commissioner regarding: |
|
(1) the need to continue operating the voluntary |
|
market assistance program; |
|
(2) the need to establish a mandatory market |
|
assistance program; |
|
(3) the need to establish a FAIR (Fair Access to |
|
Insurance Requirements) Plan under Chapter 2211 [Article 21.49A]; |
|
or |
|
(4) other recommendations the executive committee |
|
considers appropriate. |
|
SECTION 2D.005. Section 541.005(a), Insurance Code, is |
|
amended to correct cross-references to read as follows: |
|
(a) A risk retention group or purchasing group described by |
|
Subchapter B, Chapter 2201, or [, as those terms are defined by] |
|
Section 2201.251 that is [2, Article 21.54,] not chartered in this |
|
state may not engage in a trade practice in this state that is |
|
defined as unlawful under this chapter. |
|
SECTION 2D.006. Section 541.454(a), Insurance Code, is |
|
amended to correct cross-references to read as follows: |
|
(a) Civil penalties, premium refunds, judgments, |
|
compensatory judgments, individual recoveries, orders, class |
|
action awards, costs, damages, or attorney's fees assessed or |
|
awarded under this chapter: |
|
(1) may be paid only from the capital or surplus funds |
|
of the offending insurer; and |
|
(2) may not take precedence over, be in priority to, or |
|
in any other manner apply to: |
|
(A) Chapter 462 or 463 [Article 21.28-C or
|
|
21.28-D] or any other insurance guaranty act; or |
|
(B) Chapter 422 [Article 21.39-A]. |
|
SECTION 2D.007. Section 542.052, Insurance Code, is amended |
|
to correct a cross-reference to read as follows: |
|
Sec. 542.052. APPLICABILITY OF SUBCHAPTER. This subchapter |
|
applies to any insurer authorized to engage in business as an |
|
insurance company or to provide insurance in this state, including: |
|
(1) a stock life, health, or accident insurance |
|
company; |
|
(2) a mutual life, health, or accident insurance |
|
company; |
|
(3) a stock fire or casualty insurance company; |
|
(4) a mutual fire or casualty insurance company; |
|
(5) a Mexican casualty insurance company; |
|
(6) a Lloyd's plan; |
|
(7) a reciprocal or interinsurance exchange; |
|
(8) a fraternal benefit society; |
|
(9) a stipulated premium company; |
|
(10) a nonprofit legal services corporation; |
|
(11) a statewide mutual assessment company; |
|
(12) a local mutual aid association; |
|
(13) a local mutual burial association; |
|
(14) an association exempt under Section 887.102; |
|
(15) a nonprofit hospital, medical, or dental service |
|
corporation, including a corporation subject to Chapter 842; |
|
(16) a county mutual insurance company; |
|
(17) a farm mutual insurance company; |
|
(18) a risk retention group; |
|
(19) a purchasing group; |
|
(20) an eligible surplus lines insurer; and |
|
(21) except as provided by Section 542.053(b), a |
|
guaranty association operating under Chapter 462 or 463 [Article
|
|
21.28-C or 21.28-D]. |
|
SECTION 2D.008. Sections 542.053(a) and (b), Insurance |
|
Code, are amended to correct cross-references to read as follows: |
|
(a) This subchapter does not apply to: |
|
(1) workers' compensation insurance; |
|
(2) mortgage guaranty insurance; |
|
(3) title insurance; |
|
(4) fidelity, surety, or guaranty bonds; |
|
(5) marine insurance as defined by Section 1807.001 |
|
[Article 5.53]; or |
|
(6) a guaranty association created and operating under |
|
Chapter 2602. |
|
(b) A guaranty association operating under Chapter 462 or |
|
463 [Article 21.28-C or 21.28-D] is not subject to the damage |
|
provisions of Section 542.060. |
|
SECTION 2D.009. Section 542.102(b), Insurance Code, is |
|
amended to correct a cross-reference to read as follows: |
|
(b) This section does not apply to a workers' compensation |
|
insurance policy subject to Section 2051.151 [Article 5.65A]. |
|
SECTION 2D.010. Section 542.152, Insurance Code, is amended |
|
to correct a cross-reference to read as follows: |
|
Sec. 542.152. EXCEPTION. This subchapter does not apply |
|
to: |
|
(1) a casualty insurance policy that requires the |
|
insured's consent to settle a claim against the insured; |
|
(2) fidelity, surety, or guaranty bonds; or |
|
(3) marine insurance as defined by Section 1807.001 |
|
[Article 5.53]. |
|
SECTION 2D.011. Section 544.301(1), Insurance Code, is |
|
amended to correct cross-references to read as follows: |
|
(1) "Insurer" means an insurance company, reciprocal |
|
or interinsurance exchange, mutual insurance company, capital |
|
stock company, county mutual insurance company, farm mutual |
|
insurance company, Lloyd's plan, or other legal entity authorized |
|
to write residential property insurance in this state. The term |
|
includes an affiliate, as described by Section 823.003(a), if that |
|
affiliate is authorized to write and is writing residential |
|
property insurance in this state. The term does not include: |
|
(A) an eligible surplus lines insurer regulated |
|
under Chapter 981; |
|
(B) the Texas Windstorm Insurance Association |
|
under Chapter 2210 [Article 21.49]; or |
|
(C) the FAIR Plan Association under Chapter 2211 |
|
[Article 21.49A]. |
|
SECTION 2D.012. Section 551.001, Insurance Code, is amended |
|
to correct cross-references by amending Subsection (a) and adding |
|
Subsection (a-1) to read as follows: |
|
(a) The commissioner may, as necessary, adopt and enforce |
|
reasonable rules, including notice requirements, relating to the |
|
cancellation and nonrenewal of any insurance policy regulated by |
|
the department under: |
|
(1) Chapter 5; |
|
(2) Chapter 1804, 1805, 2171, or 2301; or |
|
(3) Subtitle C, D, E, or F, Title 10[, other than:
|
|
[(1) a policy subject to Subchapter B or C; or
|
|
[(2)
a marine insurance policy other than inland
|
|
marine]. |
|
(a-1) Notwithstanding Subsection (a), Subsection (a) does |
|
not apply to: |
|
(1) an insurance policy subject to Subchapter B or C of |
|
this chapter; or |
|
(2) a marine insurance policy other than inland |
|
marine. |
|
SECTION 2D.013. Sections 551.107(b) and (e), Insurance |
|
Code, are amended to correct cross-references to read as follows: |
|
(b) A claim under this section does not include a claim: |
|
(1) resulting from a loss caused by natural causes; |
|
(2) that is filed but is not paid or payable under the |
|
policy; or |
|
(3) that an insurer is prohibited from using under |
|
Section 544.353 [3, Article 5.35-4]. |
|
(e) An insurer may notify an insured who has filed two |
|
claims in a period of less than three years that the insurer may |
|
refuse to renew the policy if the insured files a third claim during |
|
the three-year period. If the insurer does not notify the insured |
|
in accordance with this subsection, the insurer may not refuse to |
|
renew the policy because of claims. The notice form must: |
|
(1) list the policyholder's claims; and |
|
(2) contain the sentence: "The filing by you of |
|
another claim, except for a claim resulting from a loss caused by |
|
natural causes, a claim filed but not paid or payable under the |
|
policy under which it was filed, or an appliance-related claim that |
|
we are prohibited from using under Section 544.353 [3, Article
|
|
5.35-4], Texas Insurance Code, could cause us to refuse to renew |
|
your policy." |
|
SECTION 2D.014. Section 553.004(a), Insurance Code, is |
|
amended to correct a cross-reference to read as follows: |
|
(a) If the commissioner considers it necessary, the |
|
commissioner may initiate an examination of an insurer under |
|
Sections 401.051, 401.052, and 401.054-401.062 [Article 1.15]. |
|
SECTION 2D.015. Section 558.001, Insurance Code, is amended |
|
to correct a cross-reference to read as follows: |
|
Sec. 558.001. DEFINITION. In this chapter, "insurer" means |
|
an insurance company or other entity authorized to engage in the |
|
business of insurance in this state. The term includes: |
|
(1) a stock life, health, or accident insurance |
|
company; |
|
(2) a mutual life, health, or accident insurance |
|
company; |
|
(3) a stock fire or casualty insurance company; |
|
(4) a mutual fire or casualty insurance company; |
|
(5) a Mexican casualty insurance company; |
|
(6) a farm mutual insurance company; |
|
(7) a county mutual insurance company; |
|
(8) a Lloyd's plan; |
|
(9) a reciprocal or insurance exchange; |
|
(10) a fraternal benefit society; |
|
(11) a stipulated premium company; |
|
(12) a nonprofit legal services corporation; |
|
(13) a statewide mutual assessment company; |
|
(14) a local mutual aid association; |
|
(15) a local mutual burial association; |
|
(16) an association exempt under Section 887.102; |
|
(17) a nonprofit hospital, medical, or dental service |
|
corporation, including a corporation subject to Chapter 842; |
|
(18) a risk retention group; |
|
(19) a purchasing group; |
|
(20) an eligible surplus lines insurer; and |
|
(21) a guaranty association operating under Chapter |
|
462 or 463 [Article 21.28-C or 21.28-D]. |
|
SECTION 2D.016. Section 558.002(c), Insurance Code, is |
|
amended to correct cross-references to read as follows: |
|
(c) A guaranty association shall promptly refund any |
|
unearned premium as described by Subchapter E, Chapter 462 [Section
|
|
5(8), Article 21.28-C], or Sections 463.003(9) [5(10)] and 463.259 |
|
[8(n), Article 21.28-D]. |
|
SECTION 2D.017. Section 706.001(a), Insurance Code, is |
|
amended to correct a cross-reference to read as follows: |
|
(a) The definitions adopted under Sections 2251.002 and |
|
2301.002 and the terms described by Sections 2251.003 and 2301.003 |
|
[Article 5.13-2] apply to this chapter. |
|
SECTION 2D.018. Section 706.004, Insurance Code, is amended |
|
to correct a cross-reference to read as follows: |
|
Sec. 706.004. RATES AND FORMS. Notwithstanding any other |
|
law, rates and forms for insurance coverage issued under this |
|
chapter are governed by: |
|
(1) Subchapters A-E, Chapter 2251; |
|
(2) Subchapter A, Chapter 2301; and |
|
(3) Article 5.13-2. |
|
PART E. CROSS-REFERENCE UPDATES: TITLE 6, INSURANCE CODE |
|
SECTION 2E.001. Section 802.056, Insurance Code, is amended |
|
to correct cross-references to read as follows: |
|
Sec. 802.056. STATUS OF REPORTS AND OTHER INFORMATION. A |
|
report or any other information resulting from the collection, |
|
review, analysis, and distribution of information developed from |
|
the filing of annual statement convention blanks and provided to |
|
the department by the National Association of Insurance |
|
Commissioners is considered part of the process of examination of |
|
insurance companies under this code, including Chapters 86 and 401 |
|
[Articles 1.15-1.19]. |
|
SECTION 2E.002. Section 803.009, Insurance Code, is amended |
|
to correct cross-references to read as follows: |
|
Sec. 803.009. CONFLICTING PROVISIONS. This chapter |
|
prevails over a conflicting provision of any other law of this |
|
state, including: |
|
(1) Chapters 221, 222, and 223; |
|
(2) Sections 401.151, 401.152, 401.155, and 401.156; |
|
and |
|
(3) Section 171.0525, Tax Code [Articles 1.16, 4.10,
|
|
4.11, and 9.59]. |
|
SECTION 2E.003. Section 804.104, Insurance Code, is amended |
|
to correct a cross-reference to read as follows: |
|
Sec. 804.104. RISK RETENTION GROUP NOT CHARTERED IN THIS |
|
STATE. A risk retention group that is not chartered but that is |
|
registered in this state under Section 2201.152 [4(b)(3), Article
|
|
21.54], must designate the commissioner as its agent for service of |
|
process and receipt of legal documents. |
|
SECTION 2E.004. Section 804.201(a), Insurance Code, is |
|
amended to correct a cross-reference to read as follows: |
|
(a) Process served by serving the commissioner under this |
|
chapter must be directed to the defendant and include: |
|
(1) for an unauthorized person or insurer, the name |
|
and address of the person or insurer to be served; |
|
(2) for a risk retention group, the name and address of |
|
the group to be served; |
|
(3) for a surplus lines insurer, the name and address |
|
of the insurer to be served; |
|
(4) for an unincorporated association, trust, or other |
|
organization formed under Chapter 1505 [Article 3.71], the name and |
|
address of the association, trust, or organization; or |
|
(5) for an authorized company, the name and address of |
|
the company as it appears in the department records. |
|
SECTION 2E.005. Section 822.056(e), Insurance Code, is |
|
amended to correct a cross-reference to read as follows: |
|
(e) If all of the authorized shares of stock without par |
|
value are not subscribed and paid for when the charter is granted or |
|
the amendment is filed, respectively, the insurance company shall |
|
file with the department a certificate authenticated by a majority |
|
of the directors stating the number of shares without par value |
|
issued and the consideration received for those shares. An |
|
insurance company may issue and dispose of those remaining |
|
authorized shares for money or an instrument authorized for minimum |
|
capital under: |
|
(1) a provision of Subchapter B, Chapter 424, other |
|
than Section 424.052, 424.072, or 424.073; and |
|
(2) Section 822.204 [and Article 2.10]. |
|
SECTION 2E.006. Sections 822.061(a) and (b), Insurance |
|
Code, are amended to correct a cross-reference to read as follows: |
|
(a) On receipt of a charter fee in the amount determined |
|
under Chapter 202 [Article 4.07], the commissioner shall examine |
|
the articles of incorporation filed with the department under |
|
Section 822.060 and any certificate filed under Section |
|
822.057(a)(4). |
|
(b) If the commissioner approves the articles of |
|
incorporation and, if applicable, the certificate filed under |
|
Section 822.057(a)(4), the commissioner shall certify and file the |
|
approved documents with the department records and, on receipt of a |
|
fee in the amount determined under Chapter 202 [Article 4.07], the |
|
commissioner shall issue a certified copy of the charter to the |
|
incorporators. |
|
SECTION 2E.007. Section 822.155, Insurance Code, is amended |
|
to correct a cross-reference to read as follows: |
|
Sec. 822.155. APPLICATION FOR AMENDMENT OF CHARTER. A |
|
domestic insurance company may amend its charter by paying to the |
|
commissioner a fee in the amount determined under Chapter 202 |
|
[Article 4.07] and by filing with the department: |
|
(1) an application for a charter amendment on the form |
|
and containing the information prescribed by the commissioner; and |
|
(2) the company's proposed amendment. |
|
SECTION 2E.008. Sections 822.158(a) and (e), Insurance |
|
Code, are amended to correct cross-references to read as follows: |
|
(a) Not later than the 60th day after the date the |
|
application under Section 822.155 is filed, the commissioner shall |
|
determine whether: |
|
(1) the proposed capital structure of the insurance |
|
company meets the requirements of this code; |
|
(2) the officers, directors, and managing head of the |
|
insurance company have sufficient insurance experience, ability, |
|
standing, and good record to make success of the company probable; |
|
(3) the applicants are acting in good faith; |
|
(4) if the proposed amendment relates to a diminution |
|
of the insurance company's charter powers with respect to the kinds |
|
of insurance business in which the company may be engaged, all |
|
liabilities incidental to the exercise of the powers to be |
|
eliminated have been terminated or wholly reinsured; and |
|
(5) the property involved in an increase of capital or |
|
surplus, or both, is: |
|
(A) properly valued; and |
|
(B) in the form authorized by the following |
|
provisions [Section 822.204 and Article 2.10], to the extent those |
|
provisions apply: |
|
(i) Subchapter B, Chapter 424, other than |
|
Sections 424.052, 424.072, and 424.073; and |
|
(ii) Section 822.204. |
|
(e) On approval of a certificate required under Section |
|
822.156 and receipt of a fee in the amount determined under Chapter |
|
202 [Article 4.07], the commissioner shall issue to the directors a |
|
certified copy of an amendment authorizing the issuance of shares |
|
of stock without par value that is filed under this section. The |
|
amendment is effective on issuance of the certified copy of the |
|
amendment. |
|
SECTION 2E.009. Section 822.211, Insurance Code, is amended |
|
to correct cross-references to read as follows: |
|
Sec. 822.211. ACTION OF COMMISSIONER WHEN CAPITAL OR |
|
SURPLUS REQUIREMENTS NOT SATISFIED. If an insurance company does |
|
not comply with the capital and surplus requirements of this |
|
chapter, the commissioner may enter an order prohibiting the |
|
company from writing new business and may: |
|
(1) place the company under state supervision or |
|
conservatorship; |
|
(2) declare the company to be in a hazardous condition |
|
as provided by Subchapter A, Chapter 404 [Article 1.32]; |
|
(3) declare the company to be impaired as provided by |
|
Subchapter B, Chapter 404 [Section 5, Article 1.10]; or |
|
(4) apply to the company any other applicable sanction |
|
provided by this code. |
|
SECTION 2E.010. Section 823.001(c), Insurance Code, is |
|
amended to read as follows: |
|
(c) The purpose of this chapter [article] is to promote the |
|
public interest by: |
|
(1) facilitating the achievement of the objectives |
|
described by Subsection (a); |
|
(2) requiring disclosure of pertinent information |
|
relating to and approval of changes in control of an insurer; |
|
(3) requiring disclosure and approval of material |
|
transactions and relationships between the insurer and the |
|
insurer's affiliates, including certain dividends to shareholders |
|
paid by the insurer; and |
|
(4) providing standards governing material |
|
transactions between the insurer and the insurer's affiliates. |
|
SECTION 2E.011. Section 823.353(a), Insurance Code, is |
|
amended to correct a cross-reference to read as follows: |
|
(a) Each registered insurer that complies with an order |
|
under Section 823.351(a) shall pay the expense of the examination |
|
in accordance with Sections 401.151, 401.152, 401.155, and 401.156 |
|
[Article 1.16]. |
|
SECTION 2E.012. Section 823.451, Insurance Code, is amended |
|
to correct cross-references to read as follows: |
|
Sec. 823.451. RECEIVERSHIP. If it appears to the |
|
commissioner that a person's violation of this chapter so impairs |
|
the financial condition of a domestic insurer as to threaten the |
|
insurer's insolvency or make the further transaction of the |
|
insurer's business hazardous to the insurer's policyholders or |
|
creditors or the public, the commissioner may proceed under |
|
Chapters 441 and 443 [Articles 21.28 and 21.28-A] to take |
|
possession of the insurer's property and conduct the business of |
|
the insurer. |
|
SECTION 2E.013. Section 824.151(b), Insurance Code, is |
|
amended to correct a cross-reference to read as follows: |
|
(b) Except as provided by Section 824.152, the provisions of |
|
Subchapter D, Chapter 425, [Article 3.39] that limit investments in |
|
the corporate stock of another corporation do not apply to a |
|
purchase made under this section. |
|
SECTION 2E.014. Sections 824.152(d) and (g), Insurance |
|
Code, are amended to correct a cross-reference to read as follows: |
|
(d) A purchase, offer to purchase, tender offer, request to |
|
purchase, or invitation to purchase shares in excess of the limits |
|
imposed under Subchapter D, Chapter 425, [Article 3.39] may not be |
|
made until it is filed with and approved by the commissioner in |
|
accordance with Chapter 823. |
|
(g) If the merger or consolidation does not take effect |
|
within the period finally determined and extended by the |
|
commissioner, the purchasing corporation must sell or otherwise |
|
dispose of the purchased shares that exceed the investment |
|
limitations imposed under Subchapter D, Chapter 425, [Article 3.39] |
|
within six months of the final effective date. |
|
SECTION 2E.015. Section 828.051, Insurance Code, is amended |
|
to correct cross-references to read as follows: |
|
Sec. 828.051. EXCEPTION TO LIMITATION ON PURCHASING SHARES |
|
OF OTHER COMPANY. Subchapters C and D, Chapter 425, [Articles 3.33
|
|
and 3.39] do not apply to a purchase or contract described by |
|
Section 828.001 if all requirements of this subchapter are met. |
|
SECTION 2E.016. Section 828.054, Insurance Code, is amended |
|
to correct cross-references to read as follows: |
|
Sec. 828.054. APPROVAL REQUIRED. A purchase, offer to |
|
purchase, tender offer, request to purchase, or invitation to |
|
purchase shares in excess of the limits imposed under Subchapter C |
|
or D, Chapter 425, [Article 3.33 or 3.39] may not be made until it is |
|
filed with and approved by the commissioner in accordance with |
|
Chapter 823. |
|
SECTION 2E.017. Section 828.056(b), Insurance Code, is |
|
amended to correct cross-references to read as follows: |
|
(b) If the reinsurance agreement does not take effect within |
|
the period finally determined and extended by the commissioner, the |
|
purchasing company shall sell or otherwise dispose of the purchased |
|
shares that exceed the investment limitations imposed under |
|
Subchapter C or D, Chapter 425, [Article 3.33 or 3.39] within six |
|
months of the final effective date. |
|
SECTION 2E.018. Section 841.002, Insurance Code, is amended |
|
to correct cross-references to read as follows: |
|
Sec. 841.002. APPLICABILITY OF CHAPTER AND OTHER |
|
LAW. Except as otherwise expressly provided by this code, each |
|
insurance company incorporated or engaging in business in this |
|
state as a life insurance company, an accident insurance company, a |
|
life and accident insurance company, a health and accident |
|
insurance company, or a life, health, and accident insurance |
|
company is subject to: |
|
(1) this chapter; |
|
(2) Chapter 3; |
|
(3) Chapters 425 and 492; [and] |
|
(4) [(3)] Title 7; |
|
(5) Sections 1202.051, 1204.151, 1204.153, and |
|
1204.154; |
|
(6) Subchapter A, Chapter 1202, Subchapters A and F, |
|
Chapter 1204, Subchapter A, Chapter 1273, Subchapters A, B, and D, |
|
Chapter 1355, and Subchapter A, Chapter 1366; |
|
(7) Subchapter A, Chapter 1507; |
|
(8) Chapters 1203, 1210, 1251-1254, 1301, 1351, 1354, |
|
1359, 1364, 1368, 1505, 1506, 1651, 1652, and 1701; and |
|
(9) Chapter 177, Local Government Code. |
|
SECTION 2E.019. Section 841.054(c), Insurance Code, is |
|
amended to correct a cross-reference to read as follows: |
|
(c) At the time of incorporation, the required capital and |
|
surplus shall consist only of: |
|
(1) United States currency; |
|
(2) bonds of the United States, this state, or a county |
|
or municipality of this state; or |
|
(3) government insured mortgage loans that are |
|
authorized by this chapter or Chapter 425 [3], with not more than 50 |
|
percent of the required capital invested in first mortgage real |
|
property loans. |
|
SECTION 2E.020. Section 841.058(a), Insurance Code, is |
|
amended to correct a cross-reference to read as follows: |
|
(a) To obtain a charter for a domestic insurance company, |
|
the incorporators must pay to the department the charter fee in an |
|
amount determined under Chapter 202 [Article 4.07] and file with |
|
the department: |
|
(1) an application for charter on the form and |
|
containing the information prescribed by the commissioner; |
|
(2) the company's articles of incorporation; and |
|
(3) an affidavit made by two or more of the |
|
incorporators that states that: |
|
(A) the minimum capital and surplus requirements |
|
of Section 841.054 are satisfied; |
|
(B) the capital and surplus are the bona fide |
|
property of the company; and |
|
(C) the information in the articles of |
|
incorporation is true and correct. |
|
SECTION 2E.021. Section 841.061(c), Insurance Code, is |
|
amended to correct a cross-reference to read as follows: |
|
(c) If the commissioner does not reject the application |
|
under Subsection (b), the commissioner shall approve the |
|
application. On approval of an application, the department shall |
|
record the information required by Section 841.058 in records |
|
maintained for that purpose. On receipt of a fee in the amount |
|
determined under Chapter 202 [Article 4.07], the commissioner shall |
|
provide to the incorporators a certified copy of the application, |
|
articles of incorporation, and submitted affidavit. |
|
SECTION 2E.022. Section 841.207, Insurance Code, is amended |
|
to correct a cross-reference to read as follows: |
|
Sec. 841.207. ACTIONS OF COMMISSIONER WHEN CAPITAL AND |
|
SURPLUS REQUIREMENTS NOT SATISFIED. If an insurance company does |
|
not comply with the capital and surplus requirements of this |
|
chapter, the commissioner may order the insurance company to cease |
|
writing new business and may: |
|
(1) place the insurance company under state |
|
supervision or conservatorship; |
|
(2) declare the insurance company to be in a hazardous |
|
condition as provided by Subchapter A, Chapter 404 [Article 1.32]; |
|
(3) declare the insurance company to be impaired as |
|
provided by Section 841.206; or |
|
(4) apply to the insurance company any other |
|
applicable sanction provided by this code. |
|
SECTION 2E.023. Section 841.255(a), Insurance Code, is |
|
amended to correct a cross-reference to read as follows: |
|
(a) Not later than March 1 of each year, a domestic |
|
insurance company shall: |
|
(1) prepare a statement showing the condition of the |
|
company on December 31 of the preceding year; and |
|
(2) deliver the statement to the department |
|
accompanied by a filing fee in the amount determined under Chapter |
|
202 [Article 4.07]. |
|
SECTION 2E.024. Section 841.257, Insurance Code, is amended |
|
to correct cross-references to read as follows: |
|
Sec. 841.257. KINDS OF BUSINESS LIMITED. An insurance |
|
company authorized to engage in the business of insurance under |
|
this chapter or in accordance with Section 982.051 may not accept a |
|
risk or write an insurance policy in this state or any other state |
|
or country other than: |
|
(1) a life, accident, or health insurance policy; |
|
(2) reinsurance under Sections 492.051(b) and (c) or |
|
Chapter 493 [Article 5.75-1] by a life insurance company authorized |
|
to engage in the business of insurance in this state; or |
|
(3) reinsurance under Chapter 494 [Article 5.75-3] by |
|
a domestic insurance company. |
|
SECTION 2E.025. Section 842.201(c), Insurance Code, is |
|
amended to correct a cross-reference to read as follows: |
|
(c) The department shall charge a fee in an amount |
|
determined under Chapter 202 [Article 4.07] for filing the |
|
statement. |
|
SECTION 2E.026. Section 842.209, Insurance Code, is amended |
|
to correct cross-references to read as follows: |
|
Sec. 842.209. EXAMINATIONS. The following laws [Articles
|
|
1.15 and 1.16] apply to a group hospital service corporation: |
|
(1) Subchapter A, Chapter 86; and |
|
(2) Sections 401.051, 401.052, 401.054-401.062, |
|
401.151, 401.152, 401.155, and 401.156. |
|
SECTION 2E.027. Section 842.210, Insurance Code, is amended |
|
to correct cross-references to read as follows: |
|
Sec. 842.210. LIQUIDATION, REHABILITATION, OR CONSERVATION |
|
OF GROUP HOSPITAL SERVICE CORPORATION. The dissolution, |
|
liquidation, rehabilitation, or conservation of a group hospital |
|
service corporation is subject to Chapters 441 and 443 [Articles
|
|
21.28 and 21.28-A]. |
|
SECTION 2E.028. Section 842.253, Insurance Code, is amended |
|
to correct a cross-reference to read as follows: |
|
Sec. 842.253. POLICY, CERTIFICATE, AND APPLICATION |
|
FORMS. A policy, certificate, or application form used by a group |
|
hospital service corporation is subject to Chapter 1701 [Article
|
|
3.42]. |
|
SECTION 2E.029. Sections 843.002(20), (28), and (30), |
|
Insurance Code, are amended to correct cross-references to read as |
|
follows: |
|
(20) "Net worth" means the amount by which total |
|
liabilities, excluding liability for subordinated debt issued in |
|
compliance with Chapter 427 [Article 1.39], is exceeded by total |
|
admitted assets. |
|
(28) "Uncovered expenses" means the estimated amount |
|
of administrative expenses and the estimated cost of health care |
|
services that are not guaranteed, insured, or assumed by a person |
|
other than the health maintenance organization. The term does not |
|
include the cost of health care services if the physician or |
|
provider agrees in writing that an enrollee is not liable, |
|
assessable, or in any way subject to making payment for the services |
|
except as described in the evidence of coverage issued to the |
|
enrollee under Chapter 1271 [Article 20A.09]. The term includes |
|
any amount due on loans in the next calendar year unless the amount |
|
is specifically subordinated to uncovered medical and health care |
|
expenses or the amount is guaranteed by a sponsoring organization. |
|
(30) "Delegated entity" means an entity, other than a |
|
health maintenance organization authorized to engage in business |
|
under this chapter, that by itself, or through subcontracts with |
|
one or more entities, undertakes to arrange for or provide medical |
|
care or health care to an enrollee in exchange for a predetermined |
|
payment on a prospective basis and that accepts responsibility for |
|
performing on behalf of the health maintenance organization a |
|
function regulated by this chapter, Section 1367.053, Subchapter A, |
|
Chapter 1452, Subchapter B, Chapter 1507, Chapter 222, 251, or 258, |
|
as applicable to a health maintenance organization, or Chapter 1271 |
|
or 1272 [or Chapter 20A]. The term does not include: |
|
(A) an individual physician; or |
|
(B) a group of employed physicians, practicing |
|
medicine under one federal tax identification number, whose total |
|
claims paid to providers not employed by the group constitute less |
|
than 20 percent of the group's total collected revenue computed on a |
|
calendar year basis. |
|
SECTION 2E.030. Section 843.006(a), Insurance Code, is |
|
amended to correct a cross-reference to read as follows: |
|
(a) Except as provided by Subsection (b), each application, |
|
filing, and report required under this chapter, Section 1367.053, |
|
Subchapter A, Chapter 1452, Subchapter B, Chapter 1507, Chapter |
|
222, 251, or 258, as applicable to a health maintenance |
|
organization, or Chapter 1271 or 1272 [or Chapter 20A] is a public |
|
document. |
|
SECTION 2E.031. Section 843.007(a), Insurance Code, is |
|
amended to correct a cross-reference to read as follows: |
|
(a) Any information relating to the diagnosis, treatment, |
|
or health of an enrollee or applicant obtained by a health |
|
maintenance organization from the enrollee or applicant or from a |
|
physician or provider shall be held in confidence and may not be |
|
disclosed to any person except: |
|
(1) to the extent necessary to accomplish the purposes |
|
of this chapter or: |
|
(A) Section 1367.053; |
|
(B) Subchapter A, Chapter 1452; |
|
(C) Subchapter B, Chapter 1507; |
|
(D) Chapter 222, 251, or 258, as applicable to a |
|
health maintenance organization; or |
|
(E) Chapter 1271 or 1272 [Chapter 20A]; |
|
(2) with the express consent of the enrollee or |
|
applicant; |
|
(3) in compliance with a statute or court order for the |
|
production or discovery of evidence; or |
|
(4) in the event of a claim or litigation between the |
|
enrollee or applicant and the health maintenance organization in |
|
which the information is pertinent. |
|
SECTION 2E.032. Section 843.008, Insurance Code, is amended |
|
to correct cross-references to read as follows: |
|
Sec. 843.008. COSTS OF ADMINISTERING HEALTH MAINTENANCE |
|
ORGANIZATION LAWS. Money collected under this chapter and |
|
Chapters 222, 251, and 258, as applicable to a health maintenance |
|
organization, [Article 20A.33] must be sufficient to administer |
|
this chapter and: |
|
(1) Section 1367.053; |
|
(2) Subchapter A, Chapter 1452; |
|
(3) Subchapter B, Chapter 1507; |
|
(4) Chapters 222, 251, and 258, as applicable to a |
|
health maintenance organization; and |
|
(5) Chapters 1271 and 1272 [Chapter 20A]. |
|
SECTION 2E.033. Sections 843.051(a), (b), and (e), |
|
Insurance Code, are amended to correct cross-references to read as |
|
follows: |
|
(a) Except to the extent that the commissioner determines |
|
that the nature of health maintenance organizations, health care |
|
plans, or evidences of coverage renders a provision of the |
|
following laws clearly inappropriate, Subchapter A, Chapter 542, |
|
Subchapters D and E, Chapter 544, and Chapters 541, 543, and 547 |
|
[Articles 21.21, 21.21A, 21.21-2, 21.21-5, and 21.21-6, as added by
|
|
Chapter 522, Acts of the 74th Legislature, Regular Session, 1995,
|
|
and the Unauthorized Insurers False Advertising Process Act
|
|
(Article 21.21-1, Vernon's Texas Insurance Code)] apply to: |
|
(1) health maintenance organizations that offer |
|
basic, limited, and single health care coverages; |
|
(2) basic, limited, and single health care plans; and |
|
(3) evidences of coverage under basic, limited, and |
|
single health care plans. |
|
(b) A health maintenance organization is subject to: |
|
(1) Chapter 402 [Section 3B, Article 3.51-6]; |
|
(2) Chapter 827 and is an authorized insurer for |
|
purposes of that chapter; and |
|
(3) Subchapter G, Chapter 1251, and Section 1551.064 |
|
[Article 21.49-8]. |
|
(e) Except for Chapter 251, as applicable to a third-party |
|
administrator, and Chapters 259, 4151, and 4201 [Articles 21.07-6
|
|
and 21.58A], insurance laws and group hospital service corporation |
|
laws do not apply to a physician or provider. Notwithstanding this |
|
subsection, a physician or provider who conducts a utilization |
|
review during the ordinary course of treatment of patients under a |
|
joint or delegated review agreement with a health maintenance |
|
organization on services provided by the physician or provider is |
|
not required to obtain certification under Subchapter C, Chapter |
|
4201 [Section 3, Article 21.58A]. |
|
SECTION 2E.034. Section 843.071(b), Insurance Code, is |
|
amended to correct a cross-reference to read as follows: |
|
(b) A person may not use "health maintenance organization" |
|
or "HMO" in the course of operation unless the person: |
|
(1) complies with this chapter and: |
|
(A) Section 1367.053; |
|
(B) Subchapter A, Chapter 1452; |
|
(C) Subchapter B, Chapter 1507; |
|
(D) Chapters 222, 251, and 258, as applicable to |
|
a health maintenance organization; and |
|
(E) Chapters 1271 and 1272 [Chapter 20A]; and |
|
(2) holds a certificate of authority under this |
|
chapter. |
|
SECTION 2E.035. Section 843.073(b), Insurance Code, is |
|
amended to correct a cross-reference to read as follows: |
|
(b) Except as provided by Section 843.101 or 843.318(a), a |
|
physician or provider that employs or enters into a contractual |
|
arrangement with a provider or group of providers to provide basic |
|
or limited health care services or a single health care service is |
|
subject to this chapter and the following provisions [Chapter 20A] |
|
and is required to obtain a certificate of authority under this |
|
chapter: |
|
(1) Section 1367.053; |
|
(2) Subchapter A, Chapter 1452; |
|
(3) Subchapter B, Chapter 1507; |
|
(4) Chapters 222, 251, and 258, as applicable to a |
|
health maintenance organization; and |
|
(5) Chapters 1271 and 1272. |
|
SECTION 2E.036. Sections 843.078(j), (m), and (n), |
|
Insurance Code, are amended to correct cross-references to read as |
|
follows: |
|
(j) An application for a certificate of authority must |
|
include a description of the procedures and programs to be |
|
implemented by the applicant to meet the quality of health care |
|
requirements of this chapter and: |
|
(1) Section 1367.053; |
|
(2) Subchapter A, Chapter 1452; |
|
(3) Subchapter B, Chapter 1507; |
|
(4) Chapters 222, 251, and 258, as applicable to a |
|
health maintenance organization; and |
|
(5) Chapters 1271 and 1272 [Chapter 20A]. |
|
(m) An application for a certificate of authority must |
|
include documentation demonstrating that the applicant will comply |
|
with Section 1271.005(c) [Article 20A.09Z]. |
|
(n) An application for a certificate of authority must |
|
include any other information that the commissioner requires to |
|
make the determinations required by this chapter and: |
|
(1) Section 1367.053; |
|
(2) Subchapter A, Chapter 1452; |
|
(3) Subchapter B, Chapter 1507; |
|
(4) Chapters 222, 251, and 258, as applicable to a |
|
health maintenance organization; and |
|
(5) Chapters 1271 and 1272 [Chapter 20A]. |
|
SECTION 2E.037. Section 843.084, Insurance Code, is amended |
|
to correct a cross-reference to read as follows: |
|
Sec. 843.084. DURATION OF CERTIFICATE OF AUTHORITY. A |
|
certificate of authority continues in effect: |
|
(1) while the certificate holder meets the |
|
requirements of this chapter and: |
|
(A) Section 1367.053; |
|
(B) Subchapter A, Chapter 1452; |
|
(C) Subchapter B, Chapter 1507; |
|
(D) Chapters 222, 251, and 258, as applicable to |
|
a health maintenance organization; and |
|
(E) Chapters 1271 and 1272 [Chapter 20A]; or |
|
(2) until the commissioner suspends or revokes the |
|
certificate or the commissioner terminates the certificate at the |
|
request of the certificate holder. |
|
SECTION 2E.038. Section 843.107, Insurance Code, is amended |
|
to correct a cross-reference to read as follows: |
|
Sec. 843.107. INDEMNITY BENEFITS; POINT-OF-SERVICE |
|
PROVISIONS. A health maintenance organization may offer: |
|
(1) indemnity benefits covering out-of-area emergency |
|
care; |
|
(2) indemnity benefits, in addition to those relating |
|
to out-of-area and emergency care, provided through an insurer or |
|
group hospital service corporation; |
|
(3) a point-of-service plan under Subchapter A, |
|
Chapter 1273 [Article 3.64]; or |
|
(4) a point-of-service rider under Section 843.108. |
|
SECTION 2E.039. Section 843.151, Insurance Code, is amended |
|
to correct a cross-reference to read as follows: |
|
Sec. 843.151. RULES. The commissioner may adopt |
|
reasonable rules as necessary and proper to: |
|
(1) implement this chapter and Section 1367.053, |
|
Subchapter A, Chapter 1452, Subchapter B, Chapter 1507, Chapters |
|
222, 251, and 258, as applicable to a health maintenance |
|
organization, and Chapters 1271 and 1272 [Chapter 20A], including |
|
rules to: |
|
(A) prescribe authorized investments for a |
|
health maintenance organization for all investments not otherwise |
|
addressed in this chapter; |
|
(B) ensure that enrollees have adequate access to |
|
health care services; and |
|
(C) establish minimum physician-to-patient |
|
ratios, mileage requirements for primary and specialty care, |
|
maximum travel time, and maximum waiting time for obtaining an |
|
appointment; and |
|
(2) meet the requirements of federal law and |
|
regulations. |
|
SECTION 2E.040. Section 843.152, Insurance Code, is amended |
|
to correct a cross-reference to read as follows: |
|
Sec. 843.152. SUBPOENA AUTHORITY. In implementing this |
|
chapter and the following provisions [Chapter 20A], the |
|
commissioner may exercise subpoena authority in accordance with |
|
Subchapter C, Chapter 36: |
|
(1) Section 1367.053; |
|
(2) Subchapter A, Chapter 1452; |
|
(3) Subchapter B, Chapter 1507; |
|
(4) Chapters 222, 251, and 258, as applicable to a |
|
health maintenance organization; and |
|
(5) Chapters 1271 and 1272. |
|
SECTION 2E.041. Section 843.153, Insurance Code, is amended |
|
to correct a cross-reference to read as follows: |
|
Sec. 843.153. AUTHORITY TO CONTRACT. In performing duties |
|
under this chapter and the following provisions [Chapter 20A], the |
|
commissioner may contract with a state agency or, after notice and |
|
opportunity for hearing, with a qualified person to make |
|
recommendations concerning determinations to be made by the |
|
commissioner: |
|
(1) Section 1367.053; |
|
(2) Subchapter A, Chapter 1452; |
|
(3) Subchapter B, Chapter 1507; |
|
(4) Chapters 222, 251, and 258, as applicable to a |
|
health maintenance organization; and |
|
(5) Chapters 1271 and 1272. |
|
SECTION 2E.042. Sections 843.155(b) and (c), Insurance |
|
Code, are amended to correct cross-references to read as follows: |
|
(b) The report shall: |
|
(1) be verified by at least two principal officers; |
|
(2) be in a form prescribed by the commissioner; and |
|
(3) include: |
|
(A) a financial statement of the health |
|
maintenance organization, including its balance sheet and receipts |
|
and disbursements for the preceding calendar year, certified by an |
|
independent public accountant; |
|
(B) the number of individuals enrolled during the |
|
preceding calendar year, the number of enrollees as of the end of |
|
that year, and the number of enrollments terminated during that |
|
year; |
|
(C) updated financial projections for the next |
|
calendar year of the type described in Section 843.078(e), until |
|
the health maintenance organization has had a net income for 12 |
|
consecutive months; and |
|
(D) other information relating to the |
|
performance of the health maintenance organization as necessary to |
|
enable the commissioner to perform the commissioner's duties under: |
|
(i) this chapter; |
|
(ii) Section 1367.053; |
|
(iii) Subchapter A, Chapter 1452; |
|
(iv) Subchapter B, Chapter 1507; |
|
(v) Chapters 222, 251, and 258, as |
|
applicable to a health maintenance organization; and |
|
(vi) Chapters 1271 and 1272 [and Chapter
|
|
20A]. |
|
(c) Sections 36.108 and 201.055 and Chapter 802 [and Article
|
|
1.11] apply to the annual report of a health maintenance |
|
organization. |
|
SECTION 2E.043. Sections 843.156(f), (h), and (i), |
|
Insurance Code, are amended to correct cross-references to read as |
|
follows: |
|
(f) The commissioner may examine and use the records of a |
|
health maintenance organization, including records of a quality of |
|
care assurance program and records of a medical peer review |
|
committee, as necessary to implement the purposes of this chapter, |
|
Section 1367.053, Subchapter A, Chapter 1452, Subchapter B, Chapter |
|
1507, Chapters 222, 251, and 258, as applicable to a health |
|
maintenance organization, and Chapters 1271 and 1272 [and Chapter
|
|
20A], including commencement of an enforcement action under Section |
|
843.461 or 843.462. Information obtained under this subsection is |
|
confidential and privileged and is not subject to the public |
|
information law, Chapter 552, Government Code, or to subpoena |
|
except as necessary for the commissioner to enforce this chapter, |
|
Section 1367.053, Subchapter A, Chapter 1452, Subchapter B, Chapter |
|
1507, Chapter 222, 251, or 258, as applicable to a health |
|
maintenance organization, or Chapter 1271 or 1272 [or Chapter 20A]. |
|
In this subsection, "medical peer review committee" has the meaning |
|
assigned by Section 151.002, Occupations Code. |
|
(h) Chapter 86, Section 401.101, and Subchapters B and D, |
|
Chapter 401, [Articles 1.04A, 1.15, 1.16, and 1.19] apply to a |
|
health maintenance organization, except to the extent that the |
|
commissioner determines that the nature of the examination of a |
|
health maintenance organization renders the applicability of those |
|
provisions clearly inappropriate. |
|
(i) Section 38.001, Section 81.003, and Chapter 82[, and
|
|
Article 1.12] apply to a health maintenance organization. |
|
SECTION 2E.044. Section 843.157(a), Insurance Code, is |
|
amended to correct cross-references to read as follows: |
|
(a) The rehabilitation, liquidation, supervision, or |
|
conservation of a health maintenance organization shall be treated |
|
as the rehabilitation, liquidation, supervision, or conservation |
|
of an insurer and be conducted under the supervision of the |
|
commissioner under Chapter 441 or 443 [Article 21.28 or 21.28-A], |
|
as appropriate. |
|
SECTION 2E.045. Sections 843.204(b) and (c), Insurance |
|
Code, are amended to correct cross-references to read as follows: |
|
(b) In this chapter, Section 1367.053, Subchapter A, |
|
Chapter 1452, Subchapter B, Chapter 1507, Chapters 222, 251, and |
|
258, as applicable to a health maintenance organization, and |
|
Chapters 1271 and 1272 [and Chapter 20A], a statement or item of |
|
information is: |
|
(1) considered to be untrue if the statement or item |
|
does not conform to fact in any respect that is or may be |
|
significant to an enrollee of, or person considering enrollment in, |
|
a health care plan; and |
|
(2) considered to be misleading, whether or not the |
|
statement or item is literally untrue, if, in the total context in |
|
which the statement is made or the item is communicated, the |
|
statement or item may be reasonably understood by a reasonable |
|
person who does not possess special knowledge regarding health care |
|
coverage as indicating: |
|
(A) the inclusion of a benefit or advantage that |
|
does not exist and that is of possible significance to an enrollee |
|
of, or person considering enrollment in, a health care plan; or |
|
(B) the absence of an exclusion, limitation, or |
|
disadvantage that does exist and that is of possible significance |
|
to an enrollee of, or person considering enrollment in, a health |
|
care plan. |
|
(c) In this chapter, Section 1367.053, Subchapter A, |
|
Chapter 1452, Subchapter B, Chapter 1507, Chapters 222, 251, and |
|
258, as applicable to a health maintenance organization, and |
|
Chapters 1271 and 1272 [and Chapter 20A], an evidence of coverage is |
|
considered to be deceptive if the evidence of coverage, taken as a |
|
whole and with consideration given to typography and format as well |
|
as language, would cause a reasonable person who does not possess |
|
special knowledge regarding health care plans and evidences of |
|
coverage for health care plans to expect charges or benefits, |
|
services, or other advantages that the evidence of coverage does |
|
not provide or that the health care plan issuing the evidence of |
|
coverage does not regularly make available for enrollees covered |
|
under the evidence of coverage. |
|
SECTION 2E.046. Sections 843.261(a), (c), and (d), |
|
Insurance Code, are amended to correct cross-references to read as |
|
follows: |
|
(a) A health maintenance organization shall implement and |
|
maintain an internal appeal system that: |
|
(1) provides reasonable procedures for the resolution |
|
of an oral or written appeal concerning dissatisfaction or |
|
disagreement with an adverse determination; and |
|
(2) includes procedures for notification, review, and |
|
appeal of an adverse determination in accordance with Chapter 4201 |
|
[Article 21.58A]. |
|
(c) When an enrollee, a person acting on behalf of an |
|
enrollee, or an enrollee's provider of record expresses orally or |
|
in writing any dissatisfaction or disagreement with an adverse |
|
determination, the health maintenance organization or utilization |
|
review agent shall: |
|
(1) consider the expression of dissatisfaction or |
|
disagreement as an appeal of the adverse determination; and |
|
(2) review and resolve the appeal in accordance with |
|
Chapter 4201 [Article 21.58A]. |
|
(d) A health maintenance organization may integrate its |
|
appeal procedures related to adverse determinations with the |
|
complaint and appeal procedures established by the health |
|
maintenance organization under Section 843.251 and otherwise |
|
governed by this subchapter only if the procedures related to |
|
adverse determinations comply with this section and Chapter 4201 |
|
[Article 21.58A]. |
|
SECTION 2E.047. Section 843.282(a), Insurance Code, is |
|
amended to correct a cross-reference to read as follows: |
|
(a) Any person, including a person who has attempted to |
|
resolve a complaint through a health maintenance organization's |
|
complaint system process and is dissatisfied with the resolution, |
|
may submit a complaint to the department alleging a violation of: |
|
(1) this chapter; |
|
(2) Section 1367.053; |
|
(3) Subchapter A, Chapter 1452; |
|
(4) Subchapter B, Chapter 1507; |
|
(5) Chapters 222, 251, and 258, as applicable to a |
|
health maintenance organization; or |
|
(6) Chapter 1271 or 1272 [or Chapter 20A]. |
|
SECTION 2E.048. Section 843.301, Insurance Code, is amended |
|
to correct a cross-reference to read as follows: |
|
Sec. 843.301. PRACTICE OF MEDICINE NOT AFFECTED. This |
|
chapter, Section 1367.053, Subchapter A, Chapter 1452, Subchapter |
|
B, Chapter 1507, Chapters 222, 251, and 258, as applicable to a |
|
health maintenance organization, and Chapters 1271 and 1272 [and
|
|
Chapter 20A] do not: |
|
(1) authorize any person, other than a licensed |
|
physician or practitioner of the healing arts, acting within the |
|
scope of the person's license, to engage directly or indirectly in |
|
the practice of medicine or a healing art; or |
|
(2) authorize any person to regulate, interfere with, |
|
or intervene in any manner in the practice of medicine or a healing |
|
art. |
|
SECTION 2E.049. Section 843.337(e), Insurance Code, is |
|
amended to correct a cross-reference to read as follows: |
|
(e) Except as provided by Chapter 1213 [Article 21.52Z], a |
|
physician or provider may, as appropriate: |
|
(1) mail a claim by United States mail, first class, or |
|
by overnight delivery service; |
|
(2) submit the claim electronically; |
|
(3) fax the claim; or |
|
(4) hand deliver the claim. |
|
SECTION 2E.050. Section 843.352, Insurance Code, is amended |
|
to correct a cross-reference to read as follows: |
|
Sec. 843.352. CONFLICT WITH OTHER LAW. To the extent of |
|
any conflict between this subchapter and Subchapter C, Chapter 1204 |
|
[Article 21.52C], this subchapter controls. |
|
SECTION 2E.051. Sections 843.407(a), (b), and (c), |
|
Insurance Code, are amended to correct cross-references to read as |
|
follows: |
|
(a) In addition to all other remedies available by law, if |
|
the commissioner believes that a health maintenance organization or |
|
another person is insolvent or does not maintain the net worth |
|
required under Sections 843.403, 843.4031, and 843.404, the |
|
commissioner may bring an action in a Travis County district court |
|
to be named receiver in accordance with Section 843.157 and Chapter |
|
443 [Article 21.28]. |
|
(b) The court may: |
|
(1) find that a receiver should take charge of the |
|
assets of the health maintenance organization; and |
|
(2) name the commissioner as the receiver of the |
|
health maintenance organization in accordance with Section 843.157 |
|
and Chapter 443 [Article 21.28]. |
|
(c) The operations and business of a health maintenance |
|
organization represent the business of insurance for purposes of |
|
Section 843.157 and Chapters 441 and 443 [Articles 21.28 and
|
|
21.28-A]. |
|
SECTION 2E.052. Section 843.461(b), Insurance Code, is |
|
amended to correct cross-references to read as follows: |
|
(b) The commissioner may take an enforcement action listed |
|
in Subsection (a) against a health maintenance organization if the |
|
commissioner finds that the health maintenance organization: |
|
(1) is operating in a manner that is: |
|
(A) significantly contrary to its basic |
|
organizational documents or health care plan; or |
|
(B) contrary to the manner described in and |
|
reasonably inferred from other information submitted under Section |
|
843.078, 843.079, or 843.080; |
|
(2) issues an evidence of coverage or uses a schedule |
|
of charges for health care services that does not comply with the |
|
requirements of Sections 843.346, 1271.001-1271.005, 1271.007, |
|
1271.151, 1271.152, and 1271.156, and Subchapters B, C, E, F, and G, |
|
Chapter 1271 [Article 20A.09]; |
|
(3) does not meet the requirements of Section |
|
843.082(1); |
|
(4) provides a health care plan that does not provide |
|
or arrange for basic health care services, provides a limited |
|
health care service plan that does not provide or arrange for the |
|
plan's limited health care services, or provides a single health |
|
care service plan that does not provide or arrange for a single |
|
health care service; |
|
(5) cannot fulfill its obligation to provide: |
|
(A) health care services as required under its |
|
health care plan; |
|
(B) limited health care services as required |
|
under its limited health care service plan; or |
|
(C) a single health care service as required |
|
under its single health care service plan; |
|
(6) is no longer financially responsible and may |
|
reasonably be expected to be unable to meet its obligations to |
|
enrollees or prospective enrollees; |
|
(7) has not implemented the complaint system required |
|
by Section 843.251 in a manner to resolve reasonably valid |
|
complaints; |
|
(8) has advertised or merchandised its services in an |
|
untrue, misrepresentative, misleading, deceptive, or unfair manner |
|
or a person on behalf of the health maintenance organization has |
|
advertised or merchandised the health maintenance organization's |
|
services in an untrue, misrepresentative, misleading, deceptive, |
|
or untrue manner; |
|
(9) would be hazardous to its enrollees if it |
|
continued in operation; |
|
(10) has not complied substantially with: |
|
(A) this chapter [or Chapter 20A] or a rule |
|
adopted under this chapter; or |
|
(B) Section 1367.053, Subchapter A, Chapter |
|
1452, Subchapter B, Chapter 1507, Chapter 222, 251, or 258, as |
|
applicable to a health maintenance organization, or Chapter 1271 or |
|
1272 or a rule adopted under one of those provisions [Chapter 20A]; |
|
or |
|
(11) has not taken corrective action the commissioner |
|
considers necessary to correct a failure to comply with this |
|
chapter, any applicable provision of this code, or any applicable |
|
rule or order of the commissioner not later than the 30th day after |
|
the date of notice of the failure or within any longer period |
|
specified in the notice and determined by the commissioner to be |
|
reasonable. |
|
SECTION 2E.053. Section 843.463, Insurance Code, is amended |
|
to correct a cross-reference to read as follows: |
|
Sec. 843.463. INJUNCTIONS. If the commissioner believes |
|
that a health maintenance organization or another person is |
|
violating or has violated this chapter [or Chapter 20A] or a rule |
|
adopted under this chapter or Section 1367.053, Subchapter A, |
|
Chapter 1452, Subchapter B, Chapter 1507, Chapter 222, 251, or 258, |
|
as applicable to a health maintenance organization, or Chapter 1271 |
|
or 1272 or a rule adopted under one of those provisions [Chapter
|
|
20A], the commissioner may bring an action in a Travis County |
|
district court to enjoin the violation and obtain other relief the |
|
court considers appropriate. |
|
SECTION 2E.054. Section 843.464(a), Insurance Code, is |
|
amended to correct a cross-reference to read as follows: |
|
(a) A person, including an agent or officer of a health |
|
maintenance organization, commits an offense if the person: |
|
(1) wilfully violates this chapter or [Chapter 20A or] |
|
a rule adopted under this chapter or Section 1367.053, Subchapter |
|
A, Chapter 1452, Subchapter B, Chapter 1507, Chapter 222, 251, or |
|
258, as applicable to a health maintenance organization, or Chapter |
|
1271 or 1272 or a rule adopted under one of those provisions |
|
[Chapter 20A]; or |
|
(2) knowingly makes a false statement with respect to |
|
a report or statement required under this chapter or Section |
|
1367.053, Subchapter A, Chapter 1452, Subchapter B, Chapter 1507, |
|
Chapter 222, 251, or 258, as applicable to a health maintenance |
|
organization, or Chapter 1271 or 1272 [Chapter 20A]. |
|
SECTION 2E.055. Section 845.051, Insurance Code, is amended |
|
to correct a cross-reference to read as follows: |
|
Sec. 845.051. STATEWIDE RURAL HEALTH CARE SYSTEM. The |
|
commissioner shall designate a single organization as the statewide |
|
rural health care system. The system is authorized to sponsor, |
|
arrange for the provision of, or provide health care services to |
|
enrollees in programs in rural areas. The programs are not subject |
|
to: |
|
(1) a law requiring the coverage or the offer of |
|
coverage for services by a particular health care provider under: |
|
(A) Chapter 62, Health and Safety Code; |
|
(B) Chapter 32, Human Resources Code; |
|
(C) a state-, county-, or local |
|
government-sponsored indigent care initiative; or |
|
(D) a federal Medicare Plus Choice program; or |
|
(2) Subchapters A-I, Chapter 1251, Subchapter A, |
|
Chapter 1364, Subchapter A, Chapter 1366, or Section 1551.064 |
|
[Article 3.51-6] under a state-, county-, or local |
|
government-sponsored uninsured or indigent care initiative. |
|
SECTION 2E.056. Section 846.003(b), Insurance Code, is |
|
amended to correct cross-references to read as follows: |
|
(b) A multiple employer welfare arrangement is subject to |
|
the following laws: |
|
(1) Subchapters C and D, Chapter 36; |
|
(2) Section 38.001; |
|
(3) Section 81.002; |
|
(4) Chapter 82; |
|
(5) Chapter 83; |
|
(6) Chapter 86; |
|
(7) Section 201.003; |
|
(8) Sections 401.051, 401.052, 401.054-401.062, |
|
401.151, 401.152, 401.155, and 401.156; |
|
(9) Chapter 441; |
|
(10) Chapter 443; |
|
(11) Chapter 461; |
|
(12) Section 521.005; |
|
(13) Chapter 541; |
|
(14) Chapter 701; |
|
(15) Chapter 801; |
|
(16) [(7)] Chapter 803; |
|
(17) [(8)] Chapter 804; |
|
(18) [(9)] Subchapter A, Chapter 805; and |
|
(19) [(10)] Sections 841.259, 841.701-841.702, and |
|
841.705[;
|
|
[(11) Section 841.704;
|
|
[(12) Section 841.259;
|
|
[(13) Article 1.10D;
|
|
[(14) Article 1.12;
|
|
[(15) Article 1.13;
|
|
[(16) Article 1.15;
|
|
[(17) Article 1.16;
|
|
[(18) Article 1.19;
|
|
[(19) Article 1.35;
|
|
[(20) Article 1.31;
|
|
[(21) Article 3.56;
|
|
[(22) Article 21.21;
|
|
[(23) Article 21.28;
|
|
[(24) Article 21.28A; and
|
|
[(25) Article 21.28E]. |
|
SECTION 2E.057. Section 846.007(d), Insurance Code, is |
|
amended to correct a cross-reference to read as follows: |
|
(d) A multiple employer welfare arrangement may establish |
|
premium discounts, rebates, or a reduction in otherwise applicable |
|
copayments or deductibles in return for adherence to programs of |
|
health promotion and disease prevention. A discount, rebate, or |
|
reduction established under this subsection does not violate |
|
Section 541.056(a) [4(8), Article 21.21]. |
|
SECTION 2E.058. Section 846.158(c), Insurance Code, is |
|
amended to correct a cross-reference to read as follows: |
|
(c) Each multiple employer welfare arrangement shall pay |
|
the expenses of the examination as provided by Sections 401.151, |
|
401.152, 401.155, and 401.156 [Article 1.16]. |
|
SECTION 2E.059. Section 846.202(a), Insurance Code, is |
|
amended to correct a cross-reference to read as follows: |
|
(a) In this section, "creditable coverage" has the meaning |
|
assigned by Section 1205.004 [Section 3, Article 21.52G, as added
|
|
by Chapter 955, Acts of the 75th Legislature, Regular Session,
|
|
1997]. |
|
SECTION 2E.060. Sections 861.052(b) and (d), Insurance |
|
Code, are amended to correct a cross-reference to read as follows: |
|
(b) The incorporators shall file with the department: |
|
(1) articles of incorporation for the general casualty |
|
company; |
|
(2) a charter fee in the amount determined under |
|
Chapter 202 [Article 4.07]; and |
|
(3) an affidavit, made by two or more of the |
|
incorporators, that all of the general casualty company's stock is |
|
subscribed in good faith and fully paid for. |
|
(d) On receipt of a fee in the amount determined under |
|
Chapter 202 [Article 4.07], the department shall provide the |
|
incorporators with a certified copy of the articles of |
|
incorporation. |
|
SECTION 2E.061. Section 861.154, Insurance Code, is amended |
|
to correct a cross-reference to read as follows: |
|
Sec. 861.154. DIVIDENDS. Except as authorized by Sections |
|
403.001 and 403.051 [Article 21.31], the directors of a general |
|
casualty company may not issue dividends. |
|
SECTION 2E.062. Section 861.251(b), Insurance Code, is |
|
amended to correct a cross-reference to read as follows: |
|
(b) After incorporation and issuance of a certificate of |
|
authority, a general casualty company shall invest the minimum |
|
capital and surplus as provided by Section 822.204. The company |
|
shall invest all other funds of the company in excess of the minimum |
|
capital and surplus as provided by: |
|
(1) a provision of Subchapter B, Chapter 424, other |
|
than Section 424.052, 424.072, or 424.073; [Article 2.10] and |
|
(2) Section 862.002. |
|
SECTION 2E.063. Section 861.252(a), Insurance Code, is |
|
amended to correct a cross-reference to read as follows: |
|
(a) On granting of the charter to a general casualty |
|
company, the company shall deposit with the comptroller $50,000 in: |
|
(1) cash; or |
|
(2) securities of the kind described by a provision of |
|
Subchapter B, Chapter 424, other than Section 424.052, 424.072, or |
|
424.073 [Article 2.10]. |
|
SECTION 2E.064. Section 861.254(h), Insurance Code, is |
|
amended to correct a cross-reference to read as follows: |
|
(h) Except as provided by Chapter 202 [Article 4.07], the |
|
department shall charge a fee of $20 for filing the annual statement |
|
required by this section. The comptroller shall collect the fee. |
|
SECTION 2E.065. Section 861.257, Insurance Code, is amended |
|
to correct cross-references to read as follows: |
|
Sec. 861.257. EXAMINATION OF COMPANY. A general casualty |
|
company is subject to: |
|
(1) Subchapter A, Chapter 86; and |
|
(2) Sections 401.051, 401.052, 401.054-401.062, |
|
401.151, 401.152, 401.155, and 401.156 [Articles 1.15 and 1.16]. |
|
SECTION 2E.066. Section 861.258(d), Insurance Code, is |
|
amended to correct a cross-reference to read as follows: |
|
(d) Subsection (b) does not apply to: |
|
(1) real property occupied by buildings used in whole |
|
or in part by a general casualty company in the transaction of |
|
business; |
|
(2) an interest in minerals or royalty reserved on the |
|
sale of real property acquired under Sections 862.002(c)(1)-(3); |
|
and |
|
(3) investment real property acquired under Section |
|
424.064 [Article 2.10(e)(11)]. |
|
SECTION 2E.067. Section 862.101(f), Insurance Code, is |
|
amended to correct cross-references to read as follows: |
|
(f) Reinsurance that is required or permitted by this |
|
section must comply with: |
|
(1) Subchapter A, Chapter 491; |
|
(2) Sections 492.051(b) and (c); and |
|
(3) Chapter 493 [Articles 5.75-1 and 21.72]. |
|
SECTION 2E.068. Section 862.151, Insurance Code, is amended |
|
to correct a cross-reference to read as follows: |
|
Sec. 862.151. REDUCTION OF CAPITAL STOCK AND PAR VALUE OF |
|
SHARES. (a) If the minimum surplus of a fire, marine, or inland |
|
marine insurance company is impaired in excess of the amount |
|
permitted under Subchapter B, Chapter 404 [Section 5, Article
|
|
1.10], the commissioner may allow the company to amend its charter |
|
as provided by Sections 822.157 and 822.158 to reduce the amount of |
|
the company's capital stock and the par value of its shares in |
|
proportion to the extent of the permitted amount of impairment. |
|
(b) A company acting under Subsection (a): |
|
(1) may not reduce the par value of its shares below |
|
the sum computed under Section 822.055; |
|
(2) may not deduct from the assets and property on hand |
|
more than $125,000; |
|
(3) shall retain the remainder of the assets and |
|
property on hand as surplus assets; |
|
(4) may not distribute any of the assets or property to |
|
the shareholders; and |
|
(5) may not reduce the capital stock or surplus of the |
|
company to an amount less than the minimum capital and the minimum |
|
surplus required by Sections 822.202, 822.210, and 822.211, subject |
|
to Subchapter B, Chapter 404 [Section 5, Article 1.10]. |
|
SECTION 2E.069. Sections 862.152(a) and (b), Insurance |
|
Code, are amended to correct a cross-reference to read as follows: |
|
(a) This section applies to a fire, marine, or inland marine |
|
insurance company that receives notice from the commissioner under |
|
Subchapter B, Chapter 404 [Section 5, Article 1.10], to make good |
|
within 60 days: |
|
(1) any impairment of the company's required capital; |
|
or |
|
(2) the company's surplus. |
|
(b) The company shall promptly call on its shareholders for |
|
an amount necessary to make the company's capital and surplus equal |
|
to the amount required by Sections 822.054 and 822.210, subject to |
|
Subchapter B, Chapter 404 [Section 5, Article 1.10]. |
|
SECTION 2E.070. Section 862.153(a), Insurance Code, is |
|
amended to correct a cross-reference to read as follows: |
|
(a) If a shareholder of the insurance company who is given |
|
notice under Section 862.152 does not pay the amount called for by |
|
the company under that section, the company may: |
|
(1) require the return of the original certificate of |
|
stock held by the shareholder; and |
|
(2) issue a new certificate for a number of shares that |
|
the shareholder may be entitled to in the proportion that the value |
|
of the funds of the company, computed without inclusion of any money |
|
or other property paid by shareholders in response to the notice |
|
under Section 862.152, bears to the total amount of the original |
|
capital and the minimum surplus of the company required by Section |
|
822.054 or 822.210, subject to Subchapter B, Chapter 404 [Section
|
|
5, Article 1.10]. |
|
SECTION 2E.071. Section 862.154(b), Insurance Code, is |
|
amended to correct a cross-reference to read as follows: |
|
(b) The insurance company shall sell any new stock created |
|
under Subsection (a) for an amount sufficient to make up any |
|
impairment of the company's required minimum capital and to make up |
|
the surplus of the company as required by Section 822.054 or |
|
822.210, subject to Subchapter B, Chapter 404 [Section 5, Article
|
|
1.10], but may not impair the capital of the company. |
|
SECTION 2E.072. Section 881.006(b), Insurance Code, is |
|
amended to correct a cross-reference to read as follows: |
|
(b) Sections 201.001 and 201.002 apply [Article 1.31A
|
|
applies] to the fee. |
|
SECTION 2E.073. Section 882.002, Insurance Code, is amended |
|
to correct cross-references to read as follows: |
|
Sec. 882.002. EXAMINATION OF COMPANY. The following |
|
provisions [Articles 1.15 and 1.16] apply to a mutual life |
|
insurance company organized under this chapter: |
|
(1) Subchapter A, Chapter 86; and |
|
(2) Sections 401.051, 401.052, 401.054-401.062, |
|
401.151, 401.152, 401.155, and 401.156. |
|
SECTION 2E.074. Section 882.056(a), Insurance Code, is |
|
amended to correct a cross-reference to read as follows: |
|
(a) To obtain a charter for a mutual life insurance company |
|
under this chapter, the incorporators must pay the charter fee in |
|
the amount determined under Chapter 202 [Article 4.07] and file |
|
with the department: |
|
(1) an application for charter on the form and |
|
including the information prescribed by the commissioner; |
|
(2) the company's articles of incorporation; and |
|
(3) an affidavit made by two or more of the |
|
incorporators that states that: |
|
(A) the unencumbered surplus requirements of |
|
Section 882.055 are satisfied; |
|
(B) the unencumbered surplus is the bona fide |
|
property of the company; and |
|
(C) the information in the application and |
|
articles of incorporation is true and correct. |
|
SECTION 2E.075. Section 883.202(a), Insurance Code, is |
|
amended to correct a cross-reference to read as follows: |
|
(a) A domestic mutual insurance company that writes |
|
fidelity and surety bond coverage shall maintain on deposit with |
|
the comptroller cash or securities of the kind described by a |
|
provision of Subchapter B, Chapter 424, other than Section 424.052, |
|
424.072, or 424.073, [Article 2.10] in an amount equal to the amount |
|
of cash or securities required of a domestic stock insurance |
|
company. |
|
SECTION 2E.076. Section 884.002(c), Insurance Code, is |
|
amended to correct cross-references to read as follows: |
|
(c) The following provisions of this code apply to a |
|
stipulated premium company: |
|
(1) Article [1.15;
|
|
[(2) Article 1.15A;
|
|
[(3) Article 1.16;
|
|
[(4) Article 1.19;
|
|
[(5) Article 1.32;
|
|
[(6) Article 3.10;
|
|
[(7) Article 3.39;
|
|
[(8) Article 3.40;
|
|
[(9) Article 21.07-7;
|
|
[(10) Article 21.21;
|
|
[(11) Article 21.28;
|
|
[(12) Article 21.32;
|
|
[(13) Article 21.39;
|
|
[(14) Article] 21.47; |
|
(2) [(15)] Section 38.001; |
|
(3) Chapter 86; |
|
(4) Subchapter A, Chapter 401; |
|
(5) Sections 401.051, 401.052, 401.054-401.062, |
|
401.151, 401.152, 401.155, and 401.156; |
|
(6) Sections 403.001, 403.052, and 403.102; |
|
(7) Subchapter A, Chapter 404; |
|
(8) Section 421.001; |
|
(9) Subchapter D, Chapter 425; |
|
(10) Chapter 443; |
|
(11) Chapter 492, other than Sections 492.051(b) and |
|
(c); |
|
(12) Chapter 541; |
|
(13) [(16)] Sections 801.001-801.002; |
|
(14) [(17)] Sections 801.051-801.055; |
|
(15) [(18)] Section 801.057; |
|
(16) [(19)] Sections 801.101-801.102; |
|
(17) [(20)] Subchapter A, Chapter 821; |
|
(18) [(21)] Chapter 824; |
|
(19) [(22)] Chapter 828; |
|
(20) [(23)] Section 841.251; |
|
(21) [(24)] Section 841.259; |
|
(22) [(25)] Section 841.261; [and] |
|
(23) [(26)] Section 841.703; and |
|
(24) Chapter 4152. |
|
SECTION 2E.077. Section 884.056(a), Insurance Code, is |
|
amended to correct a cross-reference to read as follows: |
|
(a) To obtain a charter for a stipulated premium company |
|
under this chapter, the incorporators must pay a charter fee in an |
|
amount determined under Chapter 202 [Article 4.07] and file with |
|
the department: |
|
(1) an application for charter on the form and |
|
containing the information prescribed by the department; |
|
(2) the company's articles of incorporation; and |
|
(3) an affidavit made by two or more of the |
|
incorporators that states that: |
|
(A) the minimum capital and surplus requirements |
|
of Section 884.054 are satisfied; |
|
(B) the capital and surplus is the bona fide |
|
property of the company; and |
|
(C) the information in the application and |
|
articles of incorporation is true and correct. |
|
SECTION 2E.078. Section 884.059(c), Insurance Code, is |
|
amended to correct a cross-reference to read as follows: |
|
(c) If the commissioner does not reject the application |
|
under Subsection (b), the commissioner shall approve the |
|
application and on receipt of a fee in the amount determined under |
|
Chapter 202 [Article 4.07] shall provide to the incorporators a |
|
certified copy of the application, articles of incorporation, and |
|
submitted affidavit. |
|
SECTION 2E.079. Section 884.201, Insurance Code, is amended |
|
to correct a cross-reference to read as follows: |
|
Sec. 884.201. FORM OF CAPITAL AND SURPLUS. After a charter |
|
is granted under this chapter, the stipulated premium company: |
|
(1) shall maintain the company's minimum capital at |
|
all times in a form described by Section 884.054(d); and |
|
(2) may invest the company's surplus as provided by |
|
Sections 425.203-425.228 [Article 3.39]. |
|
SECTION 2E.080. Section 884.253(c), Insurance Code, is |
|
amended to correct a cross-reference to read as follows: |
|
(c) A stipulated premium company that complies with |
|
Subsection (b) may pay cash dividends in accordance with Sections |
|
403.001 and 403.052 [Article 21.32]. |
|
SECTION 2E.081. Sections 884.256(a) and (e), Insurance |
|
Code, are amended to correct cross-references to read as follows: |
|
(a) Except as provided by Section 884.406, not later than |
|
March 31 of each year a stipulated premium company shall: |
|
(1) prepare a statement showing the condition of the |
|
company on December 31 of the preceding year; and |
|
(2) deliver the statement to the department |
|
accompanied by a filing fee in the amount determined under Chapter |
|
202 [Article 4.07]. |
|
(e) Fees collected under this section shall be deposited to |
|
the credit of the Texas Department of Insurance operating account. |
|
Sections 201.001 and 201.002 apply [Article 1.31A applies] to fees |
|
collected under this section. |
|
SECTION 2E.082. Section 884.307(a), Insurance Code, is |
|
amended to correct cross-references to read as follows: |
|
(a) A stipulated premium company that possesses capital and |
|
unencumbered surplus in a combined amount of at least $100,000 more |
|
than all of its liabilities, including contingent liabilities, may |
|
issue annuity contracts as authorized by Chapters [Chapter] 3 and |
|
1701 and Title 7. |
|
SECTION 2E.083. Section 884.310, Insurance Code, is amended |
|
to correct a cross-reference to read as follows: |
|
Sec. 884.310. AGENT. Each agent of a stipulated premium |
|
company must be licensed under Title 13 [Subchapter A, Chapter 21]. |
|
SECTION 2E.084. Sections 884.311(a) and (c), Insurance |
|
Code, are amended to correct cross-references to read as follows: |
|
(a) A stipulated premium insurance company issuing life, |
|
health, or accident coverages or maintaining policies in force that |
|
were issued in accordance with Subchapter I may elect that the |
|
company's investments and transactions be governed by Subchapter C, |
|
Chapter 425 [Article 3.33 of this code]. |
|
(c) After the second anniversary of the effective date of an |
|
initial election authorized by this section, the stipulated premium |
|
insurance company may elect that the company's investments and |
|
transactions be governed by Sections 425.203-425.228 [Article 3.39
|
|
of this code]. |
|
SECTION 2E.085. Section 884.357, Insurance Code, is amended |
|
to correct a cross-reference to read as follows: |
|
Sec. 884.357. FORM APPROVAL. The approval of a form of an |
|
insurance policy issued by a stipulated premium company is governed |
|
by Chapter 1701 [Article 3.42]. |
|
SECTION 2E.086. Section 884.402, Insurance Code, is amended |
|
to correct cross-references to read as follows: |
|
Sec. 884.402. ADDITIONAL COVERAGE. A stipulated premium |
|
company that, at the time it begins to issue coverages under this |
|
subchapter, possesses the amounts of capital and unencumbered |
|
surplus equal to or greater than the corresponding amounts required |
|
for organization of a life and health company under Sections |
|
841.052, 841.054, 841.204, 841.205, 841.301, and 841.302 may, |
|
subject to Section 884.403: |
|
(1) issue any kind of life insurance coverage |
|
authorized by Chapter 3, 841, or 1701 or Title 7; |
|
(2) issue any kind of health or accident insurance |
|
coverage authorized by Chapter 3, 841, 1251, 1505, 1651, 1652, or |
|
1701 or Subchapter A, Chapter 1507; or |
|
(3) issue life insurance coverage through policies |
|
without cash surrender values or nonforfeiture values and that |
|
exceed $10,000 on one life. |
|
SECTION 2E.087. Section 884.405, Insurance Code, is amended |
|
to correct cross-references to read as follows: |
|
Sec. 884.405. AGENT; LICENSE. (a) An agent may not |
|
solicit or write any coverage authorized by this subchapter unless |
|
the agent: |
|
(1) holds a license issued under Subchapters A-E, |
|
Chapter 4054 [Chapter 213, Acts of the 54th Legislature, Regular
|
|
Session, 1955 (Article 21.07-1, Vernon's Texas Insurance Code)]; |
|
and |
|
(2) is appointed by the stipulated premium company for |
|
which the agent is soliciting and writing coverage under this |
|
subchapter. |
|
(b) The commissioner may issue under Subchapters A-E, |
|
Chapter 4054 [Chapter 213, Acts of the 54th Legislature, Regular
|
|
Session, 1955 (Article 21.07-1, Vernon's Texas Insurance Code)], a |
|
license for an agent to solicit and write any coverage authorized by |
|
this subchapter for a stipulated premium company. Subchapters A-E, |
|
Chapter 4054, apply [Chapter 213, Acts of the 54th Legislature,
|
|
Regular Session, 1955 (Article 21.07-1, Vernon's Texas Insurance
|
|
Code), applies] to the stipulated premium company as if the company |
|
were a legal reserve life insurance company. |
|
SECTION 2E.088. Section 884.455, Insurance Code, is amended |
|
to correct a cross-reference to read as follows: |
|
Sec. 884.455. REQUIRED SECURITIES. The commissioner shall |
|
require that a stipulated premium company have securities of the |
|
class and character required by Sections 425.203-425.228 [Article
|
|
3.39] in the amount of the reserve liability computed for the |
|
company under Section 884.454 less any deficiency reserve under |
|
Section 884.453 after all the debts and claims against the company |
|
and the minimum capital required by this chapter have been applied. |
|
SECTION 2E.089. Section 884.601(a), Insurance Code, is |
|
amended to correct a cross-reference to read as follows: |
|
(a) The shareholders of a stipulated premium company that |
|
possesses capital in an amount equal to at least $700,000, |
|
unencumbered surplus in an amount equal to at least $700,000, and |
|
sufficient reserves on hand for the company's policies as required |
|
under provisions of Chapter 425, other than Sections |
|
425.002-425.005, [Subchapter C, Chapter 3,] may convert the company |
|
to a legal reserve company that operates under Chapter 841 by |
|
complying with each requirement applicable to a company operating |
|
under that chapter. |
|
SECTION 2E.090. Section 884.701, Insurance Code, is amended |
|
to correct cross-references to read as follows: |
|
Sec. 884.701. HAZARDOUS FINANCIAL CONDITION, SUPERVISION, |
|
CONSERVATORSHIP, AND LIQUIDATION. Subchapter A, Chapter 404, and |
|
Chapters 441 and 443 [Articles 1.32, 21.28, and 21.28-A] apply to a |
|
stipulated premium company engaged in the business of insurance in |
|
this state. |
|
SECTION 2E.091. Section 885.301(a), Insurance Code, is |
|
amended to correct cross-references to read as follows: |
|
(a) A fraternal benefit society may provide for the payment |
|
of: |
|
(1) death benefits in any form; |
|
(2) endowment benefits; |
|
(3) annuity benefits; |
|
(4) benefits for temporary or permanent disability |
|
resulting from disease or accident; |
|
(5) benefits for hospital, medical, or nursing |
|
expenses resulting from sickness, bodily infirmity, or accident; |
|
(6) benefits for the erection of a monument or |
|
tombstone to the memory of a deceased member; |
|
(7) funeral benefits; and |
|
(8) any other benefit that may be provided by a life, |
|
accident, or health insurance company and that is: |
|
(A) offered in compliance with a law described by |
|
Section 841.002 [the provisions of Chapter 3 and Title 7] |
|
applicable to a life, accident, or health insurance company; and |
|
(B) consistent with this chapter. |
|
SECTION 2E.092. Section 885.306(a), Insurance Code, is |
|
amended to correct a cross-reference to read as follows: |
|
(a) A fraternal benefit society may not deliver or issue for |
|
delivery in this state a benefit certificate unless the form of the |
|
certificate has been filed under Chapter 1701 [Article 3.42]. |
|
SECTION 2E.093. Section 885.351, Insurance Code, is amended |
|
to correct cross-references to read as follows: |
|
Sec. 885.351. AGENTS. (a) A fraternal benefit society may |
|
appoint an agent licensed by the department under Subchapters A-E, |
|
Chapter 4054, [Article 21.07-1] to sell benefits listed under |
|
Section 885.301(a) to society members. |
|
(b) Except as provided by Section 885.352, a person may not |
|
solicit or procure benefit contracts for a fraternal benefit |
|
society unless the person is licensed as a general life, accident, |
|
and health agent under Subchapters A-E, Chapter 4054 [Article
|
|
21.07-1]. |
|
(c) The licensing and regulation of agents for fraternal |
|
benefit societies is subject to Title 13 [Subchapter A, Chapter
|
|
21,] and other laws regulating those agents. |
|
SECTION 2E.094. Section 885.353, Insurance Code, is amended |
|
to correct cross-references to read as follows: |
|
Sec. 885.353. EMPLOYMENT OF CERTAIN PERSONS TO SOLICIT |
|
BUSINESS PROHIBITED. A fraternal benefit society may not employ or |
|
otherwise retain a person to solicit business if the person has had |
|
a license issued under one of the following provisions revoked: |
|
(1) Chapter 4001; |
|
(2) Subchapters A-E and G, Chapter 4051; or |
|
(3) Chapter 4054 [under Article 21.07 or 21.14, or
|
|
under Chapter 213, Acts of the 54th Legislature, Regular Session,
|
|
1955 (Article 21.07-1, Vernon's Texas Insurance Code)]. |
|
SECTION 2E.095. Section 885.404(c), Insurance Code, is |
|
amended to correct a cross-reference to read as follows: |
|
(c) For any category of benefit certificates issued to |
|
insure a female risk, a modified net premium or present value |
|
referred to in Subchapter B, Chapter 425, [Article 3.28] may be |
|
computed according to an age not more than six years younger than |
|
the actual age of the insured. |
|
SECTION 2E.096. Section 885.408(b), Insurance Code, is |
|
amended to correct a cross-reference to read as follows: |
|
(b) Sections 425.203-425.228 apply [Article 3.39 applies] |
|
to reserve investments for a domestic fraternal benefit society. |
|
SECTION 2E.097. Section 885.410, Insurance Code, is amended |
|
to correct cross-references to read as follows: |
|
Sec. 885.410. EXAMINATION OF DOMESTIC FRATERNAL BENEFIT |
|
SOCIETIES. A domestic fraternal benefit society is subject to: |
|
(1) Subchapter A, Chapter 86; |
|
(2) Subchapter A, Chapter 401; and |
|
(3) Sections 401.051, 401.052, 401.054-401.062, |
|
401.151, 401.152, 401.155, and 401.156 [Articles 1.15, 1.15A, and
|
|
1.16]. |
|
SECTION 2E.098. Section 885.411(e), Insurance Code, is |
|
amended to correct cross-references to read as follows: |
|
(e) A foreign fraternal benefit society is subject to the |
|
provisions of Subchapter A, Chapter 86, and Sections 401.051, |
|
401.052, 401.054-401.062, 401.151, 401.152, 401.155, and 401.156 |
|
[Articles 1.15 and 1.16] that apply to an insurer that is not |
|
organized under the laws of this state but is authorized to engage |
|
in business in this state. |
|
SECTION 2E.099. Section 885.412(b), Insurance Code, is |
|
amended to correct cross-references to read as follows: |
|
(b) This section does not apply to a proceeding involving a |
|
fraternal benefit society instituted by the commissioner or the |
|
state, including an administrative hearing, a proceeding under |
|
Chapter 441 or 443 [Article 21.28 or 21.28-A], or a court |
|
proceeding. |
|
SECTION 2E.100. Section 885.413, Insurance Code, is amended |
|
to correct a cross-reference to read as follows: |
|
Sec. 885.413. FEES. The department shall deposit fees |
|
collected under this chapter to the credit of the Texas Department |
|
of Insurance operating account. Sections 201.001 and 201.002 apply |
|
[Article 1.31A applies] to fees collected under this chapter. |
|
SECTION 2E.101. Section 885.414(a), Insurance Code, is |
|
amended to correct cross-references to read as follows: |
|
(a) This chapter does not prevent or limit any action by or |
|
remedy available to the department or the state under Chapter 441 or |
|
443 [Article 21.28 or 21.28-A] or other applicable law. |
|
SECTION 2E.102. Section 886.107(b), Insurance Code, is |
|
amended to correct a cross-reference to read as follows: |
|
(b) Sections 201.001 and 201.002 apply [Article 1.31A
|
|
applies] to the fee. |
|
SECTION 2E.103. Section 887.062, Insurance Code, is amended |
|
to correct cross-references to read as follows: |
|
Sec. 887.062. EXAMINATION. The following provisions |
|
[Articles 1.15 and 1.16] apply to an association: |
|
(1) Subchapter A, Chapter 86; and |
|
(2) Sections 401.051, 401.052, 401.054-401.062, |
|
401.151, 401.152, 401.155, and 401.156. |
|
SECTION 2E.104. Section 887.551, Insurance Code, is amended |
|
to correct cross-references to read as follows: |
|
Sec. 887.551. HAZARDOUS FINANCIAL CONDITION, SUPERVISION, |
|
CONSERVATORSHIP, AND LIQUIDATION. The following provisions |
|
[Articles 1.32, 21.28, and 21.28-A] apply to an association engaged |
|
in the business of insurance in this state: |
|
(1) Subchapter A, Chapter 404; |
|
(2) Chapter 441; and |
|
(3) Chapter 443. |
|
SECTION 2E.105. Section 888.052(b), Insurance Code, is |
|
amended to correct a cross-reference to read as follows: |
|
(b) Annual assessments collected under this section shall |
|
be deposited to the credit of the Texas Department of Insurance |
|
operating account. Sections 201.001 and 201.002 apply [Article
|
|
1.31A applies] to the assessments. |
|
SECTION 2E.106. Section 911.001(c), Insurance Code, is |
|
amended to correct cross-references to read as follows: |
|
(c) Except to the extent of any conflict with this chapter, |
|
the following provisions apply to a farm mutual insurance company: |
|
(1) Subchapter A, Chapter 32; |
|
(2) Subchapter D, Chapter 36; |
|
(3) Sections 31.002(2), 32.021(c), 32.023, 32.041, |
|
33.002, 38.001, 81.001-81.004, 201.005, 201.055, 401.051, 401.052, |
|
401.054-401.062, 401.103-401.106, 401.151, 401.152, 401.155, |
|
401.156, 421.001, 801.051-801.055, 801.057, 801.101, 801.102, |
|
822.204, 841.004, 841.251, 841.252, [and] 862.101, 1806.001, |
|
1806.101, 1806.103(b), and 1806.104-1806.107; |
|
(4) Chapter 86; |
|
(5) Subchapter A, Chapter 401; |
|
(6) Subchapter B, Chapter 404; |
|
(7) Chapter 422; |
|
(8) Subchapter B, Chapter 424, other than Section |
|
424.052, 424.072, or 424.073; |
|
(9) Chapter 441; |
|
(10) Chapter 443; |
|
(11) Chapter 462; |
|
(12) Chapter 481; |
|
(13) Chapter 541; |
|
(14) [(5)] Chapter 802; |
|
(15) [(6)] Subchapter A, Chapter 805; |
|
(16) [(7)] Chapter 824; and |
|
(17) Article [(8)
Sections 2, 5, 6, and 17, Article
|
|
1.10, and Articles] 1.09-1[, 1.12, 1.13, 1.15, 1.15A, 1.16, 1.17,
|
|
1.18, 1.19, 2.10, 5.20, 21.28, 21.28--A, 21.28--C, 21.39, and
|
|
21.39--A]. |
|
SECTION 2E.107. Section 911.251, Insurance Code, is amended |
|
to correct cross-references to read as follows: |
|
Sec. 911.251. LICENSING AND APPOINTMENT OF CERTAIN |
|
AGENTS. (a) An individual or firm may not solicit, write, sign, |
|
execute, or deliver insurance policies, bind insurance risks, |
|
collect premiums, or otherwise act on behalf of a farm mutual |
|
insurance company in the capacity of an insurance agent in the |
|
solicitation or sale of crop insurance unless the individual or |
|
firm holds a license issued under Title 13 [Subchapter A, Chapter
|
|
21]. |
|
(b) A farm mutual insurance company may not appoint and act |
|
through an agent under Subchapter F, Chapter 4051 [Article
|
|
21.14-2]. |
|
SECTION 2E.108. Sections 911.308(c) and (d), Insurance |
|
Code, are amended to correct cross-references to read as follows: |
|
(c) A company described by Subsection (b) shall invest the |
|
minimum unencumbered surplus as provided by Section 822.204. The |
|
company may invest funds in excess of the minimum unencumbered |
|
surplus as provided by the provisions of Subchapter B, Chapter 424, |
|
other than Sections 424.052, 424.072, and 424.073 [Article 2.10]. |
|
(d) A company described by Subsection (b) shall, without |
|
delay, restore the minimum unencumbered surplus if the surplus is |
|
impaired. The department shall proceed as provided by Subchapter |
|
B, Chapter 404 [Section 5, Article 1.10]. |
|
SECTION 2E.109. Sections 912.002(b) and (c), Insurance |
|
Code, are amended to correct cross-references to read as follows: |
|
(b) A county mutual insurance company is subject to: |
|
(1) Sections 38.001, 401.051, 401.052, |
|
401.054-401.062, 401.151, 401.152, 401.155, 401.156, 501.159, |
|
501.202, 501.203, [and] 822.204, 1806.001, 1806.101, 1806.103(b), |
|
1806.104-1806.107, 2002.002, and 2002.005; |
|
(2) Subchapter A, Chapter 86; |
|
(3) Subchapter A, Chapter 401; |
|
(4) the provisions of Subchapter B, Chapter 424, other |
|
than Sections 424.052, 424.072, and 424.073; |
|
(5) Chapters 221, 251, 252, 254, [and] 541, and 2210; |
|
and |
|
(6) [(3)] Articles [1.15, 1.15A, 1.16, 2.10, 5.20,
|
|
5.37, 5.38,] 5.39 and [,] 5.40[, and 21.49]. |
|
(c) Rate regulation for a residential fire and allied lines |
|
insurance policy written by a county mutual insurance company is |
|
subject to Chapter 2253 [Subchapters Q and U, Chapter 5]. On and |
|
after December 1, 2004, rate regulation for a personal automobile |
|
insurance policy and a residential fire and allied lines insurance |
|
policy written by a county mutual insurance company is subject to |
|
Article 5.13-2 and Chapter 2251. A county mutual insurance company |
|
is subject to Chapter 2253 [Subchapter U, Chapter 5]. The |
|
commissioner may adopt rules as necessary to implement this |
|
subsection. |
|
SECTION 2E.110. Section 912.152, Insurance Code, is amended |
|
to correct cross-references to read as follows: |
|
Sec. 912.152. POLICY FORMS. (a) A county mutual insurance |
|
company is subject to: |
|
(1) Sections 1952.051-1952.055; |
|
(2) Subchapter B, Chapter 2002; |
|
(3) Chapter 2301; and |
|
(4) Articles 5.06 and[,] 5.35[, and 5.145]. |
|
(b) County mutual insurance companies shall file policy |
|
forms under Subchapter B, Chapter 2301, [Article 5.145] or continue |
|
to use the standard policy forms and endorsements promulgated under |
|
former Articles 5.06 and 5.35 on notification to the commissioner |
|
in writing in the manner prescribed by those articles that those |
|
forms will continue to be used. |
|
SECTION 2E.111. Section 912.251, Insurance Code, is amended |
|
to correct a cross-reference to read as follows: |
|
Sec. 912.251. LICENSING AND APPOINTMENT OF AGENTS. An |
|
agent for a county mutual insurance company must be licensed and |
|
appointed as provided by Title 13 [Subchapter A, Chapter 21]. |
|
SECTION 2E.112. Section 912.308(b), Insurance Code, is |
|
amended to correct a cross-reference to read as follows: |
|
(b) A county mutual insurance company is subject to |
|
Subchapter B, Chapter 404, and Sections 822.203, 822.205, 822.210, |
|
and 822.212 [and Section 5, Article 1.10]. |
|
SECTION 2E.113. Section 912.701, Insurance Code, is amended |
|
to correct cross-references to read as follows: |
|
Sec. 912.701. HAZARDOUS FINANCIAL CONDITION, SUPERVISION, |
|
CONSERVATORSHIP, AND LIQUIDATION. Subchapter A, Chapter 404, and |
|
Chapters 441 and 443 [Articles 1.32, 21.28, and 21.28-A] apply to a |
|
county mutual insurance company engaged in the business of |
|
insurance in this state. |
|
SECTION 2E.114. Section 941.003(c), Insurance Code, is |
|
amended to correct a cross-reference to read as follows: |
|
(c) Chapter 2007 [Subchapter M, Chapter 5,] applies to rates |
|
for motor vehicle insurance written by a Lloyd's plan. |
|
SECTION 2E.115. Section 941.102(d), Insurance Code, is |
|
amended to correct a cross-reference to read as follows: |
|
(d) Sections 201.001 and 201.002 apply [Article 1.31A
|
|
applies] to a fee collected under Subsection (c). |
|
SECTION 2E.116. Section 941.204(b), Insurance Code, is |
|
amended to correct a cross-reference to read as follows: |
|
(b) Funds of a Lloyd's plan other than the minimum guaranty |
|
fund and surplus described by Subsection (a) must, if invested, be |
|
invested as provided by: |
|
(1) the provisions of Subchapter B, Chapter 424, other |
|
than Sections 424.052, 424.072, and 424.073 [Article 2.10]; or |
|
(2) any other law governing the investment of the |
|
funds of a capital stock insurance company engaged in the same kind |
|
of business. |
|
SECTION 2E.117. Section 941.206, Insurance Code, is amended |
|
to correct cross-references to read as follows: |
|
Sec. 941.206. HAZARDOUS FINANCIAL CONDITION, SUPERVISION, |
|
CONSERVATORSHIP, AND LIQUIDATION; IMPAIRMENT OF SURPLUS. (a) |
|
Subchapter A, Chapter 404, and Chapters 441 and 443 [Articles 1.32,
|
|
21.28, and 21.28-A] apply to a Lloyd's plan engaged in the business |
|
of insurance in this state. |
|
(b) Subchapter B, Chapter 404, [Section 5, Article 1.10,] |
|
applies to a Lloyd's plan. |
|
SECTION 2E.118. Section 941.251(a), Insurance Code, is |
|
amended to correct cross-references to read as follows: |
|
(a) The provisions of Sections 86.001, 86.002, 401.051, |
|
401.052, 401.054-401.062, 401.151, 401.152, 401.155, and 401.156 |
|
[The provisions of Articles 1.15 and 1.16] that relate to the |
|
examination of insurers apply to a Lloyd's plan. |
|
SECTION 2E.119. Section 942.003(c), Insurance Code, is |
|
amended to correct a cross-reference to read as follows: |
|
(c) Chapter 2007 [Subchapter M, Chapter 5,] applies to rates |
|
for motor vehicle insurance written by an exchange. |
|
SECTION 2E.120. Section 942.155(c), Insurance Code, is |
|
amended to correct a cross-reference to read as follows: |
|
(c) An exchange shall maintain the required assets as to: |
|
(1) minimum surplus requirements, as provided by |
|
Section 822.204; and |
|
(2) other funds, as provided by the provisions of |
|
Subchapter B, Chapter 424, other than Sections 424.052, 424.072, |
|
and 424.073 [Article 2.10]. |
|
SECTION 2E.121. Section 942.156, Insurance Code, is amended |
|
to correct a cross-reference to read as follows: |
|
Sec. 942.156. ISSUANCE OF FIDELITY AND SURETY BOND |
|
INSURANCE; DEPOSIT REQUIRED. (a) If a domestic exchange writes |
|
fidelity or surety bond insurance in this state, the exchange shall |
|
keep on deposit with the comptroller money, bonds, or other |
|
securities in an amount of not less than $50,000. The department |
|
shall approve for the deposit securities described by the |
|
provisions of Subchapter B, Chapter 424, other than Sections |
|
424.052, 424.072, and 424.073, [Article 2.10,] and the exchange |
|
shall maintain the approved securities intact at all times. |
|
(b) A foreign exchange that writes fidelity or surety bond |
|
insurance in this state shall file with the department evidence |
|
satisfactory to the department that the exchange has, for the |
|
protection of its subscribers, at least $100,000 in money, bonds, |
|
or other securities as described by the provisions of Subchapter B, |
|
Chapter 424, other than Sections 424.052, 424.072, and 424.073, |
|
[Article 2.10] on deposit with the comptroller or other appropriate |
|
official of its state of domicile or in escrow under that official's |
|
supervision and control in a reliable bank or trust company. If |
|
those bonds or other securities are not acceptable to and approved |
|
by the department, the department may deny the attorney in fact for |
|
the exchange a certificate of authority. |
|
SECTION 2E.122. Sections 942.203(a) and (b), Insurance |
|
Code, are amended to correct cross-references to read as follows: |
|
(a) To the extent applicable, the schedule of fees |
|
established under Chapter 202 [Article 4.07] applies to an exchange |
|
and the exchange's attorney in fact. |
|
(b) An exchange is subject to: |
|
(1) Chapters 221 and 222; and |
|
(2) Chapters 251-255 [Articles 4.04, 4.10, 4.11, 5.12,
|
|
5.24, 5.49, and 5.68]. |
|
SECTION 2E.123. Section 961.002(b), Insurance Code, is |
|
amended to correct cross-references to read as follows: |
|
(b) The following provisions of this code apply to a |
|
nonprofit legal services corporation in the same manner that they |
|
apply to an insurer or a person engaged in the business of |
|
insurance, to the extent the provisions do not conflict with this |
|
chapter: |
|
(1) Articles [1.01,] 1.09-1 and[, 1.11, 1.12, 1.13,
|
|
1.15, 1.15A, 1.16, 1.17, 1.18, 1.19, 1.20, 1.21, 1.22, 21.21,
|
|
21.21-2, 21.28, 21.28-A,] 21.47[, and 21.49-8]; |
|
(2) [Sections 2, 6, and 17, Article 1.10;
|
|
[(3)] Sections 31.002, 31.004, 31.007, 31.021, |
|
31.022, 31.023, [31.025,] 31.026, 31.027, [32.001, 32.002,
|
|
32.003,] 32.021, 32.022(a), 32.023, [32.041,] 33.002, 33.006, |
|
36.108, 38.001, 81.004, 201.005, 201.055, 401.051, 401.052, |
|
401.054-401.062, 401.103-401.106, 401.151, 401.152, 401.155, |
|
401.156, 801.001, 801.002, 801.051-801.055, 801.057, 801.101, |
|
801.102, [802.003,] 841.251, and 841.252; |
|
(3) [(4)] Subchapter B, Chapter 31; |
|
(4) Subchapters A and C, Chapter 32; |
|
(5) Subchapter D, Chapter 36; |
|
(6) Subchapter A, Chapter 401; |
|
(7) Subchapter A, Chapter 542; |
|
(8) Subchapter A, Chapter 805; and |
|
(9) Chapters 86, 402, 441, 443, 481, 541, 802, and [(7)
|
|
Chapter] 824. |
|
SECTION 2E.124. Section 961.005, Insurance Code, is amended |
|
to correct a cross-reference to read as follows: |
|
Sec. 961.005. AGENTS. The licensing and regulation of an |
|
agent authorized to solicit prepaid legal services contracts for a |
|
nonprofit legal services corporation is subject to Title 13 |
|
[Subchapter A, Chapter 21]. |
|
SECTION 2E.125. Section 981.005, Insurance Code, is amended |
|
to correct a cross-reference to read as follows: |
|
Sec. 981.005. VALIDITY OF CONTRACTS. (a) Unless a material |
|
and intentional violation of this chapter or Chapter 225 [Section
|
|
12, Article 1.14-2,] exists, an insurance contract obtained from an |
|
eligible surplus lines insurer is: |
|
(1) valid and enforceable as to all parties; and |
|
(2) recognized in the same manner as a comparable |
|
contract issued by an authorized insurer. |
|
(b) A material and intentional violation of this chapter or |
|
Chapter 225 [Section 12, Article 1.14-2,] does not preclude the |
|
insured from enforcing the insured's rights under the contract. |
|
SECTION 2E.126. Section 981.006, Insurance Code, is amended |
|
to correct a cross-reference to read as follows: |
|
Sec. 981.006. SANCTIONS. Chapter 82 applies to a surplus |
|
lines agent or an eligible surplus lines insurer that violates: |
|
(1) this chapter; |
|
(2) Chapter 225 [Section 12, Article 1.14-2]; or |
|
(3) a rule or order adopted under Subchapter B or |
|
Section 981.005. |
|
SECTION 2E.127. Section 981.008, Insurance Code, is amended |
|
to correct a cross-reference to read as follows: |
|
Sec. 981.008. SURPLUS LINES INSURANCE PREMIUM TAX. The |
|
premiums charged for surplus lines insurance are subject to the |
|
premium tax imposed under Chapter 225 [Section 12, Article 1.14-2]. |
|
SECTION 2E.128. Section 981.101(b), Insurance Code, is |
|
amended to correct cross-references to read as follows: |
|
(b) A surplus lines document must state, in 11-point type, |
|
the following: |
|
This insurance contract is with an insurer not licensed to transact |
|
insurance in this state and is issued and delivered as surplus line |
|
coverage under the Texas insurance statutes. The Texas Department |
|
of Insurance does not audit the finances or review the solvency of |
|
the surplus lines insurer providing this coverage, and the insurer |
|
is not a member of the property and casualty insurance guaranty |
|
association created under Chapter 462 [Article 21.28-C], Insurance |
|
Code. Chapter 225 [Section 12, Article 1.14-2], Insurance Code, |
|
requires payment of a __________ (insert appropriate tax rate) |
|
percent tax on gross premium. |
|
SECTION 2E.129. Section 981.104(b), Insurance Code, is |
|
amended to correct a cross-reference to read as follows: |
|
(b) A change made under Subsection (a) may not result in |
|
coverage or an insurance contract that would violate this chapter |
|
or Chapter 225 [Section 12, Article 1.14-2], if originally issued |
|
on that basis. |
|
SECTION 2E.130. Section 981.160, Insurance Code, is amended |
|
to correct a cross-reference to read as follows: |
|
Sec. 981.160. NO ENFORCEMENT AUTHORITY. This subchapter |
|
does not give the stamping office authority to enforce this chapter |
|
or Chapter 225 [Section 12, Article 1.14-2]. |
|
SECTION 2E.131. Section 981.201, Insurance Code, is amended |
|
to correct a cross-reference to read as follows: |
|
Sec. 981.201. DEFINITION. In this subchapter, "managing |
|
general agent" means an agent licensed under Chapter 4053 [the
|
|
Managing General Agents' Licensing Act (Article 21.07-3, Vernon's
|
|
Texas Insurance Code)]. |
|
SECTION 2E.132. Section 981.203(a), Insurance Code, is |
|
amended to correct cross-references to read as follows: |
|
(a) The department may issue a surplus lines license to an |
|
applicant who the department determines complies with Subsection |
|
(b) and is: |
|
(1) an individual who: |
|
(A) has passed an examination under Chapter 4002 |
|
[Article 21.01-1] and department rules; and |
|
(B) holds a current license as: |
|
(i) a general property and casualty agent |
|
authorized under Subchapter B, Chapter 4051 [Article 21.14]; or |
|
(ii) a managing general agent; or |
|
(2) a corporation, limited liability company, or |
|
partnership that: |
|
(A) has at least one officer or director or at |
|
least one active partner who has passed the required surplus lines |
|
license examination; |
|
(B) holds a current license as: |
|
(i) a general property and casualty agent |
|
authorized under Subchapter B, Chapter 4051 [Article 21.14]; or |
|
(ii) a managing general agent; and |
|
(C) conducts insurance activities under this |
|
chapter only through an individual licensed under this section. |
|
SECTION 2E.133. Section 981.220(b), Insurance Code, is |
|
amended to correct a cross-reference to read as follows: |
|
(b) A surplus lines license granted to a managing general |
|
agent who is not also licensed under Subchapters A-E, Chapter 4051, |
|
[Article 21.14] is limited to the acceptance of business |
|
originating through a licensed general property and casualty agent. |
|
The license does not authorize the agent to engage in business |
|
directly with the insurance applicant. |
|
SECTION 2E.134. Section 981.221, Insurance Code, is amended |
|
to correct a cross-reference to read as follows: |
|
Sec. 981.221. SUSPENSION OR REVOCATION OF LICENSE. If a |
|
license holder does not maintain the qualifications necessary to |
|
obtain the license, the department may revoke or suspend the |
|
license or deny the renewal of that license in accordance with |
|
Chapter 4003 and Subchapters B and C, Chapter 4005 [Article
|
|
21.01-2]. |
|
SECTION 2E.135. Section 981.222, Insurance Code, is amended |
|
to correct cross-references to read as follows: |
|
Sec. 981.222. APPLICABILITY OF OTHER LAW. In addition to |
|
the requirements of this chapter, the administration and regulation |
|
of a surplus lines agent's license is governed by Title 13 |
|
[Subchapter A, Chapter 21], except that the provisions of Sections |
|
4001.002(b)(2)-(6), 4001.003, and 4001.004 and Subchapters C-G, |
|
Chapter 4001, do [Article 21.07 does] not apply to a license issued |
|
under this subchapter. |
|
SECTION 2E.136. Section 982.107, Insurance Code, is amended |
|
to correct a cross-reference to read as follows: |
|
Sec. 982.107. APPLICABILITY OF OTHER LAW. Chapter 402 |
|
[Article 21.49-8] applies to a foreign or alien insurance company. |
|
SECTION 2E.137. Section 982.254, Insurance Code, is amended |
|
to correct a cross-reference to read as follows: |
|
Sec. 982.254. FAILURE TO ELIMINATE IMPAIRMENT OF TRUSTEED |
|
SURPLUS. If an alien insurance company has not satisfied the |
|
commissioner at the end of the designated period under Section |
|
982.253(a) that the impairment has been eliminated, the |
|
commissioner may proceed against the company as provided by Chapter |
|
441 [Article 21.28-A] as an insurance company whose further |
|
transaction of the business of insurance in the United States will |
|
be hazardous to its policyholders in the United States. |
|
SECTION 2E.138. Section 982.255(a), Insurance Code, is |
|
amended to correct cross-references to read as follows: |
|
(a) The books, records, accounting, and verification |
|
relating to an authorized alien insurance company's trusteed assets |
|
are subject to examination by the department or the department's |
|
appointed representative at the United States branch office of the |
|
company, in the same manner and to the same extent that applies |
|
under Subchapter A, Chapter 86, and Sections 401.051, 401.052, |
|
401.054-401.062, 401.151, 401.152, 401.155, and 401.156 [Articles
|
|
1.15 and 1.16] to domestic and foreign insurance companies |
|
authorized to engage in the same kind of insurance. |
|
SECTION 2E.139. Section 984.002, Insurance Code, is amended |
|
to correct cross-references to read as follows: |
|
Sec. 984.002. AUTHORIZED AGENT REQUIRED. A Mexican |
|
casualty insurance company may engage in the business of insurance |
|
in this state only through an agent licensed by the department under |
|
Subchapters A-E, Chapter 4051, or Chapter 4055 [Article 21.09 or
|
|
21.14]. |
|
PART F. CROSS-REFERENCE UPDATES: TITLE 7, INSURANCE CODE |
|
SECTION 2F.001. Section 1101.055(b), Insurance Code, is |
|
amended to correct a cross-reference to read as follows: |
|
(b) A life insurance policy may provide for a settlement |
|
that will be less than the amount required under Subsection (a) if |
|
the death of the insured is: |
|
(1) by the insured's own hand regardless of whether the |
|
insured is sane or insane; |
|
(2) caused by following a hazardous occupation that is |
|
stated in the policy; or |
|
(3) the result of aviation activities under conditions |
|
specified in the policy and approved by the department under |
|
Chapter 1701 [Article 3.42]. |
|
SECTION 2F.002. Section 1101.101(b), Insurance Code, is |
|
amended to correct a cross-reference to read as follows: |
|
(b) Notwithstanding Chapter 1701 [Article 3.42], a policy |
|
issued or delivered in another state, territory, district, or |
|
county by a life insurance company organized under the laws of this |
|
state may contain any provision required by the laws of that state, |
|
territory, district, or county. |
|
SECTION 2F.003. Section 1102.004(b), Insurance Code, is |
|
amended to correct a cross-reference to read as follows: |
|
(b) This section does not require the resubmission for |
|
approval of any previously approved insurance policy form unless: |
|
(1) withdrawal of approval is authorized under this |
|
section or Chapter 1701 [Article 3.42]; or |
|
(2) after notice and hearing, the commissioner |
|
determines that approval was obtained by improper means, including |
|
by misrepresentation, fraud, or a misleading statement or document. |
|
SECTION 2F.004. Section 1105.007(b), Insurance Code, is |
|
amended to correct a cross-reference to read as follows: |
|
(b) Subsection (a) does not require a cash surrender value |
|
greater than the reserve for the policy computed as provided by |
|
Subchapter B, Chapter 425 [Article 3.28]. |
|
SECTION 2F.005. Section 1105.056, Insurance Code, is |
|
amended to correct a cross-reference to read as follows: |
|
Sec. 1105.056. NONFORFEITURE INTEREST RATE. The annual |
|
nonforfeiture interest rate for a policy issued in a particular |
|
calendar year is equal to 125 percent of the calendar year statutory |
|
valuation interest rate for that policy as defined by Subchapter B, |
|
Chapter 425 [Article 3.28], rounded to the nearest one-fourth of |
|
one percent. |
|
SECTION 2F.006. Section 1111.006, Insurance Code, is |
|
amended to correct cross-references to read as follows: |
|
Sec. 1111.006. APPLICABILITY OF OTHER INSURANCE LAWS. The |
|
following laws apply to a person engaged in the business of life or |
|
viatical settlements: |
|
(1) [Articles 1.10, 1.10D, 1.19, and 21.21;
|
|
[(2)] Chapters 82, 83, [and] 84, 481, 541, and 701; |
|
(2) [(3)] Sections 31.002, [32.001, 32.002, 32.003,] |
|
32.021, 32.023, 32.041, 38.001, 81.004, 86.001, 86.051, 86.052, |
|
201.004, 401.051, 401.054, 401.061, 401.151(a), 521.003, 521.004, |
|
543.001(c), 801.056, and 862.052; |
|
(3) Subchapter A, Chapter 32; [and] |
|
(4) Subchapter C, Chapter 36; |
|
(5) Subchapter B, Chapter 404; and |
|
(6) Subchapter B, Chapter 491. |
|
SECTION 2F.007. Section 1131.007, Insurance Code, is |
|
amended to correct a cross-reference to read as follows: |
|
Sec. 1131.007. POLICY FORM. A policy of group life |
|
insurance is subject to Chapter 1701 [Article 3.42]. |
|
SECTION 2F.008. Section 1151.101, Insurance Code, is |
|
amended to correct a cross-reference to read as follows: |
|
Sec. 1151.101. AUTHORIZED PROVISIONS. In addition to the |
|
provisions required by Subchapter B and Section 1151.152, an |
|
industrial life insurance policy may: |
|
(1) exclude liability or promise a benefit that is |
|
less than the full amount payable as a death benefit if the insured: |
|
(A) dies by the insured's own hand, regardless of |
|
whether the insured is sane or insane; or |
|
(B) dies as a result of engaging in a stated |
|
hazardous occupation; |
|
(2) promise a benefit that is less than the full amount |
|
payable if the insured dies as a result of an aviation activity |
|
under a condition specified in the policy approved by the |
|
department as provided by Chapter 1701 [Article 3.42]; |
|
(3) limit the maximum amount payable on the death of a |
|
child younger than 15 years of age; and |
|
(4) include any other provision not otherwise |
|
prohibited by this chapter. |
|
SECTION 2F.009. Section 1152.151, Insurance Code, is |
|
amended to correct cross-references to read as follows: |
|
Sec. 1152.151. AGENT'S LICENSE REQUIRED. (a) A person may |
|
not sell or offer for sale in this state a variable contract, or act |
|
to negotiate, make, or consummate a variable contract for another, |
|
unless the department has licensed the person under Chapter 4054 |
|
[Article 21.07-1] as a general life, accident, and health agent. |
|
(b) The licensing and regulation of a person acting as a |
|
variable contract agent is subject to the same provisions |
|
applicable to the licensing and regulation of other agents under |
|
Title 13 [Subchapter A, Chapter 21]. |
|
PART G. CROSS-REFERENCE UPDATES: TITLE 8, INSURANCE CODE |
|
SECTION 2G.001. Section 1251.202, Insurance Code, is |
|
amended to correct cross-references to read as follows: |
|
Sec. 1251.202. NOTICE REGARDING CERTAIN EMPLOYER HEALTH |
|
BENEFIT PLANS. (a) In this section, "standard health benefit plan" |
|
means a plan offered under [Article 3.80, Article 20A.09N, or] |
|
Chapter 1507. |
|
(b) If an employer offers to employees a standard health |
|
benefit plan, the employer shall: |
|
(1) provide a copy of the disclosure statement |
|
provided to the employer by the plan issuer under [Section 6,
|
|
Article 3.80, Article 20A.09N(g),] Section 1507.006[,] or |
|
[Section] 1507.056 to: |
|
(A) each employee: |
|
(i) before the employee initially enrolls |
|
in the plan, unless the employee received notice under Paragraph |
|
(B) on or after the 90th day before the date the employee initially |
|
enrolls; and |
|
(ii) not later than the 30th day before the |
|
date the employee renews enrollment in the plan; and |
|
(B) each prospective employee before the |
|
prospective employee is hired by the employer; and |
|
(2) obtain a copy of the notice signed by the employee |
|
or prospective employee at the time the notice is provided. |
|
SECTION 2G.002. Section 1272.052(c), Insurance Code, is |
|
amended to correct a cross-reference to read as follows: |
|
(c) The parties to the delegation agreement shall determine |
|
which party bears the expense of complying with a requirement of |
|
this subchapter, including the cost of an examination required by |
|
the department under Subchapter B, Chapter 401 [Article 1.15], if |
|
applicable. |
|
SECTION 2G.003. Section 1272.058, Insurance Code, is |
|
amended to correct a cross-reference to read as follows: |
|
Sec. 1272.058. INFORMATION RELATING TO DELEGATED THIRD |
|
PARTY. A delegation agreement required by Section 1272.052 must |
|
require the delegated entity to provide the license number of a |
|
delegated third party performing a function that requires: |
|
(1) a license as a third-party administrator under |
|
Chapter 4151 or utilization review agent under Chapter 4201 |
|
[Article 21.58A]; or |
|
(2) another license under this code or another |
|
insurance law of this state. |
|
SECTION 2G.004. Section 1272.060, Insurance Code, is |
|
amended to correct a cross-reference to read as follows: |
|
Sec. 1272.060. UTILIZATION REVIEW. A delegation agreement |
|
required by Section 1272.052 must provide that: |
|
(1) enrollees shall receive notification at the time |
|
of enrollment of which entity is responsible for performing |
|
utilization review; |
|
(2) the delegated entity or third party performing |
|
utilization review shall perform that review in accordance with |
|
Chapter 4201 [Article 21.58A]; and |
|
(3) the delegated entity or third party shall forward |
|
utilization review decisions made by the entity or third party to |
|
the health maintenance organization on a monthly basis. |
|
SECTION 2G.005. Section 1272.301(d), Insurance Code, is |
|
amended to correct a cross-reference to read as follows: |
|
(d) A denial of out-of-network services under this section |
|
is subject to appeal under Chapter 4201 [Article 21.58A]. |
|
SECTION 2G.006. Section 1274.004(b), Insurance Code, is |
|
amended to correct a cross-reference to read as follows: |
|
(b) Before adopting rules under this section, the |
|
commissioner shall consult and receive advice from the technical |
|
advisory committee on claims processing established under Chapter |
|
1212 [Article 21.52Y]. |
|
SECTION 2G.007. Sections 1305.004(11), (12), (17), (27), |
|
and (28), Insurance Code, are amended to correct cross-references |
|
to read as follows: |
|
(11) "Independent review organization" means an |
|
entity that is certified by the commissioner to conduct independent |
|
review under Chapter 4202 [Article 21.58C] and rules adopted by the |
|
commissioner. |
|
(12) "Life-threatening" has the meaning assigned by |
|
Section 4201.002 [2, Article 21.58A]. |
|
(17) "Nurse" has the meaning assigned by Section |
|
4201.002 [Section 2, Article 21.58A]. |
|
(27) "Utilization review" has the meaning assigned by |
|
Section 4201.002 [2, Article 21.58A]. |
|
(28) "Utilization review agent" has the meaning |
|
assigned by Section 4201.002 [Article 21.58A]. |
|
SECTION 2G.008. Section 1305.056(c), Insurance Code, is |
|
amended to correct a cross-reference to read as follows: |
|
(c) A network is subject to Chapters 441 and 443 [Articles
|
|
21.28 and 21.28-A] and is considered an insurer or insurance |
|
company, as applicable, for purposes of those laws. |
|
SECTION 2G.009. Section 1305.154(c), Insurance Code, is |
|
amended to correct a cross-reference to read as follows: |
|
(c) A network's contract with a carrier must include: |
|
(1) a description of the functions that the carrier |
|
delegates to the network, consistent with the requirements of |
|
Subsection (b), and the reporting requirements for each function; |
|
(2) a statement that the network and any management |
|
contractor or third party to which the network delegates a function |
|
will perform all delegated functions in full compliance with all |
|
requirements of this chapter, the Texas Workers' Compensation Act, |
|
and rules of the commissioner or the commissioner of workers' |
|
compensation; |
|
(3) a provision that the contract: |
|
(A) may not be terminated without cause by either |
|
party without 90 days' prior written notice; and |
|
(B) must be terminated immediately if cause |
|
exists; |
|
(4) a hold-harmless provision stating that the |
|
network, a management contractor, a third party to which the |
|
network delegates a function, and the network's contracted |
|
providers are prohibited from billing or attempting to collect any |
|
amounts from employees for health care services under any |
|
circumstances, including the insolvency of the carrier or the |
|
network, except as provided by Section 1305.451(b)(6); |
|
(5) a statement that the carrier retains ultimate |
|
responsibility for ensuring that all delegated functions and all |
|
management contractor functions are performed in accordance with |
|
applicable statutes and rules and that the contract may not be |
|
construed to limit in any way the carrier's responsibility, |
|
including financial responsibility, to comply with all statutory |
|
and regulatory requirements; |
|
(6) a statement that the network's role is to provide |
|
the services described under Subsection (b) as well as any other |
|
services or functions delegated by the carrier, including functions |
|
delegated to a management contractor, subject to the carrier's |
|
oversight and monitoring of the network's performance; |
|
(7) a requirement that the network provide the |
|
carrier, at least monthly and in a form usable for audit purposes, |
|
the data necessary for the carrier to comply with reporting |
|
requirements of the department and the division of workers' |
|
compensation with respect to any services provided under the |
|
contract, as determined by commissioner rules; |
|
(8) a requirement that the carrier, the network, any |
|
management contractor, and any third party to which the network |
|
delegates a function comply with the data reporting requirements of |
|
the Texas Workers' Compensation Act and rules of the commissioner |
|
of workers' compensation; |
|
(9) a contingency plan under which the carrier would, |
|
in the event of termination of the contract or a failure to perform, |
|
reassume one or more functions of the network under the contract, |
|
including functions related to: |
|
(A) payments to providers and notification to |
|
employees; |
|
(B) quality of care; |
|
(C) utilization review; |
|
(D) retrospective review; and |
|
(E) continuity of care, including a plan for |
|
identifying and transitioning employees to new providers; |
|
(10) a provision that requires that any agreement by |
|
which the network delegates any function to a management contractor |
|
or any third party be in writing, and that such an agreement require |
|
the delegated third party or management contractor to be subject to |
|
all the requirements of this subchapter; |
|
(11) a provision that requires the network to provide |
|
to the department the license number of a management contractor or |
|
any delegated third party who performs a function that requires a |
|
license as a utilization review agent under Chapter 4201 [Article
|
|
21.58A] or any other license under this code or another insurance |
|
law of this state; |
|
(12) an acknowledgment that: |
|
(A) any management contractor or third party to |
|
whom the network delegates a function must perform in compliance |
|
with this chapter and other applicable statutes and rules, and that |
|
the management contractor or third party is subject to the |
|
carrier's and the network's oversight and monitoring of its |
|
performance; and |
|
(B) if the management contractor or the third |
|
party fails to meet monitoring standards established to ensure that |
|
functions delegated to the management contractor or the third party |
|
under the delegation contract are in full compliance with all |
|
statutory and regulatory requirements, the carrier or the network |
|
may cancel the delegation of one or more delegated functions; |
|
(13) a requirement that the network and any management |
|
contractor or third party to which the network delegates a function |
|
provide all necessary information to allow the carrier to provide |
|
information to employees as required by Section 1305.451; and |
|
(14) a provision that requires the network, in |
|
contracting with a third party directly or through another third |
|
party, to require the third party to permit the commissioner to |
|
examine at any time any information the commissioner believes is |
|
relevant to the third party's financial condition or the ability of |
|
the network to meet the network's responsibilities in connection |
|
with any function the third party performs or has been delegated. |
|
SECTION 2G.010. Section 1305.351(a), Insurance Code, is |
|
amended to correct cross-references to read as follows: |
|
(a) The requirements of Chapter 4201 [Article 21.58A] apply |
|
to utilization review conducted in relation to claims in a workers' |
|
compensation health care network. In the event of a conflict |
|
between Chapter 4201 [Article 21.58A] and this chapter, this |
|
chapter controls. |
|
SECTION 2G.011. Section 1305.355(a), Insurance Code, is |
|
amended to correct a cross-reference to read as follows: |
|
(a) The utilization review agent shall: |
|
(1) permit the employee or person acting on behalf of |
|
the employee and the employee's requesting provider whose |
|
reconsideration of an adverse determination is denied to seek |
|
review of that determination within the period prescribed by |
|
Subsection (b) by an independent review organization assigned in |
|
accordance with Chapter 4202 [Article 21.58C] and commissioner |
|
rules; and |
|
(2) provide to the appropriate independent review |
|
organization, not later than the third business day after the date |
|
the utilization review agent receives notification of the |
|
assignment of the request to an independent review organization: |
|
(A) any medical records of the employee that are |
|
relevant to the review; |
|
(B) any documents used by the utilization review |
|
agent in making the determination; |
|
(C) the response letter described by Section |
|
1305.354(a)(4); |
|
(D) any documentation and written information |
|
submitted in support of the request for reconsideration; and |
|
(E) a list of the providers who provided care to |
|
the employee and who may have medical records relevant to the |
|
review. |
|
SECTION 2G.012. Section 1369.056, Insurance Code, is |
|
amended to correct cross-references to read as follows: |
|
Sec. 1369.056. ADVERSE DETERMINATION. (a) The refusal of a |
|
group health benefit plan issuer to provide benefits to an enrollee |
|
for a prescription drug is an adverse determination for purposes of |
|
Section 4201.002 [2, Article 21.58A,] if: |
|
(1) the drug is not included in a drug formulary used |
|
by the group health benefit plan; and |
|
(2) the enrollee's physician has determined that the |
|
drug is medically necessary. |
|
(b) The enrollee may appeal the adverse determination under |
|
Subchapters H and I, Chapter 4201 [Sections 6 and 6A, Article
|
|
21.58A]. |
|
SECTION 2G.013. Sections 1501.002(8) and (14), Insurance |
|
Code, are amended to correct cross-references to read as follows: |
|
(8) "Large employer" means a person who employed an |
|
average of at least 51 eligible employees on business days during |
|
the preceding calendar year and who employs at least two employees |
|
on the first day of the plan year. The term includes a governmental |
|
entity subject to Article 3.51-1, [3.51-2,] 3.51-4, or 3.51-5, to |
|
Subchapter C, Chapter 1364, [or] to Chapter 1578, or to Chapter 177, |
|
Local Government Code, that otherwise meets the requirements of |
|
this subdivision. For purposes of this definition, a partnership |
|
is the employer of a partner. |
|
(14) "Small employer" means a person who employed an |
|
average of at least two employees but not more than 50 eligible |
|
employees on business days during the preceding calendar year and |
|
who employs at least two employees on the first day of the plan |
|
year. The term includes a governmental entity subject to Article |
|
3.51-1, [3.51-2,] 3.51-4, or 3.51-5, to Subchapter C, Chapter 1364, |
|
[or] to Chapter 1578, or to Chapter 177, Local Government Code, that |
|
otherwise meets the requirements of this subdivision. For purposes |
|
of this definition, a partnership is the employer of a partner. |
|
SECTION 2G.014. Section 1501.009(b), Insurance Code, is |
|
amended to correct cross-references to read as follows: |
|
(b) An independent school district that is participating in |
|
the uniform group coverage program established under Chapter 1579 |
|
[Article 3.50-7] may not participate in the small employer market |
|
under this section for health insurance coverage and may not renew a |
|
health insurance contract obtained in accordance with this section |
|
after the date on which the program of coverages provided under |
|
Chapter 1579 [Article 3.50-7] is implemented. This subsection does |
|
not affect a contract for the provision of optional coverages not |
|
included in a health benefit plan under this chapter. |
|
SECTION 2G.015. Section 1501.257(c), Insurance Code, is |
|
amended to correct a cross-reference to read as follows: |
|
(c) Utilization review performed for any cost containment, |
|
case management, or managed care arrangement must comply with |
|
Chapter 4201 [Article 21.58A]. |
|
SECTION 2G.016. Section 1504.001(4), Insurance Code, is |
|
amended to correct a cross-reference to read as follows: |
|
(4) "Health benefit plan issuer" means: |
|
(A) an insurance company, group hospital service |
|
corporation, or health maintenance organization that delivers or |
|
issues for delivery an individual, group, blanket, or franchise |
|
insurance policy or agreement, a group hospital service contract, |
|
or an evidence of coverage that provides benefits for medical or |
|
surgical expenses incurred as a result of an accident or sickness; |
|
(B) a governmental entity subject to Subchapter |
|
D, Chapter 1355, Subchapter C, Chapter 1364, Chapter 1578, [or] |
|
Article 3.51-1, [3.51-2,] 3.51-4, or 3.51-5, or Chapter 177, Local |
|
Government Code; |
|
(C) the issuer of a multiple employer welfare |
|
arrangement as defined by Section 846.001; or |
|
(D) the issuer of a group health plan as defined |
|
by Section 607, Employee Retirement Income Security Act of 1974 (29 |
|
U.S.C. Section 1167). |
|
SECTION 2G.017. Section 1506.109(a), Insurance Code, is |
|
amended to correct a cross-reference to read as follows: |
|
(a) The pool shall provide for and use cost containment |
|
measures and requirements to make the coverage offered by the pool |
|
more cost-effective. To the extent the board determines it is |
|
cost-effective, the cost containment measures must include |
|
individual case management and disease management. The cost |
|
containment measures may include preadmission screening, the |
|
requirement of a second surgical opinion, and concurrent |
|
utilization review subject to Chapter 4201 [Article 21.58A]. |
|
SECTION 2G.018. Section 1551.003(12), Insurance Code, is |
|
amended to correct a cross-reference to read as follows: |
|
(12) "Serious mental illness" has the meaning assigned |
|
by Section 1355.001 [1, Article 3.51-14]. |
|
SECTION 2G.019. Sections 1551.064(a) and (b), Insurance |
|
Code, are amended to correct cross-references to read as follows: |
|
(a) This section applies only to a group policy or contract |
|
described by Section 1251.301 [3B(a), Article 3.51-6]. A policy or |
|
contract executed under this chapter must provide that: |
|
(1) premium payments must be: |
|
(A) paid directly to the Employees Retirement |
|
System of Texas; and |
|
(B) postmarked or received not later than the |
|
10th day of the month for which the premium is due; |
|
(2) the premium for group continuation coverage under |
|
Subchapter G, Chapter 1251 [Section 3B, Article 3.51-6], may not |
|
exceed the level established for other surviving dependents of |
|
deceased employees and annuitants; |
|
(3) at the time the group policy or contract is |
|
delivered, issued for delivery, renewed, amended, or extended, the |
|
Employees Retirement System of Texas shall give notice of the |
|
continuation option to each state agency covered by the group |
|
benefits program; and |
|
(4) each state agency shall give written notice of the |
|
continuation option to each employee and dependent of an employee |
|
who is covered by the group benefits program. |
|
(b) A group policy or contract executed under this chapter |
|
must provide that, not later than the 15th day after the date of any |
|
severance of the family relationship that might activate the |
|
continuation option under Subchapter G, Chapter 1251 [Section 3B,
|
|
Article 3.51-6], the group member shall give written notice of the |
|
severance to the employing state agency. |
|
SECTION 2G.020. Section 1601.109(a), Insurance Code, is |
|
amended to correct a cross-reference to read as follows: |
|
(a) In this section, "serious mental illness" has the |
|
meaning assigned by Section 1355.001 [1, Article 3.51-14]. |
|
PART H. CROSS-REFERENCE UPDATES: TITLE 10, INSURANCE CODE |
|
SECTION 2H.001. Section 1805.001, Insurance Code, is |
|
amended to correct cross-references to read as follows: |
|
Sec. 1805.001. APPLICABILITY OF CHAPTER. This chapter |
|
applies to the kinds of insurance and insurers subject to: |
|
(1) Section 403.002; |
|
(2) Section 941.003 with respect to the application of |
|
a law described by Section 941.003(b)(1) [941.003(b)(3)] or (c); |
|
(3) Section 942.003 with respect to the application of |
|
a law described by Section 942.003(b)(1) [942.003(b)(3)] or (c); |
|
(4) Subchapter A, B, or C, [or D,] Chapter 5; |
|
(5) Subchapter H, Chapter 544; |
|
(6) Subchapter A, Chapter 2301; |
|
(7) Chapter 252, 253, 254, 255, 426, 1806, 1807, 2001, |
|
2002, 2003, 2004, 2005, 2006, 2008, 2051, 2052, 2053, 2055, 2171, |
|
2251, or 2252; |
|
(8) Subtitle B or C, Title 10; or |
|
(9) [Chapter 406A, Labor Code; or
|
|
[(10)] Chapter 2154, Occupations Code. |
|
SECTION 2H.002. Section 1951.004(a), Insurance Code, is |
|
amended to correct cross-references to read as follows: |
|
(a) An insurer, or an officer or representative of an |
|
insurer, commits an offense if the insurer, officer, or |
|
representative violates: |
|
(1) Section 1951.001, 1951.002, 1952.051, 1952.052, |
|
1952.053, 1952.054, or 1952.055; |
|
(2) Subchapter B, Chapter 1806; |
|
(3) Subchapter C, Chapter 1953; |
|
(4) Chapter 254; or |
|
(5) [(4)] Article 5.01, [5.02,] 5.03, [5.05,] 5.06, |
|
5.10, or 5.11. |
|
SECTION 2H.003. Section 2051.002, Insurance Code, is |
|
amended to correct cross-references to read as follows: |
|
Sec. 2051.002. CONSTRUCTION OF CERTAIN LAWS. The following |
|
shall be construed and applied independently of any other law that |
|
relates to insurance rates and forms or prescribes the duties of the |
|
commissioner or the department: |
|
(1) this chapter; |
|
(2) [Subchapter D, Chapter 5;
|
|
[(3)] Chapter 251, as that chapter relates to workers' |
|
compensation insurance; and |
|
(3) [(4)] Chapters 255, 426, 2052, [and] 2053, and |
|
2055[; and
|
|
[(5) Chapter 406A, Labor Code]. |
|
SECTION 2H.004. Section 2051.157, Insurance Code, is |
|
amended to correct a cross-reference to read as follows: |
|
Sec. 2051.157. PENALTY FOR CERTAIN VIOLATIONS. An officer |
|
or other representative of an insurance company is subject to a fine |
|
of not less than $100 or more than $500 if the officer or other |
|
representative violates any provision of the following relating to |
|
the company's business: |
|
(1) Subchapter A or B; |
|
(2) Section 2051.156 or 2051.201; |
|
(3) Chapter 426 or 2052; |
|
(4) Subchapter A, C, or D, Chapter 2053; or |
|
(5) Section 2053.051, 2053.052, 2053.053, or |
|
2053.055[; or
|
|
[(6) Article 5.66]. |
|
SECTION 2H.005. Section 2052.004(a), Insurance Code, is |
|
amended to correct a cross-reference to read as follows: |
|
(a) Subject to Subsections (b) and (c), this subtitle [and
|
|
Article 5.66] may not be construed to prohibit an insurance |
|
company, including the Texas Mutual Insurance Company, from issuing |
|
participating policies. |
|
SECTION 2H.006. Section 2201.155(a), Insurance Code, is |
|
amended to correct a cross-reference to read as follows: |
|
(a) A risk retention group not chartered in this state is |
|
liable for the payment of premium and maintenance taxes and taxes on |
|
premiums of direct business for risks located in this state and |
|
shall report to the commissioner the net premiums written for risks |
|
located in this state. The group is subject to taxation, and any |
|
fine or penalty related to that taxation, on the same basis as a |
|
foreign admitted insurer in accordance with Chapters 4, 201, 202, |
|
203, 221, 222, 224, 227, 228, and 251-257. |
|
SECTION 2H.007. Section 2204.101(d), Insurance Code, is |
|
amended to correct a cross-reference to read as follows: |
|
(d) The exchange and the members are considered insurers for |
|
purposes of: |
|
(1) Sections 201.052, 201.053, and 201.054; |
|
(2) Chapters 4, 202, 203, 221, 222, 224, 227, 228, 251, |
|
257, and 1109; and |
|
(3) Section 171.0525, Tax Code. |
|
PART I. CROSS-REFERENCE UPDATES: TITLE 11, INSURANCE CODE |
|
SECTION 2I.001. Section 2551.001(c), Insurance Code, is |
|
amended to correct cross-references to read as follows: |
|
(c) To the extent applicable, the following provisions of |
|
this code apply to a title insurance company: |
|
(1) Articles [1.01, 1.04A,] 1.09-1 and[, 1.12, 1.13,
|
|
1.15-1.19, 21.31,] 21.47[, and 21.49-8]; |
|
(2) Subsection (b), Article 1.04D; |
|
(3) [Article 1.14-3, other than Section 8;
|
|
[(4) Subchapter F, Chapter 5;
|
|
[(5)] Chapters 33, 82, 83, 84, 86, 102, 261, 281, 401, |
|
402, 493, 494, 541, 547, 555, 701, 801, 802, 824, [and] 828, 1805, |
|
and 2204; |
|
(4) [(6)] Chapter 31, other than Section 31.005; |
|
(5) [(7)] Chapter 32, other than Section 32.022(b); |
|
(6) [(8)] Chapter 36, other than Sections 36.003, |
|
36.004, and 36.101-36.106; |
|
(7) [(9)] Subchapter A, Chapter 38; |
|
(8) [(10)] Subchapters A-G, Chapter 101; |
|
(9) [(11)] Chapter 982, other than Sections 982.003, |
|
982.051, 982.101, 982.105, 982.106(b), 982.109, and 982.113; and |
|
(10) [(12)] Sections 37.052, 39.001, 39.002, 81.002, |
|
81.004, 201.004, 201.005, 201.051, 201.055, 403.001, 403.051, |
|
403.101, 521.002-521.004, 805.021, 822.001, 822.051, 822.052(1), |
|
(2), and (3), 822.053, 822.057, except Subsection (a)(4), 822.058, |
|
822.059, 822.060, 822.155, 822.157, 822.158, except Subsection |
|
(a)(5), 841.004, 841.251, 841.252(a)-(c), and 4001.103. |
|
SECTION 2I.002. Sections 2551.151(a) and (g), Insurance |
|
Code, are amended to correct cross-references to read as follows: |
|
(a) A title insurance company shall hold all investments in |
|
cash or in the following: |
|
(1) an abstract plant or plants, provided that: |
|
(A) the corporation is organized under this title |
|
and has the right to engage in the business of title insurance; |
|
(B) except as provided by Subsection (b), the |
|
investment is not more than 50 percent of the corporation's capital |
|
stock; and |
|
(C) the valuation of the plant or plants is |
|
approved by the department; |
|
(2) securities described by Subchapter D, Chapter 425, |
|
other than Sections 425.202 and 425.229-425.232, [Article 3.39] or |
|
investments authorized for title insurance companies under the laws |
|
of any other state in which the company is authorized to engage in |
|
business; |
|
(3) real property or any real property interest that |
|
is: |
|
(A) required for the company's convenient |
|
accommodation in the transaction of business with reasonable regard |
|
to future needs; |
|
(B) acquired in connection with a claim under a |
|
title insurance policy; |
|
(C) acquired in satisfaction or on account of |
|
loans, mortgages, liens, judgments, or decrees previously owed to |
|
the company in the course of business; |
|
(D) acquired in partial payment of the |
|
consideration of the sale of real property owned by the company if |
|
the transaction results in a net reduction in the company's |
|
investment in real property; or |
|
(E) reasonably necessary to maintain or enhance |
|
the sale value of real property previously acquired or held by the |
|
company under this subdivision; |
|
(4) a first mortgage note secured by any of the |
|
following, provided that the amount of the note does not exceed 80 |
|
percent of the appraised value of the security for the note: |
|
(A) an abstract plant and connected personal |
|
property in or outside this state; |
|
(B) stock of a title insurance agent in or |
|
outside this state; |
|
(C) a construction contract to build an abstract |
|
plant and connected personal property; or |
|
(D) any two or more of the items listed in this |
|
subdivision; |
|
(5) the shares of any federal home loan bank in an |
|
amount necessary to qualify for membership and any additional |
|
amounts approved by the commissioner; |
|
(6) foreign securities that are substantially of the |
|
same kinds, classes, and investment grade as securities otherwise |
|
qualified for investment under this section, provided that, unless |
|
the investment is also qualified under Subdivision (2), the |
|
aggregate amount of foreign investments made under this subdivision |
|
does not exceed: |
|
(A) five percent of the insurer's admitted assets |
|
at the end of the preceding year; |
|
(B) two percent of the insurer's admitted assets |
|
at the end of the preceding year invested in the securities of all |
|
entities domiciled in any one foreign country; and |
|
(C) one-half of one percent of the insurer's |
|
admitted assets at the end of the preceding year invested in the |
|
securities of any one individual entity domiciled in a foreign |
|
country; |
|
(7) securities lending, repurchase, reverse |
|
repurchase, and dollar roll transactions, as described by Section |
|
425.121 [4(q), Article 3.33]; or |
|
(8) money market funds, as described by Section |
|
425.123 [4(s), Article 3.33]. |
|
(g) A title insurance company may invest in a certified |
|
capital company in the manner provided by Chapter 228 [Subchapter
|
|
B, Chapter 4]. |
|
SECTION 2I.003. Section 2601.001, Insurance Code, is |
|
amended to correct a cross-reference to read as follows: |
|
Sec. 2601.001. SUPERVISION, LIQUIDATION, REHABILITATION, |
|
REORGANIZATION, OR CONSERVATION OF TITLE INSURANCE COMPANIES AND |
|
AGENTS. Each title insurance agent and title insurance company is |
|
subject to Chapters 441 and 443 [Articles 21.28 and 21.28-A]. |
|
SECTION 2I.004. Section 2602.002(a), Insurance Code, is |
|
amended to correct a cross-reference to read as follows: |
|
(a) This chapter is for: |
|
(1) the purposes and findings stated in Sections |
|
441.001, 441.003, 441.005, and 441.006 [Section 1, Article
|
|
21.28-A]; and |
|
(2) the protection of holders of covered claims. |
|
SECTION 2I.005. Section 2602.005(b), Insurance Code, is |
|
amended to correct cross-references to read as follows: |
|
(b) If this chapter conflicts with another law relating to |
|
the subject matter of this chapter or its application, other than |
|
Chapter 441 or 443 [Article 21.28 or 21.28-A], this chapter |
|
controls. If this chapter conflicts with Chapter 441 or 443 |
|
[Article 21.28 or 21.28-A], that chapter [article] controls. |
|
SECTION 2I.006. Section 2602.114(e), Insurance Code, is |
|
amended to correct a cross-reference to read as follows: |
|
(e) A board member may not disclose information received in |
|
the meeting unless authorized by the commissioner or required as |
|
witness in court. A board member and the meeting are subject to the |
|
confidentiality standard imposed on an examiner under Sections |
|
401.105 and 401.106 [Article 1.18], except that a bond is not |
|
required of a board member. |
|
SECTION 2I.007. Section 2602.254, Insurance Code, is |
|
amended to correct a cross-reference to read as follows: |
|
Sec. 2602.254. CERTAIN CONSERVATOR AND RECEIVER EXPENSES |
|
COVERED. Reasonable and necessary administrative expenses |
|
incurred by a conservator appointed by the commissioner or a |
|
receiver appointed by a court for an unauthorized insurer operating |
|
in this state are covered claims if the commissioner has notified |
|
the association or the association has otherwise become aware that: |
|
(1) the unauthorized insurer has insufficient liquid |
|
assets to pay those expenses; and |
|
(2) insufficient money is available from: |
|
(A) abandoned money under Section 443.304 [8,
|
|
Article 21.28]; and |
|
(B) department appropriations for use in paying |
|
those expenses. |
|
SECTION 2I.008. Section 2602.301(a), Insurance Code, is |
|
amended to correct a cross-reference to read as follows: |
|
(a) The association shall: |
|
(1) investigate a claim brought against the |
|
association, the commissioner, or a special deputy receiver |
|
appointed under Chapter 443 [Article 21.28] if the claim involves |
|
or may involve the association's rights and obligations under this |
|
chapter; and |
|
(2) adjust, compromise, settle, and pay a covered |
|
claim to the extent of the association's obligation, and deny all |
|
other claims. |
|
PART J. CROSS-REFERENCE UPDATES: TITLE 13, INSURANCE CODE |
|
SECTION 2J.001. Section 4001.002(a), Insurance Code, is |
|
amended to correct a cross-reference to read as follows: |
|
(a) Except as otherwise provided by this code, this title |
|
applies to each person licensed under: |
|
(1) Subchapter H, Chapter 885; |
|
(2) Subchapter F, Chapter 911; |
|
(3) Section 912.251; |
|
(4) Section 961.005; |
|
(5) Subchapter E, Chapter 981; |
|
(6) [(5)] Subchapter D, Chapter 1152; |
|
(7) [(6)] Subchapter C or D of this chapter; |
|
(8) [(7)] Subtitle B, C, or D of this title; |
|
[(8) Article 23.23A;] or |
|
(9) Subsection (c), Article 5.13-1. |
|
SECTION 2J.002. Section 4001.009(a), Insurance Code, is |
|
amended to correct cross-references to read as follows: |
|
(a) As referenced in Section 4001.003(9), a reference to an |
|
agent in the following laws includes a subagent without regard to |
|
whether a subagent is specifically mentioned: |
|
(1) Chapters 281, 402, 421-423, 441, 444, 461-463, |
|
523, 541-556, 558, 559, 702, 703, 705, 821, 823-825, 827, 828, 844, |
|
963, 1108, 1205-1209, 1211-1214 [1211-1213], 1352, 1353, 1357, |
|
1358, 1360-1363, 1369, 1453-1455, 1503, 1550, 1801, 1803, |
|
2151-2154, 2201-2203, 2205-2213, 3501, 3502, 4007, [and] 4102, and |
|
4201-4203; |
|
(2) Chapter 403, excluding Section 403.002; |
|
(3) Subchapter A, Chapter 491; |
|
(4) Subchapter C, Chapter 521; |
|
[(3) Subchapter F, Chapter 542;
|
|
[(4) Subchapters G and I, Chapter 544;] |
|
(5) Subchapter A, Chapter 557; |
|
(6) Subchapter B, Chapter 805; |
|
(7) Subchapters D, E, and F, Chapter 982; |
|
(8) [(7)] Subchapter D, Chapter 1103; |
|
(9) [(8)] Subchapters B, C, D, and E, Chapter 1204, |
|
excluding Sections 1204.153 and 1204.154; |
|
(10) [(9)] Subchapter B, Chapter 1366; |
|
(11) [(10)] Subchapters B, C, and D, Chapter 1367, |
|
excluding Section 1367.053(c); |
|
(12) [(11)] Subchapters A, C, D, E, F, H, and I, |
|
Chapter 1451; |
|
(13) [(12)] Subchapter B, Chapter 1452; |
|
(14) [(13)] Sections 551.004, 841.303, 982.001, |
|
982.002, 982.004, 982.052, 982.102, 982.103, 982.104, 982.106, |
|
982.107, 982.108, 982.110, 982.111, [and] 982.112, and 1802.001; |
|
and |
|
(15) [(14) Subchapters D, E, and F, Chapter 982;
|
|
[(15) Section 1101.003(a); and
|
|
[(16)] Chapter 107, Occupations Code. |
|
SECTION 2J.003. Section 4051.002, Insurance Code, is |
|
amended to correct a cross-reference to read as follows: |
|
Sec. 4051.002. REQUIREMENTS APPLICABLE TO CERTAIN AGENT |
|
CONTRACTS. An agent's contract entered into on or after August 27, |
|
1973, by an insurer engaged in the business of property and casualty |
|
insurance in this state is subject to Chapter 444 [Article
|
|
21.11-2]. |
|
SECTION 2J.004. Section 4051.101(a), Insurance Code, is |
|
amended to correct cross-references to read as follows: |
|
(a) Except as provided by Section 4051.052, a person is |
|
required to hold a limited property and casualty license if the |
|
person acts as an agent who writes: |
|
(1) job protection insurance as defined by Section |
|
962.002 [Article 25.01]; |
|
(2) exclusively, insurance on growing crops under |
|
Subchapter F; |
|
(3) any form of insurance authorized under Chapter 911 |
|
for a farm mutual insurance company; |
|
(4) exclusively, any form of insurance authorized to |
|
be solicited and written in this state that relates to: |
|
(A) the ownership, operation, maintenance, or |
|
use of a motor vehicle designed for use on the public highways, |
|
including a trailer or semitrailer, and the motor vehicle's |
|
accessories or equipment; or |
|
(B) the ownership, occupancy, maintenance, or |
|
use of a manufactured home classified as personal property under |
|
Section 2.001, Property Code; |
|
(5) a prepaid legal services contract under Article |
|
5.13-1 or Chapter 961; |
|
(6) exclusively, an industrial fire insurance policy: |
|
(A) covering dwellings, household goods, and |
|
wearing apparel; |
|
(B) written on a weekly, monthly, or quarterly |
|
basis on a continuous premium payment plan; and |
|
(C) written for an insurer exclusively engaged in |
|
the business as described by Section 912.310; |
|
(7) credit insurance, except as otherwise provided by |
|
Chapter 4055; or |
|
(8) any other kind of insurance, if holding a limited |
|
property and casualty license to write that kind of insurance is |
|
determined necessary by the commissioner for the protection of the |
|
insurance consumers of this state. |
|
SECTION 2J.005. Section 4152.104(b), Insurance Code, is |
|
amended to correct a cross-reference to read as follows: |
|
(b) Expenses relating to an examination conducted under |
|
this subchapter may be charged to the person examined in accordance |
|
with Sections 401.151, 401.152, 401.155, and 401.156 [Article
|
|
1.16]. |
|
SECTION 2J.006. Section 4152.152, Insurance Code, is |
|
amended to correct cross-references to read as follows: |
|
Sec. 4152.152. PLACEMENT OF REINSURANCE WITH UNAUTHORIZED |
|
REINSURER. Unless the ceding insurer releases the broker in |
|
writing from the broker's obligations under this section, a broker |
|
who places reinsurance on behalf of an authorized ceding insurer |
|
with a reinsurer that is not authorized, accredited, or trusteed in |
|
this state under Chapter 492 [Article 3.10] or 493 [5.75-1] shall: |
|
(1) exercise due diligence in inquiring into the |
|
financial condition of the reinsurer; |
|
(2) disclose to the ceding insurer the broker's |
|
findings in connection with the inquiry under Subdivision (1); and |
|
(3) make available to the ceding insurer a copy of the |
|
current financial statement of the reinsurer. |
|
SECTION 2J.007. Section 4152.214(a), Insurance Code, is |
|
amended to correct cross-references to read as follows: |
|
(a) Unless the ceding insurer releases the manager in |
|
writing from the manager's obligations under this section, a |
|
manager who places reinsurance on behalf of an authorized ceding |
|
insurer with a reinsurer that is not authorized, accredited, or |
|
trusteed in this state under Chapter 492 [Article 3.10] or 493 |
|
[5.75-1] shall: |
|
(1) exercise due diligence in inquiring into the |
|
financial condition of the reinsurer; |
|
(2) disclose to the ceding insurer the manager's |
|
findings in connection with the inquiry under Subdivision (1); and |
|
(3) make available to the ceding insurer a copy of the |
|
current financial statement of the reinsurer. |
|
PART K. EFFECTIVE DATE |
|
SECTION 2K.001. This article takes effect April 1, 2009. |
|
ARTICLE 3. INSURANCE CODE UPDATE |
|
PART A. GENERAL PROVISIONS |
|
SECTION 3A.001. This article is enacted as part of the |
|
state's continuing statutory revision program under Chapter 323, |
|
Government Code. This article is a revision for purposes of Section |
|
43, Article III, Texas Constitution, and has the purposes of: |
|
(1) conforming codifications enacted by the 79th |
|
Legislature to other Acts of that legislature that amended the laws |
|
codified or added new law to subject matter codified; |
|
(2) making necessary corrections to enacted |
|
codifications; and |
|
(3) renumbering titles, chapters, and sections of |
|
codes that duplicate title, chapter, or section numbers. |
|
SECTION 3A.002. (a) The repeal of a statute by this article |
|
does not affect an amendment, revision, or reenactment of the |
|
statute by the 80th Legislature, Regular Session, 2007. The |
|
amendment, revision, or reenactment is preserved and given effect |
|
as part of the code provision that revised the statute so amended, |
|
revised, or reenacted. |
|
(b) If any provision of this article conflicts with a |
|
statute enacted by the 80th Legislature, Regular Session, 2007, the |
|
statute controls. |
|
SECTION 3A.003. (a) A transition or saving provision of a |
|
law codified by this article applies to the codified law to the same |
|
extent as it applied to the original law. |
|
(b) The repeal of a transition or saving provision by this |
|
article does not affect the application of the provision to the |
|
codified law. |
|
(c) In this section, "transition provision" includes any |
|
temporary provision providing for a special situation in the |
|
transition period between the existing law and the establishment or |
|
implementation of the new law. |
|
PART B. CHANGES UPDATING INSURANCE CODE |
|
SECTION 3B.001. (a) Section 401.010(a), Insurance Code, is |
|
amended to conform to Section 2, Chapter 408, Acts of the 79th |
|
Legislature, Regular Session, 2005, to read as follows: |
|
(a) An accountant must audit the financial reports provided |
|
by an insurer or health maintenance organization for purposes of an |
|
audit under this subchapter. The accountant who audits the reports |
|
must conduct the audit in accordance with generally accepted |
|
auditing standards or with standards adopted by the Public Company |
|
Accounting Oversight Board, as applicable, and must consider the |
|
standards specified [other procedures described] in the Financial |
|
Condition Examiner's Handbook adopted by the National Association |
|
of Insurance Commissioners or other analogous nationally |
|
recognized standards adopted by commissioner rule. |
|
(b) Section 2, Chapter 408, Acts of the 79th Legislature, |
|
Regular Session, 2005, which amended former Subsection (b), Section |
|
14, Article 1.15A, Insurance Code, is repealed. |
|
SECTION 3B.002. (a) Section 401.011(d), Insurance Code, is |
|
amended to conform to Section 1, Chapter 408, Acts of the 79th |
|
Legislature, Regular Session, 2005, to read as follows: |
|
(d) The commissioner may not accept an audited financial |
|
report prepared wholly or partly by an individual or firm who the |
|
commissioner finds: |
|
(1) has been convicted of fraud, bribery, a violation |
|
of the Racketeer Influenced and Corrupt Organizations Act (18 |
|
U.S.C. Section 1961 et seq.), or a state or federal criminal offense |
|
involving dishonest conduct; |
|
(2) has violated the insurance laws of this state with |
|
respect to a report filed under this subchapter; [or] |
|
(3) has demonstrated a pattern or practice of failing |
|
to detect or disclose material information in reports filed under |
|
this subchapter; or |
|
(4) has directly or indirectly entered into an |
|
agreement of indemnity or release of liability regarding an audit |
|
of an insurer. |
|
(b) Section 1, Chapter 408, Acts of the 79th Legislature, |
|
Regular Session, 2005, which amended former Subsection (c), Section |
|
12, Article 1.15A, Insurance Code, is repealed. |
|
SECTION 3B.003. Subchapters A, B, C, D, E, F, G, H, I, J, K, |
|
L, M, N, O, and P, Chapter 442, Insurance Code, and Section 6.069, |
|
Chapter 265, Acts of the 79th Legislature, Regular Session, 2005, |
|
which amended former Section 3A, Article 21.28, Insurance Code, are |
|
repealed to conform to the repeal of Article 21.28, Insurance Code, |
|
by Section 9, Chapter 995, Acts of the 79th Legislature, Regular |
|
Session, 2005. |
|
SECTION 3B.004. (a) The following changes are made to Title |
|
1, Insurance Code, and Subtitle C, Title 4, Insurance Code, for |
|
organizational purposes: |
|
(1) Chapter 21A, Insurance Code, is redesignated as |
|
Chapter 443, Subtitle C, Title 4, Insurance Code, and: |
|
(A) Subchapter A in the redesignated chapter is |
|
redesignated as Subchapter A, Chapter 443, Insurance Code, and the |
|
sections in the redesignated subchapter, Sections 21A.001, |
|
21A.002, 21A.003, 21A.004, 21A.005, 21A.006, 21A.007, 21A.008, |
|
21A.009, 21A.010, 21A.011, 21A.012, 21A.013, 21A.0135, 21A.014, |
|
21A.015, 21A.016, and 21A.017, are redesignated as Sections |
|
443.001, 443.002, 443.003, 443.004, 443.005, 443.006, 443.007, |
|
443.008, 443.009, 443.010, 443.011, 443.012, 443.013, 443.0135, |
|
443.014, 443.015, 443.016, and 443.017, respectively; |
|
(B) Subchapter B in the redesignated chapter is |
|
redesignated as Subchapter B, Chapter 443, Insurance Code, and the |
|
sections in the redesignated subchapter, Sections 21A.051 through |
|
21A.059, are redesignated as Sections 443.051 through 443.059; |
|
(C) Subchapter C in the redesignated chapter is |
|
redesignated as Subchapter C, Chapter 443, Insurance Code, and the |
|
sections in the redesignated subchapter, Sections 21A.101 through |
|
21A.105, are redesignated as Sections 443.101 through 443.105; |
|
(D) Subchapter D in the redesignated chapter is |
|
redesignated as Subchapter D, Chapter 443, Insurance Code, and the |
|
sections in the redesignated subchapter, Sections 21A.151 through |
|
21A.156, are redesignated as Sections 443.151 through 443.156; |
|
(E) Subchapter E in the redesignated chapter is |
|
redesignated as Subchapter E, Chapter 443, Insurance Code, and the |
|
sections in the redesignated subchapter, Sections 21A.201 through |
|
21A.213, are redesignated as Sections 443.201 through 443.213; |
|
(F) Subchapter F in the redesignated chapter is |
|
redesignated as Subchapter F, Chapter 443, Insurance Code, and the |
|
sections in the redesignated subchapter, Sections 21A.251 through |
|
21A.261, are redesignated as Sections 443.251 through 443.261; |
|
(G) Subchapter G in the redesignated chapter is |
|
redesignated as Subchapter G, Chapter 443, Insurance Code, and the |
|
sections in the redesignated subchapter, Sections 21A.301 through |
|
21A.304, are redesignated as Sections 443.301 through 443.304; |
|
(H) Subchapter H in the redesignated chapter is |
|
redesignated as Subchapter H, Chapter 443, Insurance Code, and the |
|
sections in the redesignated subchapter, Sections 21A.351 through |
|
21A.355, are redesignated as Sections 443.351 through 443.355; and |
|
(I) Subchapter I in the redesignated chapter is |
|
redesignated as Subchapter I, Chapter 443, Insurance Code, and the |
|
sections in the redesignated subchapter, Sections 21A.401 and |
|
21A.402, are redesignated as Sections 443.401 and 443.402, |
|
respectively; and |
|
(2) Subchapter Q, Chapter 442, Insurance Code, is |
|
redesignated as Chapter 444, Insurance Code, the heading of |
|
Subchapter Q is amended to read as follows: "CHAPTER 444 |
|
[SUBCHAPTER Q]. AGENCY CONTRACTS WITH CERTAIN INSURERS", and |
|
Sections 442.801, 442.802, 442.803, and 442.804 in the redesignated |
|
subchapter are redesignated as Sections 444.001, 444.002, 444.003, |
|
and 444.004, respectively. |
|
(b) Sections 21A.004(a)(4), (11), (14), (17), and (26), |
|
Insurance Code, redesignated as Sections 443.004(a)(4), (11), |
|
(14), (17), and (26), Insurance Code, respectively, by Subsection |
|
(a)(1)(A) of this section, are amended to conform to the additional |
|
changes made by Subsection (a)(1) of this section and to the |
|
recodification and repeal of Articles 21.28-C and 21.28-D, |
|
Insurance Code, by Chapter 727, Acts of the 79th Legislature, |
|
Regular Session, 2005, to read as follows: |
|
(4) "Delinquency proceeding" means any proceeding |
|
instituted against an insurer for the purpose of liquidating, |
|
rehabilitating, or conserving the insurer, and any proceeding under |
|
Section 443.051 [21A.051]. |
|
(11) "Guaranty association" means any mechanism |
|
mandated by [Article 21.28-C or 21.28-D,] Chapter 462, 463, or |
|
2602[,] or other laws of this state or a similar mechanism in |
|
another state that is created for the payment of claims or |
|
continuation of policy obligations of financially impaired or |
|
insolvent insurers. |
|
(14) "Insurer" means any person that has done, |
|
purports to do, is doing, or is authorized to do the business of |
|
insurance in this state, and is or has been subject to the authority |
|
of or to liquidation, rehabilitation, reorganization, supervision, |
|
or conservation by any insurance commissioner. For purposes of |
|
this chapter, any other persons included under Section 443.003 |
|
[21A.003] are insurers. |
|
(17) "Party in interest" means the commissioner, a 10 |
|
percent or greater equity security holder in the insolvent insurer, |
|
any affected guaranty association, any nondomiciliary commissioner |
|
for a jurisdiction in which the insurer has outstanding claims |
|
liabilities, and any of the following parties that have filed a |
|
request for inclusion on the service list under Section 443.007 |
|
[21A.007]: |
|
(A) an insurer that ceded to or assumed business |
|
from the insolvent insurer; and |
|
(B) an equity shareholder, policyholder, |
|
third-party claimant, creditor, and any other person, including any |
|
indenture trustee, with a financial or regulatory interest in the |
|
receivership proceeding. |
|
(26) "Secured claim" means any claim secured by an |
|
asset that is not a general asset. The term includes the right to |
|
set off as provided in Section 443.209 [21A.209]. The term does not |
|
include a claim arising from a constructive or resulting trust, a |
|
special deposit claim, or a claim based on mere possession. |
|
(c) Sections 21A.005(e), (h), and (i), Insurance Code, |
|
redesignated as Sections 443.005(e), (h), and (i), Insurance Code, |
|
respectively, by Subsection (a)(1)(A) of this section, are amended |
|
to conform to the additional changes made by Subsection (a)(1) of |
|
this section to read as follows: |
|
(e) If, on motion of any party, the receivership court finds |
|
that any action, as a matter of substantial justice, should be tried |
|
in a forum outside this state, the receivership court may enter an |
|
appropriate order to stay further proceedings on the action in this |
|
state. Except as to claims against the estate, nothing in this |
|
chapter deprives a party of any contractual right to pursue |
|
arbitration. A party in arbitration may bring a claim or |
|
counterclaim against the estate, but the claim or counterclaim is |
|
subject to Section 443.209 [21A.209]. |
|
(h) At any time after an order is entered pursuant to |
|
Section 443.051, 443.101, or 443.151 [21A.051, 21A.101, or
|
|
21A.151], the commissioner or receiver may transfer the case to the |
|
county of the principal office of the person proceeded against. In |
|
the event of transfer, the court in which the proceeding was |
|
commenced, upon application of the commissioner or receiver, shall |
|
direct its clerk to transmit the court's file to the clerk of the |
|
court to which the case is to be transferred. The proceeding, after |
|
transfer, shall be conducted in the same manner as if it had been |
|
commenced in the court to which the matter is transferred. |
|
(i) A person may not intervene in any delinquency proceeding |
|
in this state for the purpose of seeking or obtaining payment of any |
|
judgment, lien, or other claim of any kind. The claims procedure |
|
set forth in this chapter constitutes the exclusive means for |
|
obtaining payment of claims from the receivership estate. This |
|
provision is not intended to affect the rights conferred on the |
|
guaranty associations by Section 443.008(l) [21A.008(l)]. |
|
(d) Section 21A.008(e), Insurance Code, redesignated as |
|
Section 443.008(e), Insurance Code, by Subsection (a)(1)(A) of this |
|
section, is amended to conform to the additional changes made by |
|
Subsection (a)(1) of this section to read as follows: |
|
(e) Notwithstanding Subsection (c), the commencement of a |
|
delinquency proceeding under this chapter does not operate as a |
|
stay of: |
|
(1) regulatory actions not described by Subsection |
|
(c)(7) that are taken by the commissioners of nondomiciliary |
|
states, including the suspension of licenses; |
|
(2) criminal proceedings; |
|
(3) any act to perfect or to maintain or continue the |
|
perfection of an interest in property to the extent that the act is |
|
accomplished within any relation back period under applicable law; |
|
(4) set off as permitted by Section 443.209 [21A.209]; |
|
(5) pursuit and enforcement of nonmonetary |
|
governmental claims, judgments, and proceedings; |
|
(6) presentment of a negotiable instrument and the |
|
giving of notice and protesting dishonor of the instrument; |
|
(7) enforcement of rights against single beneficiary |
|
trusts established pursuant to and in compliance with laws relating |
|
to credit for reinsurance; |
|
(8) termination, liquidation, and netting of |
|
obligations under qualified financial contracts as provided for in |
|
Section 443.261 [21A.261]; |
|
(9) discharge by a guaranty association of statutory |
|
responsibilities under any law governing guaranty associations; or |
|
(10) any of the following actions: |
|
(A) an audit by a governmental unit to determine |
|
tax liability; |
|
(B) the issuance to the insurer by a governmental |
|
unit of a notice of tax deficiency; |
|
(C) a demand for tax returns; or |
|
(D) the making of an assessment for any tax and |
|
issuance of a notice and demand for payment of the assessment. |
|
(e) Section 21A.009(c), Insurance Code, redesignated as |
|
Section 443.009(c), Insurance Code, by Subsection (a)(1)(A) of this |
|
section, is amended to conform to the additional changes made by |
|
Subsection (a)(1) of this section to read as follows: |
|
(c) If applicable law, an order, or an agreement fixes a |
|
period for commencing or continuing a civil action in a court other |
|
than the receivership court on a claim against the insurer, and the |
|
period has not expired before the date of the initial filing of the |
|
petition in a delinquency proceeding, then the period does not |
|
expire until the later of: |
|
(1) the end of the period, including any suspension of |
|
the period occurring on or after the filing of the initial petition |
|
in the delinquency proceeding; or |
|
(2) 30 days after termination or expiration of the |
|
stay under Section 443.008 [21A.008] with respect to the claim. |
|
(f) Section 21A.0135, Insurance Code, redesignated as |
|
Section 443.0135, Insurance Code, by Subsection (a)(1)(A) of this |
|
section, is amended to conform to the additional changes made by |
|
Subsection (a)(1) of this section to read as follows: |
|
Sec. 443.0135 [21A.0135]. CONTRACTS FOR SPECIAL DEPUTIES. |
|
(a) The receiver shall use a competitive bidding process in the |
|
selection of any special deputies appointed under Section 443.102 |
|
or 443.154 [21A.102 or 21A.154]. The process must include |
|
procedures to promote the participation of historically |
|
underutilized businesses that have been certified by the Texas |
|
Building and Procurement Commission under Section 2161.061, |
|
Government Code. |
|
(b) A proposal submitted in connection with a bid |
|
solicitation under Subsection (a) must describe the efforts that |
|
have been made to include historically underutilized businesses as |
|
subcontractors and the plan for using the historically |
|
underutilized businesses in the administration of the receivership |
|
estate. A special deputy appointed under Section 443.102 or |
|
443.154 [21A.102 or 21A.154] shall make a good faith effort to |
|
implement the plan and shall report to the receiver the special |
|
deputy's efforts to identify and subcontract with historically |
|
underutilized businesses. |
|
(g) Sections 21A.015(a), (c), and (i), Insurance Code, |
|
redesignated as Sections 443.015(a), (c), and (i), Insurance Code, |
|
respectively, by Subsection (a)(1)(A) of this section, are amended |
|
to conform to the additional changes made by Subsection (a)(1) of |
|
this section to read as follows: |
|
(a) The receiver may pay any expenses under contracts, |
|
leases, employment agreements, or other arrangements entered into |
|
by the insurer prior to receivership, as the receiver deems |
|
necessary for the purposes of this chapter. The receiver is not |
|
required to pay any expenses that the receiver determines are not |
|
necessary, and may reject any contract pursuant to Section 443.013 |
|
[21A.013]. |
|
(c) The receiver shall submit to the receivership court an |
|
application pursuant to Section 443.007 [21A.007] to approve: |
|
(1) the terms of compensation of each special deputy |
|
or contractor with respect to which the total amount of the |
|
compensation is reasonably expected by the receiver for the |
|
duration of the delinquency proceeding to exceed $250,000, or |
|
another amount established by the receivership court; and |
|
(2) any other anticipated expense in excess of |
|
$25,000, or another amount established by the receivership court. |
|
(i) All expenses of receivership shall be paid from the |
|
assets of the insurer, except as provided by this subsection. In |
|
the event that the property of the insurer does not contain |
|
sufficient cash or liquid assets to defray the expenses incurred, |
|
the commissioner may advance funds from the account established |
|
under Section 443.304(c) [21A.304(c)]. Any amounts advanced shall |
|
be repaid to the account out of the first available money of the |
|
insurer. |
|
(h) Sections 21A.051(a), (b), and (i), Insurance Code, |
|
redesignated as Sections 443.051(a), (b), and (i), Insurance Code, |
|
respectively, by Subsection (a)(1)(B) of this section, are amended |
|
to conform to the additional changes made by Subsection (a)(1) of |
|
this section to read as follows: |
|
(a) The commissioner may file in a district court of Travis |
|
County a petition with respect to an insurer domiciled in this |
|
state, an unauthorized insurer, or, pursuant to Section 443.401 |
|
[21A.401], a foreign insurer: |
|
(1) alleging that grounds exist that would justify a |
|
court order for a formal delinquency proceeding against the insurer |
|
under this chapter; |
|
(2) alleging that the interests of policyholders, |
|
creditors, or the public will be endangered by delay; and |
|
(3) setting forth the contents of a seizure order |
|
deemed to be necessary by the commissioner. |
|
(b) Upon a filing under Subsection (a), the receivership |
|
court may issue, ex parte and without notice or hearing, the |
|
requested seizure order directing the commissioner to take |
|
possession and control of all or a part of the property, books, |
|
accounts, documents, and other records of an insurer, and of the |
|
premises occupied by it for transaction of its business, and until |
|
further order of the receivership court, enjoining the insurer and |
|
its officers, managers, agents, and employees from disposition of |
|
its property and from the transaction of its business except with |
|
the written consent of the commissioner. Any person having |
|
possession or control of and refusing to deliver any of the books, |
|
records, or assets of a person against whom a seizure order has been |
|
issued commits an offense. An offense under this subsection is |
|
punishable in the manner described by Section 443.010(e) |
|
[21A.010(e)]. |
|
(i) In all proceedings and judicial reviews under this |
|
section, all records of the insurer, department files, court |
|
records and papers, and other documents, so far as they pertain to |
|
or are a part of the record of the proceedings, are confidential, |
|
and all papers filed with the clerk of the court shall be held by the |
|
clerk in a confidential file as permitted by law, except to the |
|
extent necessary to obtain compliance with any order entered in |
|
connection with the proceedings, unless and until: |
|
(1) the court, after hearing argument in chambers, |
|
orders otherwise; |
|
(2) the insurer requests that the matter be made |
|
public; or |
|
(3) the commissioner applies for an order under |
|
Section 443.057 [21A.057]. |
|
(i) Section 21A.052(b), Insurance Code, redesignated as |
|
Section 443.052(b), Insurance Code, by Subsection (a)(1)(B) of this |
|
section, is amended to conform to the additional changes made by |
|
Subsection (a)(1) of this section to read as follows: |
|
(b) The petition must state the grounds upon which the |
|
proceeding is based and the relief requested and may include a |
|
prayer for restraining orders and injunctive relief as described in |
|
Section 443.008 [21A.008]. On the filing of the petition or order, |
|
a copy shall be forwarded by first class mail or electronic |
|
communication as permitted by the receivership court to the |
|
insurance regulatory officials and guaranty associations in states |
|
in which the insurer did business. |
|
(j) Section 21A.056(a), Insurance Code, redesignated as |
|
Section 443.056(a), Insurance Code, by Subsection (a)(1)(B) of this |
|
section, is amended to conform to the additional changes made by |
|
Subsection (a)(1) of this section to read as follows: |
|
(a) The commissioner, rehabilitator, or liquidator may |
|
share documents, materials, or other information in the possession, |
|
custody, or control of the department without regard to the |
|
confidentiality of those documents, materials, or information, |
|
pertaining to an insurer that is the subject of a proceeding under |
|
this chapter with other state, federal, and international |
|
regulatory agencies, with the National Association of Insurance |
|
Commissioners and its affiliates and subsidiaries, with state, |
|
federal, and international law enforcement authorities, with an |
|
auditor appointed by the receivership court in accordance with |
|
Section 443.355 [21A.355], and, pursuant to Section 443.105 |
|
[21A.105], with representatives of guaranty associations that may |
|
have statutory obligations as a result of the insolvency of the |
|
insurer, provided that the recipient agrees to maintain the |
|
confidentiality, if any, of the documents, material, or other |
|
information. Nothing in this section limits the power of the |
|
commissioner to disclose information under other applicable law. |
|
(k) Section 21A.057, Insurance Code, redesignated as |
|
Section 443.057, Insurance Code, by Subsection (a)(1)(B) of this |
|
section, is amended to conform to the additional changes made by |
|
Subsection (a)(1) of this section and to the recodification and |
|
repeal of Articles 1.15, 1.15A, 1.16, 1.32, and 21.28-A, Insurance |
|
Code, by Chapter 727, Acts of the 79th Legislature, Regular |
|
Session, 2005, to read as follows: |
|
Sec. 443.057 [21A.057]. GROUNDS FOR CONSERVATION, |
|
REHABILITATION, OR LIQUIDATION. The commissioner may file with a |
|
court in this state a petition with respect to an insurer domiciled |
|
in this state or an unauthorized insurer for an order of |
|
rehabilitation or liquidation on any one or more of the following |
|
grounds: |
|
(1) the insurer is impaired; |
|
(2) the insurer is insolvent; |
|
(3) the insurer is about to become insolvent, with |
|
"about to become insolvent" being defined as reasonably anticipated |
|
that the insurer will not have liquid assets to meet its next 90 |
|
days' current obligations; |
|
(4) the insurer has neglected or refused to comply |
|
with an order of the commissioner to make good within the time |
|
prescribed by law any deficiency, whenever its capital and minimum |
|
required surplus, if a stock company, or its surplus, if a company |
|
other than stock, has become impaired; |
|
(5) the insurer, its parent company, its subsidiaries, |
|
or its affiliates have converted, wasted, or concealed property of |
|
the insurer or have otherwise improperly disposed of, dissipated, |
|
used, released, transferred, sold, assigned, hypothecated, or |
|
removed the property of the insurer; |
|
(6) the insurer is in a condition such that it could |
|
not meet the requirements for organization and authorization as |
|
required by law, except as to the amount of the original surplus |
|
required of a stock company under Title 6, and except as to the |
|
amount of the surplus required of a company other than a stock |
|
company in excess of the minimum surplus required to be maintained; |
|
(7) the insurer, its parent company, its subsidiaries, |
|
or its affiliates have concealed, removed, altered, destroyed, or |
|
failed to establish and maintain books, records, documents, |
|
accounts, vouchers, and other pertinent material adequate for the |
|
determination of the financial condition of the insurer by |
|
examination under Chapter 401 [Article 1.15, 1.15A, or 1.16] or has |
|
failed to properly administer claims or maintain claims records |
|
that are adequate for the determination of its outstanding claims |
|
liability; |
|
(8) at any time after the issuance of an order under |
|
Section 404.003 or Chapter 441 [Article 1.32 or 21.28-A], or at the |
|
time of instituting any proceeding under this chapter, it appears |
|
to the commissioner that, upon good cause shown, it would not be in |
|
the best interest of the policyholders, creditors, or the public to |
|
proceed with the conduct of the business of the insurer; |
|
(9) the insurer is in a condition such that the further |
|
transaction of business would be hazardous financially, according |
|
to Subchapter A, Chapter 404, [Article 1.32] or otherwise, to its |
|
policyholders, creditors, or the public; |
|
(10) there is reasonable cause to believe that there |
|
has been embezzlement from the insurer, wrongful sequestration or |
|
diversion of the insurer's property, forgery or fraud affecting the |
|
insurer, or other illegal conduct in, by, or with respect to the |
|
insurer that, if established, would endanger assets in an amount |
|
threatening the solvency of the insurer; |
|
(11) control of the insurer is in a person who is: |
|
(A) dishonest or untrustworthy; or |
|
(B) so lacking in insurance company managerial |
|
experience or capability as to be hazardous to policyholders, |
|
creditors, or the public; |
|
(12) any person who in fact has executive authority in |
|
the insurer, whether an officer, manager, general agent, director, |
|
trustee, employee, shareholder, or other person, has refused to be |
|
examined under oath by the commissioner concerning the insurer's |
|
affairs, whether in this state or elsewhere or if examined under |
|
oath, refuses to divulge pertinent information reasonably known to |
|
the person; and after reasonable notice of the fact, the insurer has |
|
failed promptly and effectively to terminate the employment and |
|
status of the person and all the person's influence on management; |
|
(13) after demand by the commissioner under Chapter |
|
401 [Article 1.15, 1.15A, or 1.16] or under this chapter, the |
|
insurer has failed promptly to make available for examination any |
|
of its own property, books, accounts, documents, or other records, |
|
or those of any subsidiary or related company within the control of |
|
the insurer or of any person having executive authority in the |
|
insurer, so far as they pertain to the insurer; |
|
(14) without first obtaining the written consent of |
|
the commissioner, the insurer has transferred, or attempted to |
|
transfer, in a manner contrary to Chapter 823 or any law relating to |
|
bulk reinsurance, substantially its entire property or business, or |
|
has entered into any transaction the effect of which is to merge, |
|
consolidate, or reinsure substantially its entire property or |
|
business in or with the property or business of any other person; |
|
(15) the insurer or its property has been or is the |
|
subject of an application for the appointment of a receiver, |
|
trustee, custodian, conservator, sequestrator, or similar |
|
fiduciary of the insurer or its property otherwise than as |
|
authorized under the insurance laws of this state; |
|
(16) within the previous five years, the insurer has |
|
wilfully and continuously violated its charter, articles of |
|
incorporation or bylaws, any insurance law of this state, or any |
|
valid order of the commissioner; |
|
(17) the insurer has failed to pay within 60 days after |
|
the due date any obligation to any state or political subdivision of |
|
a state or any judgment entered in any state, if the court in which |
|
the judgment was entered had jurisdiction over the subject matter, |
|
except that nonpayment is not a ground until 60 days after any good |
|
faith effort by the insurer to contest the obligation has been |
|
terminated, whether it is before the commissioner or in the courts; |
|
(18) the insurer has systematically engaged in the |
|
practice of reaching settlements with and obtaining releases from |
|
claimants, and then unreasonably delayed payment, failed to pay the |
|
agreed-upon settlements, or systematically attempted to compromise |
|
with claimants or other creditors on the ground that it is |
|
financially unable to pay its claims or obligations in full; |
|
(19) the insurer has failed to file its annual report |
|
or other financial report required by statute within the time |
|
allowed by law; |
|
(20) the board of directors or the holders of a |
|
majority of the shares entitled to vote, or a majority of those |
|
individuals entitled to the control of those entities specified by |
|
Section 443.003 [21A.003], request or consent to rehabilitation or |
|
liquidation under this chapter; |
|
(21) the insurer does not comply with its domiciliary |
|
state's requirements for issuance to it of a certificate of |
|
authority, or its certificate of authority has been revoked by its |
|
state of domicile; or |
|
(22) when authorized by department rules. |
|
(l) Section 21A.058, Insurance Code, redesignated as |
|
Section 443.058, Insurance Code, by Subsection (a)(1)(B) of this |
|
section, is amended to conform to the additional changes made by |
|
Subsection (a)(1) of this section to read as follows: |
|
Sec. 443.058 [21A.058]. ENTRY OF ORDER. If the |
|
commissioner establishes any of the grounds provided in Section |
|
443.057 [21A.057], the receivership court shall grant the petition |
|
and issue the order of rehabilitation or liquidation requested in |
|
the petition. |
|
(m) Section 21A.101(b), Insurance Code, redesignated as |
|
Section 443.101(b), Insurance Code, by Subsection (a)(1)(C) of this |
|
section, is amended to conform to the additional changes made by |
|
Subsection (a)(1) of this section to read as follows: |
|
(b) Any order issued under this section must require |
|
accountings to the receivership court by the rehabilitator. |
|
Accountings must be at the intervals specified by the receivership |
|
court in its order, but not less frequently than semi-annually. |
|
Each accounting must include a report concerning the |
|
rehabilitator's opinion as to the likelihood that a plan under |
|
Section 443.103 [21A.103] will be prepared by the rehabilitator and |
|
the timetable for doing so. |
|
(n) Section 21A.102(a), Insurance Code, redesignated as |
|
Section 443.102(a), Insurance Code, by Subsection (a)(1)(C) of this |
|
section, is amended to conform to the additional changes made by |
|
Subsection (a)(1) of this section to read as follows: |
|
(a) The rehabilitator may appoint one or more special |
|
deputies. A special deputy serves at the pleasure of the |
|
rehabilitator and has all the powers and responsibilities of the |
|
rehabilitator granted under this section, unless specifically |
|
limited by the rehabilitator. The rehabilitator may employ or |
|
contract with legal counsel, actuaries, accountants, appraisers, |
|
consultants, clerks, assistants, and other personnel as may be |
|
deemed necessary. Any special deputy or any other person with whom |
|
the rehabilitator contracts under this subsection may act on behalf |
|
of the commissioner only in the commissioner's capacity as |
|
rehabilitator. Any person with whom the rehabilitator contracts |
|
under this subsection is not considered an agent of the state, and |
|
any contract entered into under this subsection does not constitute |
|
a contract with the state. The provisions of any law governing the |
|
procurement of goods and services by the state does not apply to any |
|
contract entered into by the commissioner as rehabilitator. The |
|
compensation of any special deputies, employees, and contractors |
|
and all expenses of taking possession of the insurer and of |
|
conducting the rehabilitation shall be fixed by the rehabilitator, |
|
with the approval of the receivership court in accordance with |
|
Section 443.015 [21A.015], and shall be paid out of the property of |
|
the insurer. The persons appointed under this subsection serve at |
|
the pleasure of the rehabilitator. If the rehabilitator deems it |
|
necessary to the proper performance of the rehabilitator's duties |
|
under this chapter, the rehabilitator may appoint an advisory |
|
committee of policyholders, claimants, or other creditors, |
|
including guaranty associations. The advisory committee serves at |
|
the pleasure of the rehabilitator and without compensation or |
|
reimbursement for expenses. The rehabilitator or the receivership |
|
court in rehabilitation proceedings conducted under this chapter |
|
may not appoint another committee of any nature. |
|
(o) Section 21A.104, Insurance Code, redesignated as |
|
Section 443.104, Insurance Code, by Subsection (a)(1)(C) of this |
|
section, is amended to conform to the additional changes made by |
|
Subsection (a)(1) of this section to read as follows: |
|
Sec. 443.104 [21A.104]. TERMINATION OF REHABILITATION. (a) |
|
When the rehabilitator believes further attempts to rehabilitate an |
|
insurer would substantially increase the risk of loss to creditors, |
|
policyholders, or the public or would be futile, the rehabilitator |
|
may move for an order of liquidation. In accordance with Section |
|
443.105 [21A.105], the rehabilitator or the rehabilitator's |
|
designated representative shall coordinate with the guaranty |
|
associations that may become liable as a result of the liquidation |
|
and any national association of guaranty associations to plan for |
|
transition to liquidation. |
|
(b) Because the protection of the interests of insureds, |
|
claimants, and the public requires the timely performance of all |
|
insurance policy obligations, if the payment of policy obligations |
|
is suspended in substantial part for a period of six months at any |
|
time after the appointment of the rehabilitator and the |
|
rehabilitator has not filed an application for approval of a plan |
|
under Section 443.103 [21A.103], the rehabilitator shall petition |
|
the receivership court for an order of liquidation. |
|
(c) The rehabilitator or the directors of the insurer may at |
|
any time petition the receivership court for, or the receivership |
|
court on its own motion may enter, an order terminating |
|
rehabilitation of an insurer. Subject to the provisions of Section |
|
443.351 [21A.351], if the receivership court finds that |
|
rehabilitation has been accomplished and that grounds for |
|
rehabilitation under Section 443.057 [21A.057] no longer exist, it |
|
shall order that the insurer be restored to title and possession of |
|
its property and the control of the business. |
|
(p) Sections 21A.151(b) and (e), Insurance Code, |
|
redesignated as Sections 443.151(b) and (e), Insurance Code, |
|
respectively, by Subsection (a)(1)(D) of this section, are amended |
|
to conform to the additional changes made by Subsection (a)(1) of |
|
this section to read as follows: |
|
(b) Upon issuance of the order of liquidation, the rights |
|
and liabilities of the insurer and of its creditors, policyholders, |
|
shareholders, members, and all other persons interested in its |
|
estate become fixed as of the date of entry of the order of |
|
liquidation, except as provided by Sections 443.152 and 443.255 |
|
[21A.152 and 21A.255], unless otherwise fixed by the court. |
|
(e) In the event an order of liquidation is set aside on |
|
appeal, the company may not be released from delinquency |
|
proceedings except in accordance with Section 443.351 [21A.351]. |
|
(q) Sections 21A.152(b), (c), and (d), Insurance Code, |
|
redesignated as Sections 443.152(b), (c), and (d), Insurance Code, |
|
respectively, by Subsection (a)(1)(D) of this section, are amended |
|
to conform to the additional changes made by Subsection (a)(1) of |
|
this section to read as follows: |
|
(b) Notwithstanding any policy or contract language or any |
|
other statute, all policies, insurance contracts other than |
|
reinsurance by which the insurer has ceded insurance obligations to |
|
another person, and surety bonds or surety undertakings, other than |
|
life or health insurance or annuities, in effect at the time of |
|
issuance of an order of liquidation, unless further extended by the |
|
receiver with the approval of the receivership court, continue in |
|
force only until the earlier of: |
|
(1) the 30th day after the date of entry of the |
|
liquidation order; |
|
(2) the date of expiration of the policy coverage; |
|
(3) the date the insured has replaced the insurance |
|
coverage with equivalent insurance with another insurer or |
|
otherwise terminated the policy; |
|
(4) the date the liquidator has effected a transfer of |
|
the policy obligation pursuant to Section 443.154(h) [21A.154(h)]; |
|
or |
|
(5) the date proposed by the liquidator and approved |
|
by the receivership court to cancel coverage. |
|
(c) An order of liquidation under Section 443.151 [21A.151] |
|
must terminate coverages at the time specified by Subsections (a) |
|
and (b) for purposes of any other statute. |
|
(d) Policies of life or health insurance or annuities |
|
covered by a guaranty association and any portion of policies of |
|
life or health insurance or annuities covered by a guaranty |
|
association continue in force for the period and under the terms |
|
provided for by any applicable guaranty association law. Policies |
|
of life or health insurance or annuities not covered by a guaranty |
|
association and any portion of policies of life or health insurance |
|
or annuities not covered by a guaranty association terminate under |
|
Subsection (b), except to the extent the liquidator proposes and |
|
the receivership court approves the use of property of the estate, |
|
consistent with Section 443.301 [21A.301], for the purpose of |
|
continuing the contracts or coverage by transferring them to an |
|
assuming reinsurer. |
|
(r) Sections 21A.154(a), (b), (h), (k), (l), (y), and (z), |
|
Insurance Code, redesignated as Sections 443.154(a), (b), (h), (k), |
|
(l), (y), and (z), Insurance Code, respectively, by Subsection |
|
(a)(1)(D) of this section, are amended to conform to the additional |
|
changes made by Subsection (a)(1) of this section to read as |
|
follows: |
|
(a) The liquidator may appoint a special deputy or deputies |
|
to act for the liquidator under this chapter and employ or contract |
|
with legal counsel, actuaries, accountants, appraisers, |
|
consultants, clerks, assistants, and other personnel the |
|
liquidator may deem necessary to assist in the liquidation. A |
|
special deputy has all powers of the liquidator granted by this |
|
section, unless specifically limited by the liquidator, and serves |
|
at the pleasure of the liquidator. A special deputy or any other |
|
person with whom the liquidator contracts under this subsection may |
|
act on behalf of the commissioner only in the commissioner's |
|
capacity as liquidator. Any person with whom the liquidator |
|
contracts is not considered to be an agent of the state and any |
|
contract under this subsection is not a contract with the state. |
|
The provisions of any law governing the procurement of goods and |
|
services by the state do not apply to any contract entered into by |
|
the commissioner as liquidator. This subsection does not waive any |
|
immunity granted by Section 443.014 [21A.014] or create any cause |
|
of action against the state. |
|
(b) The liquidator may determine the reasonable |
|
compensation for any special deputies, employees, or contractors |
|
retained by the liquidator as provided in Subsection (a) and pay |
|
compensation in accordance with Section 443.015 [21A.015]. |
|
(h) The liquidator may use property of the estate of an |
|
insurer under a liquidation order to transfer to a solvent assuming |
|
insurer policy obligations or the insurer's obligations under |
|
surety bonds and surety undertakings as well as collateral held by |
|
the insurer with respect to the reimbursement obligations of the |
|
principals under those surety bonds and surety undertakings, if the |
|
transfer can be arranged without prejudice to applicable priorities |
|
under Section 443.301 [21A.301]. If all insureds, principals, |
|
third-party claimants, and obligees under the policies, surety |
|
bonds, and surety undertakings consent or if the receivership court |
|
so orders, the estate has no further liability under the |
|
transferred policies, surety bonds, or surety undertakings after |
|
the transfer is made. |
|
(k) The liquidator may enter into contracts as necessary to |
|
carry out the order to liquidate and, subject to the provisions of |
|
Section 443.013 [21A.013], may assume or reject any executory |
|
contract or unexpired lease to which the insurer is a party. |
|
(l) The liquidator may continue to prosecute and institute |
|
in the name of the insurer or in the liquidator's own name any and |
|
all suits and other legal proceedings, in this state or elsewhere, |
|
and abandon the prosecution of claims the liquidator deems |
|
unprofitable to pursue further. If the insurer is dissolved under |
|
Section 443.153 [21A.153], the liquidator has the power to apply to |
|
any court in this state or elsewhere for leave to substitute the |
|
liquidator for the insurer as a party. |
|
(y) The liquidator may hypothecate, encumber, lease, sell, |
|
transfer, abandon, or otherwise dispose of or deal with any |
|
property of the insurer, settle or resolve any claim brought by the |
|
liquidator on behalf of the insurer, or commute or settle any claim |
|
of reinsurance under any contract of reinsurance, as follows: |
|
(1) if the property or claim has a market or settlement |
|
value that does not exceed the lesser of $1 million or 10 percent of |
|
the general assets of the estate as shown on the receivership's |
|
financial statements, the liquidator may take action at the |
|
liquidator's discretion, provided that the receivership court may, |
|
upon petition of the liquidator, increase the threshold upon a |
|
showing that compliance with this requirement is burdensome to the |
|
liquidator in administering the estate and is unnecessary to |
|
protect the material interests of creditors; |
|
(2) in all instances other than those described in |
|
Subdivision (1), the liquidator may take the action only after |
|
obtaining approval of the receivership court as provided by Section |
|
443.007 [21A.007]; |
|
(3) the liquidator may, at the liquidator's |
|
discretion, request the receivership court to approve a proposed |
|
action as provided by Section 443.007 [21A.007] if the value of the |
|
property or claim appears to be less than the threshold provided by |
|
Subdivision (1) but cannot be ascertained with certainty, or for |
|
any other reason as determined by the liquidator; and |
|
(4) after obtaining approval of the receivership court |
|
as provided in Section 443.007 [21A.007], the liquidator may, |
|
subject to Subsection (z), transfer rights to payment under ceding |
|
reinsurance agreements covering policies to a third-party |
|
transferee. |
|
(z) The transferee of a right to payment under Subsection |
|
(y)(4) has the rights to collect and enforce collection of the |
|
reinsurance for the amount payable to the ceding insurer or to its |
|
receiver, without diminution because of the insolvency or because |
|
the receiver has failed to pay all or a portion of the claim, based |
|
on the amounts paid or allowed pursuant to Section 443.211 |
|
[21A.211]. The transfer of the rights does not give rise to any |
|
defense regarding the reinsurer's obligations under the |
|
reinsurance agreement regardless of whether an agreement or other |
|
applicable law prohibits the transfer of rights under the |
|
reinsurance agreement. Except as provided in this subsection, any |
|
transfer of rights pursuant to Subsection (y)(4) does not impair |
|
any rights or defenses of the reinsurer that existed prior to the |
|
transfer or that would have existed in the absence of the transfer. |
|
Except as otherwise provided in this subsection, any transfer of |
|
rights pursuant to Subsection (y)(4) does not relieve the |
|
transferee or the liquidator from obligations owed to the reinsurer |
|
pursuant to the reinsurance or other agreement. |
|
(s) Section 21A.155(b), Insurance Code, redesignated as |
|
Section 443.155(b), Insurance Code, by Subsection (a)(1)(D) of this |
|
section, is amended to conform to the additional changes made by |
|
Subsection (a)(1) of this section to read as follows: |
|
(b) The notice of the entry of an order of liquidation must |
|
contain or provide directions for obtaining the following |
|
information: |
|
(1) a statement that the insurer has been placed in |
|
liquidation; |
|
(2) a statement that certain acts are stayed under |
|
Section 443.008 [21A.008] and describe any additional injunctive |
|
relief ordered by the receivership court; |
|
(3) a statement whether, and to what extent, the |
|
insurer's policies continue in effect; |
|
(4) to the extent applicable, a statement that |
|
coverage by state guaranty associations may be available for all or |
|
part of policy benefits in accordance with applicable state |
|
guaranty laws; |
|
(5) a statement of the deadline for filing claims, if |
|
established, and the requirements for filing a proof of claim |
|
pursuant to Section 443.251 [21A.251] on or before that date; |
|
(6) a statement of the date, time, and location of any |
|
initial status hearing scheduled at the time the notice is sent; |
|
(7) a description of the process for obtaining notice |
|
of matters before the receivership court; and |
|
(8) any other information the liquidator or the |
|
receivership court deems appropriate. |
|
(t) Section 21A.156(a), Insurance Code, redesignated as |
|
Section 443.156(a), Insurance Code, by Subsection (a)(1)(D) of this |
|
section, is amended to conform to the additional changes made by |
|
Subsection (a)(1) of this section to read as follows: |
|
(a) Every person who represented the insurer as an agent and |
|
receives notice in the form prescribed in Section 443.155 [21A.155] |
|
that the insurer is the subject of a liquidation order, not later |
|
than the 30th day after the date of the notice, shall provide to the |
|
liquidator, in addition to the information the agent may be |
|
required to provide pursuant to Section 443.010 [21A.010], the |
|
information in the agent's records related to any policy issued by |
|
the insurer through the agent and any policy issued by the insurer |
|
through an agent under contract to the agent, including the name and |
|
address of any subagent. For purposes of this subsection, a policy |
|
is issued through an agent if the agent has a property interest in |
|
the expiration of the policy or if the agent has had in the agent's |
|
possession a copy of the declarations of the policy at any time |
|
during the life of the policy, except where the ownership of the |
|
expiration of the policy has been transferred to another. |
|
(u) Sections 21A.207(a), (d), and (f), Insurance Code, |
|
redesignated as Sections 443.207(a), (d), and (f), Insurance Code, |
|
respectively, by Subsection (a)(1)(E) of this section, are amended |
|
to conform to the additional changes made by Subsection (a)(1) of |
|
this section to read as follows: |
|
(a) Except as otherwise provided in this section, to the |
|
extent that the receiver obtains an order under Section 443.201 |
|
[21A.201] or avoids a transfer under Section 443.202, 443.203, |
|
443.204, 443.205, or 443.206 [Sections 21A.202, 21A.203, 21A.204,
|
|
21A.205, or 21A.206], the receiver may recover the property |
|
transferred, or the value of the property, from: |
|
(1) the initial transferee of the transfer or the |
|
entity for whose benefit the transfer was made; or |
|
(2) any immediate or mediate transferee of the initial |
|
transferee. |
|
(d) In addition to the remedies specifically provided under |
|
Sections 443.201-443.206 [21A.201-21A.206] and Subsection (a), if |
|
the receiver is successful in establishing a claim to the property |
|
or any part of the property, the receiver is entitled to recover |
|
judgment for: |
|
(1) rental for the use of the tangible property from |
|
the later of the entry of the receivership order or the date of the |
|
transfer; |
|
(2) in the case of funds or intangible property, the |
|
greater of: |
|
(A) the actual interest or income earned by the |
|
property; or |
|
(B) interest at the statutory rate for judgments |
|
from the later of the date of the entry of the receivership order or |
|
the date of the transfer; and |
|
(3) except as to recoveries from guaranty |
|
associations, all costs, including investigative costs and other |
|
expenses necessary to the recovery of the property or funds, and |
|
reasonable attorney's fees. |
|
(f) In any action under Sections 443.201-443.206 |
|
[21A.201-21A.206], the receiver has the burden of proving the |
|
avoidability of a transfer, and the person against whom recovery or |
|
avoidance is sought has the burden of proving the nature and extent |
|
of any affirmative defense. |
|
(v) Section 21A.208(b), Insurance Code, redesignated as |
|
Section 443.208(b), Insurance Code, by Subsection (a)(1)(E) of this |
|
section, is amended to conform to the additional changes made by |
|
Subsection (a)(1) of this section to read as follows: |
|
(b) A claim allowable under Subsection (a) by reason of the |
|
avoidance, whether voluntary or involuntary, or a preference, lien, |
|
conveyance, transfer, assignment, or encumbrance, may be filed as |
|
an excused late filing under Section 443.251(b) [21A.251(b)] if |
|
filed not later than the 30th day after the date of the avoidance, |
|
or within the further time allowed by the receivership court under |
|
Subsection (a). |
|
(w) Section 21A.210(j), Insurance Code, redesignated as |
|
Section 443.210(j), Insurance Code, by Subsection (a)(1)(E) of this |
|
section, is amended to conform to the additional changes made by |
|
Subsection (a)(1) of this section to read as follows: |
|
(j) Any claim filed by an assessee who fails to pay an |
|
assessment, after the conclusion of any legal action by the |
|
assessee objecting to the assessment, is deemed a late filed claim |
|
under Section 443.251 [21A.251]. |
|
(x) Sections 21A.211(b) and (f), Insurance Code, |
|
redesignated as Sections 443.211(b) and (f), Insurance Code, |
|
respectively, by Subsection (a)(1)(E) of this section, are amended |
|
to conform to the additional changes made by Subsection (a)(1) of |
|
this section and to the recodification and repeal of Articles |
|
21.28-C and 21.28-D, Insurance Code, by Chapter 727, Acts of the |
|
79th Legislature, Regular Session, 2005, to read as follows: |
|
(b) Except as provided by Subsection (a), any reinsurance |
|
shall be payable to the receiver under a policy reinsured by the |
|
assuming insurer on the basis of claims: |
|
(1) allowed under Section 443.253 [21A.253]; and |
|
(2) paid under: |
|
(A) Chapter 462, 463, or [Article 21.28-C or
|
|
21.28-D;
|
|
[(B) Chapter] 2602; or |
|
(B) [(C)] the guaranty associations of other |
|
states. |
|
(f) Nothing in this chapter shall be construed as |
|
authorizing the receiver, or other entity, to compel payment from a |
|
non-life reinsurer on the basis of estimated incurred but not |
|
reported losses or outstanding reserves, except outstanding |
|
reserves with respect to claims made pursuant to Section 443.255 |
|
[21A.255] and approved workers compensation claims filed under |
|
Section 443.252(d) [21A.252(d)]. |
|
(y) Sections 21A.212(a), (b), and (c), Insurance Code, |
|
redesignated as Sections 443.212(a), (b), and (c), Insurance Code, |
|
respectively, by Subsection (a)(1)(E) of this section, are amended |
|
to conform to the additional changes made by Subsection (a)(1) of |
|
this section to read as follows: |
|
(a) An insured shall pay, either directly to the receiver or |
|
to any agent that has paid or is obligated to pay the receiver on |
|
behalf of the insured, any unpaid earned premium or retrospectively |
|
rated premium due the insurer based on the termination of coverage |
|
under Section 443.152 [21A.152]. Premium on surety business is |
|
deemed earned at inception if a policy term cannot be determined. |
|
All other premium is deemed earned and is prorated equally over the |
|
determined policy term, regardless of any provision in the bond, |
|
guaranty, contract or other agreement. |
|
(b) Any person, other than the insured, shall turn over to |
|
the receiver any unpaid premium due and owing as shown on the |
|
records of the insurer, including any amount representing |
|
commissions, for the full policy term due the insurer at the time of |
|
the entry of the receivership order, whether earned or unearned, |
|
based on the termination of coverage under Section 443.152 |
|
[21A.152]. The unpaid premium due the receiver from any person |
|
other than the insured excludes any premium not collected from the |
|
insured and not earned based on the termination of coverage under |
|
Section 443.152 [21A.152]. |
|
(c) Any person, other than the insured, responsible for the |
|
remittance of a premium, shall turn over to the receiver any |
|
unearned commission of the person based on the termination of |
|
coverage under Section 443.152 [21A.152]. Credits, setoffs, or |
|
both may not be allowed to an agent, broker, premium finance |
|
company, or any other person for any amounts advanced to the insurer |
|
by the person on behalf of, but in the absence of a payment by, the |
|
insured, or for any other amount paid by the person to any other |
|
person after the entry of the order of receivership. |
|
(z) Sections 21A.213(h) and (i), Insurance Code, |
|
redesignated as Sections 443.213(h) and (i), Insurance Code, |
|
respectively, by Subsection (a)(1)(E) of this section, are amended |
|
to conform to the additional changes made by Subsection (a)(1) of |
|
this section to read as follows: |
|
(h) To the extent a guaranty association is required by |
|
applicable law to pay any claims for which the insurer would have |
|
been entitled to reimbursement from the policyholder, the following |
|
provisions apply: |
|
(1) The receiver shall promptly invoice the |
|
policyholder for the reimbursement due under the agreement, and the |
|
policyholder is obligated to pay the amount invoiced to the |
|
receiver for the benefit of the guaranty associations that paid the |
|
claims. Neither the insolvency of the insurer nor the insurer's |
|
inability to perform any obligations under the deductible agreement |
|
is a defense to the policyholder's reimbursement obligation under |
|
the deductible agreement. At the time the policyholder |
|
reimbursements are collected, the receiver shall promptly forward |
|
those amounts to the guaranty association, based on the claims paid |
|
by the guaranty association that were subject to the deductible. |
|
(2) If the collateral is insufficient to reimburse the |
|
guaranty association for claims paid within the deductible, the |
|
receiver shall use any existing collateral to make a partial |
|
reimbursement to the guaranty association, subject to any |
|
allocation under Subsection (d), (e), or (f). If more than one |
|
guaranty association has a claim against the same collateral, the |
|
receiver shall prorate payments to each guaranty association based |
|
on the amount of the claims each guaranty association has paid. |
|
(3) The receiver is entitled to deduct from |
|
reimbursements owed to a guaranty association or collateral to be |
|
returned to a policyholder reasonable actual expenses incurred in |
|
fulfilling the receiver's responsibilities under this section. |
|
Expenses incurred to collect reimbursements for the benefit of a |
|
guaranty association are subject to the approval of the guaranty |
|
association. Any remaining expenses that are not deducted from the |
|
reimbursements are payable subject to Section 443.015 [21A.015]. |
|
(4) The receiver shall provide any affected guaranty |
|
associations with a complete accounting of the receiver's |
|
deductible billing and collection activities on a quarterly basis, |
|
or at other intervals as may be agreed to between the receiver and |
|
the guaranty associations. Accountings under this subdivision must |
|
include copies of the policyholder billings, the reimbursements |
|
collected, the available amounts and use of collateral for each |
|
account, and any prorating of payments. |
|
(5) If the receiver fails to make a good faith effort |
|
to collect reimbursements due from a policyholder under a |
|
deductible agreement within 120 days of receipt of claims payment |
|
reports from a guaranty association, the guaranty association may, |
|
after notice to the receiver, collect the reimbursements that are |
|
due, and, in so doing, the guaranty association shall have the same |
|
rights and remedies as the receiver. A guaranty association shall |
|
report any amounts collected under this subdivision and expenses |
|
incurred in collecting those amounts to the receiver. |
|
(6) The receiver shall periodically adjust the |
|
collateral held as the claims subject to the deductible agreement |
|
are paid, provided that adequate collateral is maintained. The |
|
receiver is not required to adjust the collateral more than once a |
|
year. The receiver shall inform the guaranty associations of all |
|
collateral reviews, including the basis for the adjustment. |
|
(7) Reimbursements received or collected by a guaranty |
|
association under this section may not be considered a distribution |
|
of the insurer's assets. A guaranty association shall provide the |
|
receiver with an accounting of any amounts it has received or |
|
collected under this section and any expenses incurred in |
|
connection with that receipt or collection. The amounts received, |
|
net of any expenses incurred in connection with collection of the |
|
amounts, must be set off against the guaranty association's claim |
|
filed under Section 443.251 [21A.251] for the payments that were |
|
reimbursed. |
|
(8) To the extent that a guaranty association pays a |
|
claim within the deductible amount that is not reimbursed by either |
|
the receiver or by policyholder payments, the guaranty association |
|
has a claim for those amounts in the delinquency proceeding in |
|
accordance with Section 443.251 [21A.251]. |
|
(9) Nothing in this section limits any rights of a |
|
guaranty association under applicable law to obtain reimbursement |
|
for claims payments made by the guaranty association under policies |
|
of the insurer or for the association's related expenses. |
|
(i) If a claim that is subject to a deductible agreement and |
|
secured by collateral is not covered by any guaranty association, |
|
the following provisions apply: |
|
(1) The receiver is entitled to retain as an asset of |
|
the estate any collateral or deductible reimbursements obtained by |
|
the receiver. |
|
(2) If a policyholder fails to assume an obligation |
|
under a deductible agreement to pay a claim, the receiver shall use |
|
the collateral to adjust and pay the claim to the extent that the |
|
available collateral, after any allocation under Subsection (d), |
|
(e), or (f), is sufficient to pay all outstanding and anticipated |
|
claims within the deductible. If the collateral is exhausted and |
|
all reasonable means of collection against the insured have been |
|
exhausted, the remaining claims shall be subject to the provisions |
|
of Sections 443.251 and 443.301 [21A.251 and 21A.301]. |
|
(3) The receiver is entitled to deduct from collateral |
|
reasonable actual expenses incurred in fulfilling the receiver's |
|
responsibilities under this section. Any remaining expenses that |
|
are not deducted from the reimbursements are payable subject to |
|
Section 443.015 [21A.015]. |
|
(aa) Sections 21A.251(a) and (b), Insurance Code, |
|
redesignated as Sections 443.251(a) and (b), Insurance Code, |
|
respectively, by Subsection (a)(1)(F) of this section, are amended |
|
to conform to the additional changes made by Subsection (a)(1) of |
|
this section to read as follows: |
|
(a) Except as provided by this subsection, proof of all |
|
claims must be filed with the liquidator in the form required by |
|
Section 443.252 [21A.252] on or before the last day for filing |
|
specified in the notice required under Section 443.155 [21A.155], |
|
which date may not be later than 18 months after entry of the order |
|
of liquidation, unless the receivership court, for good cause |
|
shown, extends the time, except that proofs of claims for cash |
|
surrender values or other investment values in life insurance and |
|
annuities and for any other policies insuring the lives of persons |
|
need not be filed unless the liquidator expressly so requires. The |
|
receivership court, only upon application of the liquidator, may |
|
allow alternative procedures and requirements for the filing of |
|
proofs of claim or for allowing or proving claims. Upon |
|
application, if the receivership court dispenses with the |
|
requirements of filing a proof of claim by a person or a class or |
|
group of persons, a proof of claim for the person, class, or group |
|
is deemed to have been filed for all purposes, except that the |
|
receivership court's waiver of proof of claim requirements does not |
|
impact guaranty association proof of claim filing requirements or |
|
coverage determinations to the extent the guaranty fund statute or |
|
filing requirements are inconsistent with the receivership court's |
|
waiver of proof. |
|
(b) The liquidator shall permit a claimant that makes a late |
|
filing to share ratably in distributions, whether past or future, |
|
as if the claim were not filed late, to the extent that the payment |
|
will not prejudice the orderly administration of the liquidation, |
|
under the following circumstances: |
|
(1) the eligibility to file a proof of claim was not |
|
known to the claimant, and the claimant filed a proof of claim not |
|
later than the 90th day after the date of first learning of the |
|
eligibility; |
|
(2) a transfer to a creditor was avoided under Section |
|
443.202, 443.203, 443.204, or 443.206 [21A.202, 21A.203, 21A.204,
|
|
or 21A.206], or was voluntarily surrendered under Section 443.208 |
|
[21A.208], and the filing satisfies the conditions of Section |
|
443.208 [21A.208]; or |
|
(3) the valuation under Section 443.260 [21A.260], of |
|
security held by a secured creditor shows a deficiency, and the |
|
claim for the deficiency is filed not later than the 30th day after |
|
the valuation. |
|
(bb) Sections 21A.253(b), (d), (i), and (k), Insurance |
|
Code, redesignated as Sections 443.253(b), (d), (i), and (k), |
|
Insurance Code, respectively, by Subsection (a)(1)(F) of this |
|
section, are amended to conform to the additional changes made by |
|
Subsection (a)(1) of this section to read as follows: |
|
(b) Pursuant to the review, the liquidator shall provide |
|
written notice of the claim determination by any means authorized |
|
by Section 443.007 [21A.007] to the claimant or the claimant's |
|
attorney and may provide notice to any reinsurer that is or may be |
|
liable in respect of the claim. The notice must set forth the |
|
amount of the claim allowed by the liquidator, if any, and the |
|
priority class of the claim as established in Section 443.301 |
|
[21A.301]. |
|
(d) A claim that has not become mature as of the coverage |
|
termination date established under Section 443.201 [21A.201] |
|
because payment on the claim is not yet due may be allowed as if it |
|
were mature. A claim that is allowed under this subsection may be |
|
discounted to present value based upon a reasonable estimated date |
|
of the payment, if the liquidator determines that the present value |
|
of the payment is materially less than the amount of the payment. |
|
(i) A claim that does not contain all the applicable |
|
information required by Section 443.252 [21A.252] need not be |
|
further reviewed or adjudicated, and may be denied or disallowed by |
|
the liquidator subject to the notice and objection procedures in |
|
this section. |
|
(k) The liquidator is not required to process claims for any |
|
class until it appears reasonably likely that property will be |
|
available for a distribution to that class. If there are |
|
insufficient assets to justify processing all claims for any class |
|
listed in Section 443.301 [21A.301], the liquidator shall report |
|
the facts to the receivership court and make such recommendations |
|
as may be appropriate for handling the remainder of the claims. |
|
(cc) Section 21A.254, Insurance Code, redesignated as |
|
Section 443.254, Insurance Code, by Subsection (a)(1)(F) of this |
|
section, is amended to conform to the additional changes made by |
|
Subsection (a)(1) of this section to read as follows: |
|
Sec. 443.254 [21A.254]. CLAIMS UNDER OCCURRENCE POLICIES, |
|
SURETY BONDS, AND SURETY UNDERTAKINGS. (a) Subject to the |
|
provisions of Section 443.253 [21A.253], any insured has the right |
|
to file a claim for the protection afforded under the insured's |
|
policy, regardless of whether a claim is known at the time of |
|
filing, if the policy is an occurrence policy. |
|
(b) Subject to the provisions of Section 443.253 [21A.253], |
|
an obligee under a surety bond or surety undertaking has the right |
|
to file a claim for the protection afforded under the surety bond or |
|
surety undertaking issued by the insurer under which the obligee is |
|
the beneficiary, regardless of whether a claim is known at the time |
|
of filing. |
|
(c) After a claim is filed under Subsection (a) or (b), at |
|
the time that a specific claim is made by or against the insured or |
|
by the obligee, the insured or the obligee shall supplement the |
|
claim, and the receiver shall treat the claim as a contingent or |
|
unliquidated claim under Section 443.255 [21A.255]. |
|
(dd) Sections 21A.255(a) and (c), Insurance Code, |
|
redesignated as Sections 443.255(a) and (c), Insurance Code, |
|
respectively, by Subsection (a)(1)(F) of this section, are amended |
|
to conform to the additional changes made by Subsection (a)(1) of |
|
this section to read as follows: |
|
(a) A claim of an insured or third party may be allowed under |
|
Section 443.253 [21A.253], regardless of the fact that the claim |
|
was contingent or unliquidated, if any contingency is removed in |
|
accordance with Subsection (b) and the value of the claim is |
|
determined. For purposes of this section, a claim is contingent if: |
|
(1) the accident, casualty, disaster, loss, event, or |
|
occurrence insured, reinsured, or bonded or reinsured against |
|
occurred on or before the date fixed under Section 443.151 |
|
[21A.151]; and |
|
(2) the act or event triggering the insurer's |
|
obligation to pay has not occurred as of the date fixed under |
|
Section 443.151 [21A.151]. |
|
(c) The liquidator may petition the receivership court to |
|
set a date before which all claims under this section are final. In |
|
addition to the notice requirements of Section 443.007 [21A.007], |
|
the liquidator shall give notice of the filing of the petition to |
|
all claimants with claims that remain contingent or unliquidated |
|
under this section. |
|
(ee) Section 21A.256(c), Insurance Code, redesignated as |
|
Section 443.256(c), Insurance Code, by Subsection (a)(1)(F) of this |
|
section, is amended to conform to the additional changes made by |
|
Subsection (a)(1) of this section to read as follows: |
|
(c) The liquidator may make recommendations to the |
|
receivership court for the allowance of an insured's claim after |
|
consideration of the probable outcome of any pending action against |
|
the insured on which the claim is based, the probable damages |
|
recoverable in the action, and the probable costs and expenses of |
|
defense. After allowance by the receivership court, the liquidator |
|
shall withhold any distribution payable on the claim, pending the |
|
outcome of litigation and negotiation between the insured and the |
|
third party. The liquidator may reconsider the claim as provided in |
|
Section 443.253(j) [21A.253(j)]. As claims against the insured are |
|
settled or barred, the insured or third party, as appropriate, |
|
shall be paid from the amount withheld the same percentage |
|
distribution as was paid on other claims of like priority, based on |
|
the lesser of the amount actually due from the insured by action or |
|
paid by agreement plus the reasonable costs and expense of defense, |
|
or the amount allowed on the claims by the receivership court. |
|
After all claims are settled or barred, any sum remaining from the |
|
amount withheld shall revert to the undistributed property of the |
|
insurer. |
|
(ff) Section 21A.257(a), Insurance Code, redesignated as |
|
Section 443.257(a), Insurance Code, by Subsection (a)(1)(F) of this |
|
section, is amended to conform to the additional changes made by |
|
Subsection (a)(1) of this section to read as follows: |
|
(a) When objections to the liquidator's proposed treatment |
|
of a claim are filed and the liquidator does not alter the |
|
determination of the claim as a result of the objections, the |
|
liquidator shall ask the receivership court for a hearing pursuant |
|
to Section 443.007 [21A.007]. |
|
(gg) Section 21A.258, Insurance Code, redesignated as |
|
Section 443.258, Insurance Code, by Subsection (a)(1)(F) of this |
|
section, is amended to conform to the additional changes made by |
|
Subsection (a)(1) of this section to read as follows: |
|
Sec. 443.258 [21A.258]. LIQUIDATOR'S RECOMMENDATIONS TO |
|
RECEIVERSHIP COURT. The liquidator shall present to the |
|
receivership court, for approval, reports of claims settled or |
|
determined by the liquidator under Section 443.253 [21A.253]. The |
|
reports must be presented from time to time as determined by the |
|
liquidator and must include information identifying the claim and |
|
the amount and priority class of the claim. |
|
(hh) Sections 21A.260(e) and (g), Insurance Code, |
|
redesignated as Sections 443.260(e) and (g), Insurance Code, |
|
respectively, by Subsection (a)(1)(F) of this section, are amended |
|
to conform to the additional changes made by Subsection (a)(1) of |
|
this section to read as follows: |
|
(e) If collateral is insufficient to satisfy in full all |
|
potential claims against it under Subsections (c) and (g), the |
|
claims against the collateral must be paid on a pro rata basis, and |
|
an obligee or completion contractor under Subsection (c) has a |
|
claim, subject to allowance under Section 443.253 [21A.253], for |
|
any deficiency. |
|
(g) To the extent that a guaranty association has made a |
|
payment relating to a claim against a surety bond, the guaranty |
|
association shall first be reimbursed for that payment and related |
|
expenses out of the available collateral or proceeds related to the |
|
surety bond. To the extent that the collateral is sufficient, the |
|
guaranty association shall be reimbursed 100 percent of its |
|
payment. If the collateral is insufficient to satisfy in full all |
|
potential claims against the collateral under Subsection (c) and |
|
this subsection, a guaranty association that has paid claims on the |
|
surety bond is entitled to a pro rata share of the available |
|
collateral in accordance with Subsection (e), and the guaranty |
|
association has claims against the general assets of the estate in |
|
accordance with Section 443.253 [21A.253] for any deficiency. Any |
|
payment made to a guaranty association under this subsection from |
|
collateral may not be deemed early access or otherwise deemed a |
|
distribution out of the general assets or property of the estate, |
|
and the guaranty association receiving payment shall subtract any |
|
payment from the collateral from the association's final claims |
|
against the estate. |
|
(ii) Sections 21A.261(a) and (e), Insurance Code, |
|
redesignated as Sections 443.261(a) and (e), Insurance Code, |
|
respectively, by Subsection (a)(1)(F) of this section, are amended |
|
to conform to the additional changes made by Subsection (a)(1) of |
|
this section to read as follows: |
|
(a) Notwithstanding any other provision of this chapter, |
|
including any other provision of this chapter permitting the |
|
modification of contracts, or other law of this state, a person may |
|
not be stayed or prohibited from exercising: |
|
(1) a contractual right to terminate, liquidate, or |
|
close out any netting agreement or qualified financial contract |
|
with an insurer because of: |
|
(A) the insolvency, financial condition, or |
|
default of the insurer at any time, provided that the right is |
|
enforceable under applicable law other than this chapter; or |
|
(B) the commencement of a formal delinquency |
|
proceeding under this chapter; |
|
(2) any right under a pledge, security, collateral, or |
|
guarantee agreement, or any other similar security arrangement or |
|
credit support document, relating to a netting agreement or |
|
qualified financial contract; or |
|
(3) subject to any provision of Section 443.209(b) |
|
[21A.209(b)], any right to set off or net out any termination value, |
|
payment amount, or other transfer obligation arising under or in |
|
connection with a netting agreement or qualified financial contract |
|
where the counterparty or its guarantor is organized under the laws |
|
of the United States or a state or foreign jurisdiction approved by |
|
the Securities Valuation Office of the National Association of |
|
Insurance Commissioners as eligible for netting. |
|
(e) Notwithstanding any other provision of this chapter, a |
|
receiver may not avoid a transfer of money or other property arising |
|
under or in connection with a netting agreement or qualified |
|
financial contract, or any pledge, security, or collateral or |
|
guarantee agreement or any other similar security arrangement or |
|
credit support document relating to a netting agreement or |
|
qualified financial contract, that is made before the commencement |
|
of a formal delinquency proceeding under this chapter. However, a |
|
transfer may be avoided under Section 443.205(a) [21A.205(a)] if |
|
the transfer was made with actual intent to hinder, delay, or |
|
defraud the insurer, a receiver appointed for the insurer, or |
|
existing or future creditors. |
|
(jj) Section 21A.301, Insurance Code, redesignated as |
|
Section 443.301, Insurance Code, by Subsection (a)(1)(G) of this |
|
section, is amended to conform to the additional changes made by |
|
Subsection (a)(1) of this section and to the recodification and |
|
repeal of Section 2(3), Article 21.28-C, and Section 12, Article |
|
21.28-D, Insurance Code, by Chapter 727, Acts of the 79th |
|
Legislature, Regular Session, 2005, to read as follows: |
|
Sec. 443.301 [21A.301]. PRIORITY OF DISTRIBUTION. The |
|
priority of payment of distributions on unsecured claims must be in |
|
accordance with the order in which each class of claims is set forth |
|
in this section. Every claim in each class shall be paid in full, or |
|
adequate funds retained for their payment, before the members of |
|
the next class receive payment, and all claims within a class must |
|
be paid substantially the same percentage of the amount of the |
|
claim. Except as provided by Subsections (a)(2), (a)(3), (i), and |
|
(k), subclasses may not be established within a class. No claim by |
|
a shareholder, policyholder, or other creditor shall be permitted |
|
to circumvent the priority classes through the use of equitable |
|
remedies. The order of distribution of claims shall be: |
|
(a) Class 1. (1) The costs and expenses of administration |
|
expressly approved or ratified by the liquidator, including the |
|
following: |
|
(A) the actual and necessary costs of preserving |
|
or recovering the property of the insurer; |
|
(B) reasonable compensation for all services |
|
rendered on behalf of the administrative supervisor or receiver; |
|
(C) any necessary filing fees; |
|
(D) the fees and mileage payable to witnesses; |
|
(E) unsecured loans obtained by the receiver; and |
|
(F) expenses, if any, approved by the |
|
rehabilitator of the insurer and incurred in the course of the |
|
rehabilitation that are unpaid at the time of the entry of the order |
|
of liquidation. |
|
(2) The reasonable expenses of a guaranty association, |
|
including overhead, salaries and other general administrative |
|
expenses allocable to the receivership to include administrative |
|
and claims handling expenses and expenses in connection with |
|
arrangements for ongoing coverage, other than expenses incurred in |
|
the performance of duties under Section 462.002(3), 463.108, |
|
463.111, 463.113, 463.353, or 2602.113[, Section 2(3) of Article
|
|
21.28-C, and Section 12 of Article 21.28-D] or similar duties under |
|
the statute governing a similar organization in another state. In |
|
the case of the Texas Property and Casualty Insurance Guaranty |
|
Association and other property and casualty guaranty associations, |
|
the expenses shall include loss adjustment expenses, including |
|
adjusting and other expenses and defense and cost containment |
|
expenses. In the event that there are insufficient assets to pay |
|
all of the costs and expenses of administration under Subsection |
|
(a)(1) and the expenses of a guaranty association, the costs and |
|
expenses under Subsection (a)(1) shall have priority over the |
|
expenses of a guaranty association. In this event, the expenses of |
|
a guaranty association shall be paid on a pro rata basis after the |
|
payment of costs and expenses under Subsection (a)(1) in full. |
|
(3) For purposes of Subsection (a)(1)(E), any |
|
unsecured loan obtained by the receiver, unless by its terms it |
|
otherwise provides, has priority over all other costs of |
|
administration. Absent agreement to the contrary, all claims in |
|
this subclass share pro rata. |
|
(4) Except as expressly approved by the receiver, any |
|
expenses arising from a duty to indemnify the directors, officers, |
|
or employees of the insurer are excluded from this class and, if |
|
allowed, are Class 5 claims. |
|
(b) Class 2. All claims under policies of insurance, |
|
including third-party claims, claims under nonassessable policies |
|
for unearned premium, claims of obligees and, subject to the |
|
discretion of the receiver, completion contractors under surety |
|
bonds and surety undertakings other than bail bonds, mortgage or |
|
financial guaranties, or other forms of insurance offering |
|
protection against investment risk, claims by principals under |
|
surety bonds and surety undertakings for wrongful dissipation of |
|
collateral by the insurer or its agents, and claims incurred during |
|
the extension of coverage provided for in Section 443.152 |
|
[21A.152]. All other claims incurred in fulfilling the statutory |
|
obligations of a guaranty association not included in Class 1, |
|
including indemnity payments on covered claims and, in the case of |
|
the Life, Accident, Health, and Hospital Service Insurance Guaranty |
|
Association or another life and health guaranty association, all |
|
claims as a creditor of the impaired or insolvent insurer for all |
|
payments of and liabilities incurred on behalf of covered claims or |
|
covered obligations of the insurer and for the funds needed to |
|
reinsure those obligations with a solvent insurer. Notwithstanding |
|
any provision of this chapter, the following claims are excluded |
|
from Class 2 priority: |
|
(1) obligations of the insolvent insurer arising out |
|
of reinsurance contracts; |
|
(2) obligations, excluding unearned premium claims on |
|
policies other than reinsurance agreements, incurred after: |
|
(A) the expiration date of the insurance policy; |
|
(B) the policy has been replaced by the insured |
|
or canceled at the insured's request; or |
|
(C) the policy has been canceled as provided by |
|
this chapter; |
|
(3) obligations to insurers, insurance pools, or |
|
underwriting associations and their claims for contribution, |
|
indemnity, or subrogation, equitable or otherwise; |
|
(4) any claim that is in excess of any applicable |
|
limits provided in the insurance policy issued by the insurer; |
|
(5) any amount accrued as punitive or exemplary |
|
damages unless expressly covered under the terms of the policy; |
|
(6) tort claims of any kind against the insurer and |
|
claims against the insurer for bad faith or wrongful settlement |
|
practices; and |
|
(7) claims of the guaranty associations for |
|
assessments not paid by the insurer, which must be paid as claims in |
|
Class 5. |
|
(c) Class 3. Claims of the federal government not included |
|
in Class 3. |
|
(d) Class 4. Debts due employees for services or benefits |
|
to the extent that the debts do not exceed $5,000 or two months |
|
salary, whichever is the lesser, and represent payment for services |
|
performed within one year before the entry of the initial order of |
|
receivership. This priority is in lieu of any other similar |
|
priority that may be authorized by law as to wages or compensation |
|
of employees. |
|
(e) Class 5. Claims of other unsecured creditors not |
|
included in Classes 1 through 4, including claims under reinsurance |
|
contracts, claims of guaranty associations for assessments not paid |
|
by the insurer, and other claims excluded from Class 2. |
|
(f) Class 6. Claims of any state or local governments, |
|
except those specifically classified elsewhere in this section. |
|
Claims of attorneys for fees and expenses owed them by an insurer |
|
for services rendered in opposing a formal delinquency proceeding. |
|
In order to prove the claim, the claimant must show that the insurer |
|
that is the subject of the delinquency proceeding incurred the fees |
|
and expenses based on its best knowledge, information, and belief, |
|
formed after reasonable inquiry, indicating opposition was in the |
|
best interests of the insurer, was well grounded in fact, and was |
|
warranted by existing law or a good faith argument for the |
|
extension, modification, or reversal of existing law, and that |
|
opposition was not pursued for any improper purpose, such as to |
|
harass or to cause unnecessary delay or needless increase in the |
|
cost of the litigation. |
|
(g) Class 7. Claims of any state or local government for a |
|
penalty or forfeiture, but only to the extent of the pecuniary loss |
|
sustained from the act, transaction, or proceeding out of which the |
|
penalty or forfeiture arose, with reasonable and actual costs |
|
occasioned thereby. The balance of the claims must be treated as |
|
Class 9 claims under Subsection (i). |
|
(h) Class 8. Except as provided in Sections 443.251(b) |
|
[21A.251(b)] and (d), late filed claims that would otherwise be |
|
classified in Classes 2 through 7. |
|
(i) Class 9. Surplus notes, capital notes or contribution |
|
notes or similar obligations, premium refunds on assessable |
|
policies, and any other claims specifically assigned to this class. |
|
Claims in this class are subject to any subordination agreements |
|
related to other claims in this class that existed before the entry |
|
of the liquidation order. |
|
(j) Class 10. Interest on allowed claims of Classes 1 |
|
through 9, according to the terms of a plan proposed by the |
|
liquidator and approved by the receivership court. |
|
(k) Class 11. Claims of shareholders or other owners |
|
arising out of their capacity as shareholders or other owners, or |
|
any other capacity, except as they may be qualified in Class 2, 5, |
|
or 10. Claims in this class are subject to any subordination |
|
agreements related to other claims in this class that existed |
|
before the entry of the liquidation order. |
|
(kk) Section 21A.302(f), Insurance Code, redesignated as |
|
Section 443.302(f), Insurance Code, by Subsection (a)(1)(G) of this |
|
section, is amended to conform to the additional changes made by |
|
Subsection (a)(1) of this section to read as follows: |
|
(f) Any claim payments made under Subsection (d) and any |
|
related expenses must be treated as early access payments under |
|
Section 443.303 [21A.303] to the guaranty association responsible |
|
for the claims. |
|
(ll) Sections 21A.303(a), (b), (c), (e), (f), and (g), |
|
Insurance Code, redesignated as Sections 443.303(a), (b), (c), (e), |
|
(f), and (g), Insurance Code, respectively, by Subsection (a)(1)(G) |
|
of this section, are amended to conform to the additional changes |
|
made by Subsection (a)(1) of this section to read as follows: |
|
(a) For purposes of this section, "distributable assets" |
|
means all general assets of the liquidation estate less: |
|
(1) amounts reserved, to the extent necessary and |
|
appropriate, for the entire Section 443.301(a) [21A.301(a)] |
|
expenses of the liquidation through and after its closure; and |
|
(2) to the extent necessary and appropriate, reserves |
|
for distributions on claims other than those of the guaranty |
|
associations falling within the priority classes of claims |
|
established in Section 443.301(c) [21A.301(c)]. |
|
(b) Early access payments to guaranty associations must be |
|
made as soon as possible after the entry of a liquidation order and |
|
as frequently as possible after the entry of the order, but at least |
|
annually if distributable assets are available to be distributed to |
|
the guaranty associations, and must be in amounts consistent with |
|
this section. Amounts advanced to an affected guaranty association |
|
pursuant to this section shall be accounted for as advances against |
|
distributions to be made under Section 443.302 [21A.302]. Where |
|
sufficient distributable assets are available, amounts advanced |
|
are not limited to the claims and expenses paid to date by the |
|
guaranty associations; however, the liquidator may not distribute |
|
distributable assets to the guaranty associations in excess of the |
|
anticipated entire claims of the guaranty associations falling |
|
within the priority classes of claims established in Sections |
|
443.301(b) [21A.301(b)] and (c). |
|
(c) Within 120 days after the entry of an order of |
|
liquidation by the receivership court, and at least annually after |
|
the entry of the order, the liquidator shall apply to the |
|
receivership court for approval to make early access payments out |
|
of the general assets of the insurer to any guaranty associations |
|
having obligations arising in connection with the liquidation or |
|
shall report that there are no distributable assets at that time |
|
based on financial reporting as required in Section 443.016 |
|
[21A.016]. The liquidator may apply to the receivership court for |
|
approval to make early access payments more frequently than |
|
annually based on additional information or the recovery of |
|
material assets. |
|
(e) Notice of each application for early access payments, or |
|
of any report required pursuant to this section, must be given in |
|
accordance with Section 443.007 [21A.007] to the guaranty |
|
associations that may have obligations arising from the |
|
liquidation. Notwithstanding the provisions of Section 443.007 |
|
[21A.007], the liquidator shall provide these guaranty |
|
associations with at least 30 days' actual notice of the filing of |
|
the application and with a complete copy of the application prior to |
|
any action by the receivership court. Any guaranty association |
|
that may have obligations arising in connection with the |
|
liquidation has: |
|
(1) the right to request additional information from |
|
the liquidator, who may not unreasonably deny such request; and |
|
(2) the right to object as provided by Section 443.007 |
|
[21A.007] to any part of each application or to any report filed by |
|
the liquidator pursuant to this section. |
|
(f) In each application regarding early access payments, |
|
the liquidator shall, based on the best information available to |
|
the liquidator at the time, provide, at a minimum, the following: |
|
(1) to the extent necessary and appropriate, the |
|
amount reserved for the entire expenses of the liquidation through |
|
and after its closure and for distributions on claims falling |
|
within the priority classes of claims established in Sections |
|
443.301(b) [21A.301(b)] and (c); |
|
(2) the computation of distributable assets and the |
|
amount and method of equitable allocation of early access payments |
|
to each of the guaranty associations; and |
|
(3) the most recent financial information filed with |
|
the National Association of Insurance Commissioners by the |
|
liquidator. |
|
(g) Each guaranty association that receives any payments |
|
pursuant to this section agrees, upon depositing the payment in any |
|
account to its benefit, to return to the liquidator any amount of |
|
these payments that may be required to pay claims of secured |
|
creditors and claims falling within the priority classes of claims |
|
established in Section 443.301(a) [21A.301(a)], (b), or (c). No |
|
bond may be required of any guaranty association. |
|
(mm) Sections 21A.304(a), (b), and (d), Insurance Code, |
|
redesignated as Sections 443.304(a), (b), and (d), Insurance Code, |
|
respectively, by Subsection (a)(1)(G) of this section, are amended |
|
to conform to the additional changes made by Subsection (a)(1) of |
|
this section to read as follows: |
|
(a) If any funds of the receivership estate remain unclaimed |
|
after the final distribution under Section 443.302 [21A.302], the |
|
funds must be placed in a segregated unclaimed funds account held by |
|
the commissioner. If the owner of any of the unclaimed funds |
|
presents proof of ownership satisfactory to the commissioner before |
|
the second anniversary of the date of the termination of the |
|
delinquency proceeding, the commissioner shall remit the funds to |
|
the owner. The interest earned on funds held in the unclaimed funds |
|
account may be used to pay any administrative costs related to the |
|
handling or return of unclaimed funds. |
|
(b) If any amounts held in the unclaimed funds account |
|
remain unclaimed on or after the second anniversary of the date of |
|
the termination of the delinquency proceeding, the commissioner may |
|
file a motion for an order directing the disposition of the funds in |
|
the court in which the delinquency proceeding was pending. Any |
|
costs incurred in connection with the motion may be paid from the |
|
unclaimed funds account. The motion shall identify the name of the |
|
insurer, the names and last known addresses of the persons entitled |
|
to the unclaimed funds, if known, and the amount of the funds. |
|
Notice of the motion shall be given as directed by the court. Upon a |
|
finding by the court that the funds have not been claimed before the |
|
second anniversary of the date of the termination of the |
|
delinquency proceeding, the court shall order that any claims for |
|
unclaimed funds and any interest earned on the unclaimed funds that |
|
has not been expended under Subsection (a) are abandoned and that |
|
the funds must be disbursed under one of the following methods: |
|
(1) the amounts may be deposited in the general |
|
receivership expense account under Subsection (c); |
|
(2) the amounts may be transferred to the comptroller, |
|
and deposited into the general revenue fund; or |
|
(3) the amounts may be used to reopen the receivership |
|
in accordance with Section 443.353 [21A.353] and be distributed to |
|
the known claimants with approved claims. |
|
(d) Any advance to a receivership under Subsection (c)(2) |
|
may be treated as a claim under Section 443.301 [21A.301] as agreed |
|
at the time the advance is made or, in the absence of an agreement, |
|
in the priority determined to be appropriate by the court. |
|
(nn) Section 21A.352, Insurance Code, redesignated as |
|
Section 443.352, Insurance Code, by Subsection (a)(1)(H) of this |
|
section, is amended to conform to the additional changes made by |
|
Subsection (a)(1) of this section to read as follows: |
|
Sec. 443.352 [21A.352]. TERMINATION OF LIQUIDATION |
|
PROCEEDINGS. When all property justifying the expense of |
|
collection and distribution has been collected and distributed |
|
under this chapter, the liquidator shall apply to the receivership |
|
court for an order discharging the liquidator and terminating the |
|
proceeding. The receivership court may grant the application and |
|
make any other orders, including orders to transfer any remaining |
|
funds that are uneconomic to distribute, or pursuant to Section |
|
443.302(c) [21A.302(c)], assign any assets that remain |
|
unliquidated, including claims and causes of action, as may be |
|
deemed appropriate. |
|
(oo) Section 21A.354(b), Insurance Code, redesignated as |
|
Section 443.354(b), Insurance Code, by Subsection (a)(1)(H) of this |
|
section, is amended to conform to the additional changes made by |
|
Subsection (a)(1) of this section to read as follows: |
|
(b) If the receiver determines that any records should be |
|
maintained after the closing of the delinquency proceeding, the |
|
receiver may reserve property from the receivership estate for the |
|
maintenance of the records, and any amounts so retained are |
|
administrative expenses of the estate under Section 443.301(a) |
|
[21A.301(a)]. Any records retained pursuant to this subsection |
|
must be transferred to the custody of the commissioner, and the |
|
commissioner may retain or dispose of the records as appropriate, |
|
at the commissioner's discretion. Any records of a delinquent |
|
insurer that are transferred to the commissioner may not be |
|
considered records of the department for any purposes, and Chapter |
|
552, Government Code, does not apply to those records. |
|
(pp) Sections 21A.401(a) and (d), Insurance Code, |
|
redesignated as Sections 443.401(a) and (d), Insurance Code, |
|
respectively, by Subsection (a)(1)(I) of this section, are amended |
|
to conform to the changes made by Subsection (a)(1) of this section |
|
and to the recodification and repeal of Section 17, Article |
|
21.28-C, and Section 18, Article 21.28-D, Insurance Code, by |
|
Chapter 727, Acts of the 79th Legislature, Regular Session, 2005, |
|
to read as follows: |
|
(a) The commissioner may initiate an action against a |
|
foreign insurer pursuant to Section 443.051 [21A.051] on any of the |
|
grounds stated in that section or on the basis that: |
|
(1) any of the foreign insurer's property has been |
|
sequestered, garnished, or seized by official action in its |
|
domiciliary state or in any other state; |
|
(2) the foreign insurer's certificate of authority to |
|
do business in this state has been revoked or was never issued and |
|
there are residents of this state with unpaid claims or in-force |
|
policies; or |
|
(3) initiation of the action is necessary to enforce a |
|
stay under Section 462.309, 463.404, or [17, Article 21.28-C,
|
|
Section 18, Article 21.28-D, or Section] 2602.259. |
|
(d) Notwithstanding Section 443.201(c) [21A.201(c)], the |
|
conservator shall hold and conserve the assets located in this |
|
state until the commissioner in the insurer's domiciliary state is |
|
appointed its receiver or until an order terminating conservation |
|
is entered under Subsection (g). Once a domiciliary receiver is |
|
appointed, the conservator shall turn over to the domiciliary |
|
receiver all property subject to an order under this section. |
|
(qq) Sections 21A.402(a) and (c), Insurance Code, |
|
redesignated as Sections 443.402(a) and (c), Insurance Code, |
|
respectively, by Subsection (a)(1)(I) of this section, are amended |
|
to conform to the additional changes made by Subsection (a)(1) of |
|
this section to read as follows: |
|
(a) A domiciliary receiver appointed in another state is |
|
vested by operation of law with title to, and may summarily take |
|
possession of, all property and records of the insurer in this |
|
state. Notwithstanding any other provision of law regarding |
|
special deposits, special deposits held in this state shall be, |
|
upon the entry of an order of liquidation with a finding of |
|
insolvency, distributed to the guaranty associations in this state |
|
as early access payments subject to Section 443.303 [21A.303], in |
|
relation to the lines of business for which the special deposits |
|
were made. The holder of any special deposit shall account to the |
|
domiciliary receiver for all distributions from the special deposit |
|
at the time of the distribution. The statutory provisions of |
|
another state and all orders entered by courts of competent |
|
jurisdiction in relation to the appointment of a domiciliary |
|
receiver of an insurer and any related proceedings in another state |
|
must be given full faith and credit in this state. For purposes of |
|
this section, "another state" means any state other than this |
|
state. This state shall treat any other state than this state as a |
|
reciprocal state. |
|
(c) Except as provided in Subsection (a), the domiciliary |
|
receiver shall handle special deposits and special deposit claims |
|
in accordance with federal law and the statutes pursuant to which |
|
the special deposits are required. All amounts in excess of the |
|
estimated amount necessary to administer the special deposit and |
|
pay the unpaid special deposit claims are deemed general assets of |
|
the estate. If there is a deficiency in any special deposit so that |
|
the claims secured by the special deposit are not fully discharged |
|
from the deposit, the claimants may share in the general assets of |
|
the insurer to the extent of the deficiency at the same priority as |
|
other claimants in their class of priority under Section 443.301 |
|
[21A.301], but the sharing must be deferred until the other |
|
claimants of their class have been paid percentages of their claims |
|
equal to the percentage paid from the special deposit. The intent |
|
of this provision is to equalize to this extent the advantage gained |
|
by the security provided by the special deposits. |
|
(rr) Section 442.801, Insurance Code, redesignated as |
|
Section 444.001, Insurance Code, by Subsection (a)(2) of this |
|
section, is amended to conform to the repeal of Article 21.28, |
|
Insurance Code, and the enactment of Chapter 21A, Insurance Code, |
|
by Chapter 995, Acts of the 79th Legislature, Regular Session, |
|
2005, and to the changes made by Subsection (a)(1) of this section |
|
to read as follows: |
|
Sec. 444.001 [442.801]. REQUIRED CONTRACT PROVISION. An |
|
agency contract entered into on or after August 27, 1973, by an |
|
insurer writing fire and casualty insurance in this state must |
|
contain, or shall be construed to contain, the following provision: |
|
Notwithstanding any other provision of this contract, the |
|
obligation of the agent to remit written premiums to the insurer |
|
shall be changed on the commencement of a delinquency proceeding as |
|
defined by Chapter 443 [442], Insurance Code, as amended. After the |
|
commencement of the delinquency proceeding, the obligation of the |
|
agent to remit premiums is limited to premiums earned before the |
|
cancellation date of insurance policies stated in the order of a |
|
court of competent jurisdiction under Chapter 443 [442], Insurance |
|
Code, canceling the policies. The agent does not owe and may not be |
|
required to remit to the insurer or to the receiver any premiums |
|
that are unearned as of the cancellation date stated in the order. |
|
(ss) Section 442.803, Insurance Code, redesignated as |
|
Section 444.003, Insurance Code, by Subsection (a)(2) of this |
|
section, is amended to conform to the additional changes made by |
|
Subsection (a)(2) of this section to read as follows: |
|
Sec. 444.003 [442.803]. EFFECT OF CHAPTER [SUBCHAPTER] ON |
|
ACTION BY RECEIVER AGAINST AGENT. This chapter [subchapter] does |
|
not prejudice a cause of action by the receiver against an agent to |
|
recover: |
|
(1) unearned premiums that were not returned to |
|
policyholders; or |
|
(2) earned premiums that were not promptly remitted to |
|
the receiver. |
|
(tt) Section 442.804, Insurance Code, redesignated as |
|
Section 444.004, Insurance Code, by Subsection (a)(2) of this |
|
section, is amended to conform to the additional changes made by |
|
Subsection (a)(2) of this section to read as follows: |
|
Sec. 444.004 [442.804]. AGENT NOT RECEIVER'S AGENT. This |
|
chapter [subchapter] does not render the agent an agent of the |
|
receiver for earned or unearned premiums. |
|
SECTION 3B.005. (a) Section 462.007(b), Insurance Code, |
|
is amended to conform to Section 2, Chapter 995, Acts of the 79th |
|
Legislature, Regular Session, 2005, to read as follows: |
|
(b) Except as provided by Subchapter F, this chapter does |
|
not apply to: |
|
(1) life, annuity, health, or disability insurance; |
|
(2) mortgage guaranty, financial guaranty, or other |
|
kinds of insurance offering protection against investment risks; |
|
(3) a fidelity or surety bond, or any other bonding |
|
obligation; |
|
(4) credit insurance, vendors' single-interest |
|
insurance, collateral protection insurance, or similar insurance |
|
protecting a creditor's interest arising out of a creditor-debtor |
|
transaction; |
|
(5) insurance of warranties or service contracts; |
|
(6) title insurance; |
|
(7) ocean marine insurance; |
|
(8) a transaction or combination of transactions |
|
between a person, including an affiliate of the person, and an |
|
insurer, including an affiliate of the insurer, that involves the |
|
transfer of investment or credit risk unaccompanied by the transfer |
|
of insurance risk, including transactions, except for workers' |
|
compensation insurance, involving captive insurers, policies in |
|
which deductible or self-insured retention is substantially equal |
|
in amount to the limit of the liability under the policy, and |
|
transactions in which the insured retains a substantial portion of |
|
the risk; or |
|
(9) insurance provided by or guaranteed by government. |
|
(b) Section 2, Chapter 995, Acts of the 79th Legislature, |
|
Regular Session, 2005, which amended former Subsection (a), |
|
Section 3, Article 21.28-C, Insurance Code, is repealed. |
|
SECTION 3B.006. (a) Section 462.207, Insurance Code, is |
|
amended to conform to Section 3, Chapter 995, Acts of the 79th |
|
Legislature, Regular Session, 2005, to read as follows: |
|
Sec. 462.207. CLAIMS NOT COVERED: AMOUNTS DUE CERTAIN |
|
ENTITIES. (a) Any amount directly or indirectly due any |
|
reinsurer, insurer, self-insurer, insurance pool, or underwriting |
|
association, as a subrogation recovery, reinsurance recovery, |
|
contribution, or indemnification, or otherwise, is not a covered |
|
claim. |
|
(b) An impaired insurer's insured is not liable, and the |
|
reinsurer, insurer, self-insurer, insurance pool, or underwriting |
|
association is not entitled to sue or continue a suit against the |
|
insured, for a subrogation recovery, reinsurance recovery, |
|
contribution, [or] indemnification, or any other claim asserted |
|
directly or indirectly by a reinsurer, insurer, insurance pool, or |
|
underwriting association to the extent of the applicable liability |
|
limits of the insurance policy written and issued to the insured by |
|
the insolvent insurer. |
|
(b) Section 3, Chapter 995, Acts of the 79th Legislature, |
|
Regular Session, 2005, which amended former Subdivision (8), |
|
Section 5, Article 21.28-C, Insurance Code, is repealed. |
|
SECTION 3B.007. (a) Section 462.211, Insurance Code, is |
|
amended to conform to Section 4, Chapter 995, Acts of the 79th |
|
Legislature, Regular Session, 2005, and Section 6.070, Chapter 265, |
|
Acts of the 79th Legislature, Regular Session, 2005, to read as |
|
follows: |
|
Sec. 462.211. CLAIMS NOT COVERED: LATE FILED CLAIMS. (a) |
|
Notwithstanding any other provision of this chapter or any other |
|
law to the contrary, and subject to [except as provided by] |
|
Subsection (b), a claim that is filed with the association on a date |
|
that is later than 18 months after the date of the order of |
|
liquidation or that is unknown and unreported as of the date is not |
|
a covered claim. |
|
(b) This section does not apply to a claim for workers' |
|
compensation benefits governed by Title 5, Labor Code, and the |
|
applicable rules of the commissioner of workers' compensation |
|
[Texas Workers' Compensation Commission]. |
|
(b) Subchapter C, Chapter 462, Insurance Code, is amended to |
|
conform to Section 4, Chapter 995, Acts of the 79th Legislature, |
|
Regular Session, 2005, by adding Section 462.1121 to read as |
|
follows: |
|
Sec. 462.1121. ACTION TO OBTAIN INFORMATION CONCERNING |
|
INSURER IN RECEIVERSHIP AUTHORIZED. (a) The association may bring |
|
an action against any third-party administrator, agent, attorney, |
|
or other representative of an insurer for which a receiver has been |
|
appointed to obtain custody and control of all information, |
|
including files, records, and electronic data, related to the |
|
insurer that is appropriate or necessary for the association, or a |
|
similar association in other states, to carry out its duties under |
|
this chapter or a similar law of another state. The association has |
|
the absolute right to obtain information under this section through |
|
emergency equitable relief, regardless of where the information is |
|
physically located. |
|
(b) In bringing an action under this section, the |
|
association is not subject to any defense, possessory lien or other |
|
type of lien, or other legal or equitable ground for refusal to |
|
surrender the information that may be asserted against the receiver |
|
of the insurer. |
|
(c) The association is entitled to an award of reasonable |
|
attorney's fees and costs incurred by the association in any action |
|
to obtain information under this section. |
|
(d) The rights granted to the association under this section |
|
do not affect the receiver's title to information, and information |
|
obtained under this section remains the property of the receiver |
|
while in the custody of the association. |
|
(c) The following are repealed: |
|
(1) Section 4, Chapter 995, Acts of the 79th |
|
Legislature, Regular Session, 2005, which amended former Section 8, |
|
Article 21.28-C, Insurance Code, by amending Subsection (d) and |
|
adding Subsection (i); and |
|
(2) Section 6.070, Chapter 265, Acts of the 79th |
|
Legislature, Regular Session, 2005, which amended former |
|
Subsection (d), Section 8, Article 21.28-C, Insurance Code. |
|
SECTION 3B.008. (a) Section 462.017(b), Insurance Code, |
|
is amended to conform to Section 5, Chapter 995, Acts of the 79th |
|
Legislature, Regular Session, 2005, to read as follows: |
|
(b) Venue in a suit by or against the commissioner or |
|
association relating to an action or ruling of the commissioner or |
|
association under this chapter is in Travis County. The |
|
commissioner or association is not required to give an appeal bond |
|
in an appeal of a cause of action arising under this chapter. |
|
(b) Section 5, Chapter 995, Acts of the 79th Legislature, |
|
Regular Session, 2005, which amended former Subsection (g), Section |
|
10, Article 21.28-C, Insurance Code, is repealed. |
|
SECTION 3B.009. (a) Sections 462.308(a) and (c), |
|
Insurance Code, are amended to conform to Section 6, Chapter 995, |
|
Acts of the 79th Legislature, Regular Session, 2005, to read as |
|
follows: |
|
(a) The association is entitled to recover: |
|
(1) the amount of a covered claim and the cost of |
|
defense paid on behalf of [under this chapter from the person on
|
|
whose behalf the payment was made if the person is:
|
|
[(1)] a person: |
|
(A) who is an affiliate of the impaired insurer; |
|
and |
|
(B) whose liability obligations to other persons |
|
are satisfied wholly or partly by payment made under this chapter; |
|
and [or] |
|
(2) the amount of a covered claim for workers' |
|
compensation insurance benefits and the costs of administration and |
|
defense of the claim paid under this chapter from an insured |
|
employer[:
|
|
[(A)] whose net worth on December 31 of the year |
|
preceding the date the insurer becomes an impaired insurer exceeds |
|
$50 million[; and
|
|
[(B)
whose obligations under a liability policy
|
|
or contract of insurance written, issued, and placed in force after
|
|
January 1, 1992, are satisfied wholly or partly by payment made
|
|
under this chapter]. |
|
(c) For purposes of Subsection (a)(2), an insured's net |
|
worth is deemed to include [includes] the aggregate net worth of the |
|
insured and of the insured's parent, subsidiary, and affiliated |
|
companies[,] computed on a consolidated basis. |
|
(b) Section 6, Chapter 995, Acts of the 79th Legislature, |
|
Regular Session, 2005, which amended former Subsection (b), Section |
|
11, Article 21.28-C, Insurance Code, is repealed. |
|
SECTION 3B.010. (a) Section 462.212, Insurance Code, is |
|
amended to conform to Section 7, Chapter 995, Acts of the 79th |
|
Legislature, Regular Session, 2005, to read as follows: |
|
Sec. 462.212. NET WORTH EXCLUSION. (a) Except for a |
|
workers' compensation claim governed by Title 5, Labor Code, a |
|
covered claim does not include, and the association is not liable |
|
for, any claim arising from an insurance policy of any [The
|
|
association is not liable to pay a first-party claim of an] insured |
|
whose net worth on December 31 of the year preceding the date the |
|
insurer becomes an impaired insurer exceeds $50 million. |
|
(b) For purposes of this section, an insured's net worth |
|
includes the aggregate net worth of the insured and of the insured's |
|
parent, subsidiary, and affiliated companies[,] computed on a |
|
consolidated basis. |
|
(c) This section does not apply: |
|
(1) to third-party claims against an insured that has: |
|
(A) applied for or consented to the appointment |
|
of a receiver, trustee, or liquidator for all or a substantial part |
|
of the insurer's assets; |
|
(B) filed a voluntary petition in bankruptcy; or |
|
(C) filed a petition or an answer seeking a |
|
reorganization or arrangement with creditors or to take advantage |
|
of any insolvency law; or |
|
(2) if an order, judgment, or decree is entered by a |
|
court of competent jurisdiction, on the application of a creditor, |
|
adjudicating the insured bankrupt or insolvent or approving a |
|
petition seeking reorganization of the insured or of all or a |
|
substantial part of its assets. |
|
(d) In an instance described by Subsection (c), the |
|
association is entitled to assert a claim in the bankruptcy or |
|
receivership proceeding to recover the amount of any covered claim |
|
and costs of defense paid on behalf of the insured. |
|
(e) The association may establish procedures for requesting |
|
financial information from an insured or claimant on a confidential |
|
basis for the purpose of applying sections concerning the net worth |
|
of first-party and third-party claimants, subject to any |
|
information requested under this subsection being shared with any |
|
other association similar to the association and with the |
|
liquidator for the impaired insurer on the same confidential basis. |
|
If the insured or claimant refuses to provide the requested |
|
financial information, the association requests an auditor's |
|
certification of that information, and the auditor's certification |
|
is available but not provided, the association may deem the net |
|
worth of the insured or claimant to be in excess of $50 million at |
|
the relevant time. |
|
(f) In any lawsuit contesting the applicability of Section |
|
462.308 or this section when the insured or claimant has declined to |
|
provide financial information under the procedure provided in the |
|
plan of operation under Section 462.103, the insured or claimant |
|
bears the burden of proof concerning its net worth at the relevant |
|
time. If the insured or claimant fails to prove that its net worth |
|
at the relevant time was less than the applicable amount, the court |
|
shall award the association its full costs, expenses, and |
|
reasonable attorney's fees in contesting the claim [This section
|
|
does not exclude the payment of a covered claim for workers'
|
|
compensation benefits otherwise payable under this chapter]. |
|
(b) Section 7, Chapter 995, Acts of the 79th Legislature, |
|
Regular Session, 2005, which amended former Section 11A, Article |
|
21.28-C, Insurance Code, is repealed. |
|
SECTION 3B.011. (a) Sections 462.309(c) and (e), |
|
Insurance Code, are amended to conform to Section 8, Chapter 995, |
|
Acts of the 79th Legislature, Regular Session, 2005, to read as |
|
follows: |
|
(c) A deadline imposed under the Texas Rules of Civil |
|
Procedure or the Texas Rules of Appellate Procedure is tolled |
|
during the stay. Statutes of limitation or repose are not tolled |
|
during the stay, and any action filed during the stay is stayed upon |
|
the filing of the action. |
|
(e) The commissioner may bring an ancillary conservation |
|
[delinquency] proceeding under Section 443.401 [Sections 442.751,
|
|
442.752, and 442.754] for the [limited] purpose of determining the |
|
application, enforcement, and extension of the stay to an impaired |
|
insurer that is not domiciled in this state. |
|
(b) Section 8, Chapter 995, Acts of the 79th Legislature, |
|
Regular Session, 2005, which amended former Subsection (a), Section |
|
17, Article 21.28-C, Insurance Code, is repealed. |
|
SECTION 3B.012. (a) The heading to Chapter 463, Insurance |
|
Code, is amended to conform to Section 9, Chapter 753, Acts of the |
|
79th Legislature, Regular Session, 2005, to read as follows: |
|
CHAPTER 463. TEXAS LIFE, ACCIDENT, HEALTH, AND HOSPITAL SERVICE |
|
INSURANCE GUARANTY ASSOCIATION |
|
(b) Section 463.001, Insurance Code, is amended to conform |
|
to Section 9, Chapter 753, Acts of the 79th Legislature, Regular |
|
Session, 2005, to read as follows: |
|
Sec. 463.001. SHORT TITLE. This chapter may be cited as |
|
the Texas Life, Accident, Health, and Hospital Service Insurance |
|
Guaranty Association Act. |
|
SECTION 3B.013. (a) Section 463.003, Insurance Code, is |
|
amended to conform to Sections 2 and 3, Chapter 753, Acts of the |
|
79th Legislature, Regular Session, 2005, and to more closely |
|
conform to the source law from which the section was derived, to |
|
read as follows: |
|
Sec. 463.003. GENERAL DEFINITIONS. In this chapter: |
|
(1) "Association" means the Texas Life, Accident, |
|
Health, and Hospital Service Insurance Guaranty Association. |
|
(1-a) "Benefit plan" means a specific employee, union, |
|
or association of natural persons benefit plan. |
|
(2) "Board" means the board of directors of the |
|
association. |
|
(3) "Contractual obligation" means an obligation |
|
under a policy or contract or certificate under a group policy or |
|
contract, or part of a policy or contract or certificate, for which |
|
coverage is provided under Subchapter E. |
|
(4) "Covered policy" means a policy or contract, or |
|
portion of a policy or contract, with respect to which this chapter |
|
provides coverage as determined under Subchapter E. |
|
(5) "Impaired insurer" means a member insurer that is |
|
designated an "impaired insurer" by the commissioner and is: |
|
(A) [is] placed by a court in this state or |
|
another state under an order of supervision, liquidation, |
|
rehabilitation, or conservation [under Chapter 441 or 442 and is
|
|
designated by the commissioner as an impaired insurer]; [or] |
|
(B) placed under an order of liquidation or |
|
rehabilitation under Chapter 443; or |
|
(C) placed under an order of supervision or |
|
conservation by the commissioner under Chapter 441 [is determined
|
|
in good faith by the commissioner to be unable or potentially unable
|
|
to fulfill the insurer's contractual obligations]. |
|
(6) "Insolvent insurer" means a member insurer that[:
|
|
[(A)] has been placed under an order of |
|
liquidation with a finding of insolvency by a court in this state or |
|
another state [a minimum free surplus, if a mutual insurance
|
|
company, or required capital, if a stock insurance company, that is
|
|
impaired to an extent prohibited by law; and
|
|
[(B)
the commissioner designates as an insolvent
|
|
insurer]. |
|
(7) "Member insurer" means an insurer that is required |
|
to participate in the association under Section 463.052. |
|
(7-a) "Owner" means the owner of a policy or contract |
|
and "policy owner" and "contract owner" mean the person who is |
|
identified as the legal owner under the terms of the policy or |
|
contract or who is otherwise vested with legal title to the policy |
|
or contract through a valid assignment completed in accordance with |
|
the terms of the policy or contract and is properly recorded as the |
|
owner on the books of the insurer. The terms "owner," "contract |
|
owner," and "policy owner" do not include persons with a mere |
|
beneficial interest in a policy or contract. |
|
(8) "Person" means an individual, corporation, |
|
limited liability company, partnership, association, governmental |
|
body or entity, or voluntary organization. |
|
(8-a) "Plan sponsor" means: |
|
(A) the employer in the case of a benefit plan |
|
established or maintained by a single employer; |
|
(B) the employee organization in the case of a |
|
benefit plan established or maintained by an employee organization; |
|
or |
|
(C) in a case of a benefit plan established or |
|
maintained by two or more employers or jointly by one or more |
|
employers and one or more employee organizations, the association, |
|
committee, joint board of trustees, or other similar group of |
|
representatives of the parties who establish or maintain the |
|
benefit plan. |
|
(9) "Premium" means an amount received on a covered |
|
policy, less any premium, consideration, or deposit returned on the |
|
policy, and any dividend or experience credit on the policy. The |
|
term does not include: |
|
(A) an amount received for a policy or contract |
|
or part of a policy or contract for which coverage is not provided |
|
under Section 463.202, except that assessable premiums may not be |
|
reduced because of: |
|
(i) an interest limitation provided by |
|
Section 463.203(b)(3); or |
|
(ii) a limitation provided by Section |
|
463.204 with respect to a single individual, participant, |
|
annuitant, or contract owner [holder]; |
|
(B) premiums in excess of $5 million on an |
|
unallocated annuity contract not issued under a governmental |
|
benefit [retirement] plan established under Section 401, 403(b), |
|
or 457, Internal Revenue Code of 1986; [or] |
|
(C) premiums received from the state treasury or |
|
the United States treasury for insurance for which this state or the |
|
United States contracts to: |
|
(i) provide welfare benefits to designated |
|
welfare recipients; or |
|
(ii) implement Title 2, Human Resources |
|
Code, or the Social Security Act (42 U.S.C. Section 301 et seq.); or |
|
(D) premiums in excess of $5 million with respect |
|
to multiple nongroup policies of life insurance owned by one owner, |
|
regardless of whether the policy owner is an individual, firm, |
|
corporation, or other person and regardless of whether the persons |
|
insured are officers, managers, employees, or other persons, |
|
regardless of the number of policies or contracts held by the owner. |
|
(10) "Resident" means a person who resides in this |
|
state on the earlier of the date a member insurer becomes an |
|
impaired insurer or the date of entry of a court order that |
|
determines a member insurer to be an impaired insurer or the date of |
|
entry of a court order that determines a member insurer to be an |
|
insolvent insurer and to whom the [at the time a] member insurer |
|
[that] owes a contractual obligation [to the person is determined
|
|
to be impaired or insolvent]. For the purposes of this subdivision: |
|
(A) a person is considered to be a resident of |
|
only one state; [and] |
|
(B) a person other than an individual is |
|
considered to be a resident of the state in which the person's |
|
principal place of business is located; and |
|
(C) a United States citizen who is either a |
|
resident of a foreign country or a resident of a United States |
|
possession, territory, or protectorate that does not have an |
|
association similar to the association created by this chapter is |
|
considered a resident of the state of domicile of the insurer that |
|
issued the policy or contract. |
|
(10-a) "Structured settlement annuity" means an |
|
annuity purchased to fund periodic payments for a plaintiff or |
|
other claimant in payment for or with respect to personal injury |
|
suffered by the plaintiff or other claimant. |
|
(11) "Supplemental contract" means a written [an] |
|
agreement for the distribution of policy or contract proceeds. |
|
(12) "Unallocated annuity contract" means an annuity |
|
contract or group annuity certificate that is not issued to and |
|
owned by an individual, except to the extent of any annuity benefits |
|
guaranteed to an individual by an insurer under the contract or |
|
certificate. |
|
(b) Subchapter A, Chapter 463, Insurance Code, is amended to |
|
conform to Section 3, Chapter 753, Acts of the 79th Legislature, |
|
Regular Session, 2005, by adding Section 463.0031 to read as |
|
follows: |
|
Sec. 463.0031. DEFINITION OF PRINCIPAL PLACE OF BUSINESS OF |
|
PLAN SPONSOR OR OTHER PERSON. (a) Except as otherwise provided by |
|
this section, in this chapter, the "principal place of business" of |
|
a plan sponsor or a person other than an individual means the single |
|
state in which the individuals who establish policy for the |
|
direction, control, and coordination of the operations of the plan |
|
sponsor or person as a whole primarily exercise that function, as |
|
determined by the association in its reasonable judgment by |
|
considering the following factors: |
|
(1) the state in which the primary executive and |
|
administrative headquarters of the plan sponsor or person is |
|
located; |
|
(2) the state in which the principal office of the |
|
chief executive officer of the plan sponsor or person is located; |
|
(3) the state in which the board of directors, or |
|
similar governing person or persons, of the plan sponsor or person |
|
conduct the majority of their meetings; |
|
(4) the state in which the executive or management |
|
committee of the board of directors, or similar governing person or |
|
persons, of the plan sponsor or person conduct the majority of their |
|
meetings; |
|
(5) the state from which the management of the overall |
|
operations of the plan sponsor or person is directed; and |
|
(6) in the case of a benefit plan sponsored by |
|
affiliated companies comprising a consolidated corporation, the |
|
state in which the holding company or controlling affiliate has its |
|
principal place of business as determined using the factors |
|
described by Subdivisions (1)-(5). |
|
(b) In the case of a plan sponsor, if more than 50 percent of |
|
the participants in the benefit plan are employed in a single state, |
|
that state is the principal place of business of the plan sponsor. |
|
(c) The principal place of business of a plan sponsor of a |
|
benefit plan described in Section 463.003(8-a)(C) is the principal |
|
place of business of the association, committee, joint board of |
|
trustees, or other similar group of representatives of the parties |
|
who establish or maintain the benefit plan that, in lieu of a |
|
specific or clear designation of a principal place of business, |
|
shall be deemed to be the principal place of business of the |
|
employer or employee organization that has the largest investment |
|
in that benefit plan. |
|
(c) Section 463.052(b), Insurance Code, is amended to |
|
conform to Section 2, Chapter 753, Acts of the 79th Legislature, |
|
Regular Session, 2005, to read as follows: |
|
(b) The following do not participate as member insurers: |
|
(1) a health maintenance organization; |
|
(2) a fraternal benefit society; |
|
(3) a mandatory state pooling plan; |
|
(4) a reciprocal or interinsurance exchange; [and] |
|
(5) an organization which has a certificate of |
|
authority or license limited to the issuance of charitable gift |
|
annuities, as defined by this code or rules adopted by the |
|
commissioner; and |
|
(6) an entity similar to an entity described by |
|
Subdivision (1), (2), (3), [or] (4), or (5). |
|
(d) Section 463.204, Insurance Code, is amended to conform |
|
to Section 2, Chapter 753, Acts of the 79th Legislature, Regular |
|
Session, 2005, to read as follows: |
|
Sec. 463.204. OBLIGATIONS EXCLUDED. A contractual |
|
obligation does not include: |
|
(1) death benefits in an amount in excess of $300,000 |
|
or a net cash surrender or net cash withdrawal value in an amount in |
|
excess of $100,000 [in the aggregate] under one or more policies on |
|
a single life; |
|
(2) an amount in excess of: |
|
(A) $100,000 in the present value [aggregate] |
|
under one or more annuity contracts issued with respect to a single |
|
life under [to the same holder of] individual annuity policies or |
|
[to the same annuitant or participant under] group annuity |
|
policies; or |
|
(B) $5 million in unallocated annuity contract |
|
benefits with respect to a single contract owner [holder] |
|
regardless of the number of those contracts; |
|
(3) an amount in excess of the following amounts, |
|
including any net cash surrender or cash withdrawal values, |
|
[$200,000 in the aggregate] under one or more accident, health, |
|
[or] accident and health, or long-term care insurance policies on a |
|
single life: |
|
(A) $500,000 for basic hospital, |
|
medical-surgical, or major medical insurance, as those terms are |
|
defined by this code or rules adopted by the commissioner; |
|
(B) $300,000 for disability and long-term care |
|
insurance, as those terms are defined by this code or rules adopted |
|
by the commissioner; or |
|
(C) $200,000 for coverages that are not defined |
|
as basic hospital, medical-surgical, major medical, disability, or |
|
long-term care insurance; |
|
(4) an amount in excess of $100,000 in present value |
|
annuity benefits, in the aggregate, including any net cash |
|
surrender and net cash withdrawal values, with respect to each |
|
individual participating in a governmental retirement benefit plan |
|
established under Section 401, 403(b), or 457, Internal Revenue |
|
Code of 1986 (26 U.S.C. Sections 401, 403(b), and 457), covered by |
|
an unallocated annuity contract or the beneficiary or beneficiaries |
|
of the individual if the individual is deceased; |
|
(5) an amount in excess of $100,000 in present value |
|
annuity benefits, in the aggregate, including any net cash |
|
surrender and net cash withdrawal values, with respect to each |
|
payee of a structured settlement annuity or the beneficiary or |
|
beneficiaries of the payee if the payee is deceased; |
|
(6) aggregate benefits in an amount in excess of |
|
$300,000 with respect to a single life, except with respect to: |
|
(A) benefits paid under basic hospital, |
|
medical-surgical, or major medical insurance policies, described |
|
by Subdivision (3)(A), in which case the aggregate benefits are |
|
$500,000; and |
|
(B) benefits paid to one owner of multiple |
|
nongroup policies of life insurance, whether the policy owner is an |
|
individual, firm, corporation, or other person, and whether the |
|
persons insured are officers, managers, employees, or other |
|
persons, in which case the maximum benefits are $5 million |
|
regardless of the number of policies and contracts held by the |
|
owner; |
|
(7) an amount in excess of $5 million in benefits, with |
|
respect to either one plan sponsor whose plans own directly or in |
|
trust one or more unallocated annuity contracts not included in |
|
Subdivision (4) irrespective of the number of contracts with |
|
respect to the contract owner or plan sponsor or one contract owner |
|
provided coverage under Section 463.201(a)(3)(B), except that, if |
|
one or more unallocated annuity contracts are covered contracts |
|
under this chapter and are owned by a trust or other entity for the |
|
benefit of two or more plan sponsors, coverage shall be afforded by |
|
the association if the largest interest in the trust or entity |
|
owning the contract or contracts is held by a plan sponsor whose |
|
principal place of business is in this state, and in no event shall |
|
the association be obligated to cover more than $5 million in |
|
benefits with respect to all these unallocated contracts; |
|
(8) any contractual obligations of the insolvent or |
|
impaired insurer under a covered policy or contract that do not |
|
materially affect the economic value of economic benefits of the |
|
covered policy or contract; or |
|
(9) [(4)] punitive, exemplary, extracontractual, or |
|
bad faith damages, regardless of whether the damages are: |
|
(A) agreed to or assumed by an insurer or |
|
insured; or |
|
(B) imposed by a court. |
|
(e) The following are repealed: |
|
(1) Section 2, Chapter 753, Acts of the 79th |
|
Legislature, Regular Session, 2005, which amended former Section 5, |
|
Article 21.28-D, Insurance Code, by amending Subdivisions (2), (3), |
|
(4), (5), (6), (7), (9), (10), (11), and (12) and adding |
|
Subdivisions (2-a), (8-a), (9-a), and (11-a); and |
|
(2) Section 3, Chapter 753, Acts of the 79th |
|
Legislature, Regular Session, 2005, which added Section 5A to |
|
former Article 21.28-D, Insurance Code. |
|
SECTION 3B.014. (a) Section 463.051(a), Insurance Code, |
|
is amended to conform to Section 4, Chapter 753, Acts of the 79th |
|
Legislature, Regular Session, 2005, to read as follows: |
|
(a) The Texas Life, Accident, Health, and Hospital Service |
|
Insurance Guaranty Association is a nonprofit legal entity existing |
|
to pay benefits and continue coverage as provided by this chapter. |
|
(b) Section 4, Chapter 753, Acts of the 79th Legislature, |
|
Regular Session, 2005, which amended former Subsection (a), Section |
|
6, Article 21.28-D, Insurance Code, is repealed. |
|
SECTION 3B.015. (a) Section 463.101(a), Insurance Code, |
|
is amended to conform to Section 5, Chapter 753, Acts of the 79th |
|
Legislature, Regular Session, 2005, to read as follows: |
|
(a) The association may: |
|
(1) enter into contracts as necessary or proper to |
|
carry out this chapter and the purposes of this chapter; |
|
(2) sue or be sued, including taking: |
|
(A) necessary or proper legal action to: |
|
(i) recover an unpaid assessment under |
|
Subchapter D; or |
|
(ii) settle a claim or potential claim |
|
against the association; or |
|
(B) necessary legal action to avoid payment of an |
|
improper claim; |
|
(3) borrow money to effect the purposes of this |
|
chapter; |
|
(4) exercise, for the purposes of this chapter and to |
|
the extent approved by the commissioner, the powers of a domestic |
|
life, accident, or health insurance company or a group hospital |
|
service corporation, except that the association may not issue an |
|
insurance policy or annuity contract other than to perform the |
|
association's obligations under this chapter; [and] |
|
(5) to further the association's purposes, exercise |
|
the association's powers, and perform the association's duties, |
|
join an organization of one or more state associations that have |
|
similar purposes; |
|
(6) request information from a person seeking coverage |
|
from the association in determining its obligations under this |
|
chapter with respect to the person, and the person shall promptly |
|
comply with the request; and |
|
(7) take any other necessary or appropriate action to |
|
discharge the association's duties and obligations under this |
|
chapter or to exercise the association's powers under this chapter. |
|
(b) Subchapter E, Chapter 463, Insurance Code, is amended to |
|
conform to Section 5, Chapter 753, Acts of the 79th Legislature, |
|
Regular Session, 2005, by adding Section 463.206 to read as |
|
follows: |
|
Sec. 463.206. ASSOCIATION DISCRETION IN MANNER OF PROVIDING |
|
BENEFITS. (a) The board shall have discretion and may exercise |
|
reasonable business judgment to determine the means by which the |
|
association is to provide the benefits of this chapter in an |
|
economical and efficient manner. |
|
(b) If the association arranges or offers to provide the |
|
benefits of this chapter to a covered person under a plan or |
|
arrangement that fulfills the association's obligations under this |
|
chapter, the person is not entitled to benefits from the |
|
association in addition to or other than those provided under the |
|
plan or arrangement. |
|
(c) Section 463.259, Insurance Code, is amended to conform |
|
to Section 5, Chapter 753, Acts of the 79th Legislature, Regular |
|
Session, 2005, to read as follows: |
|
Sec. 463.259. PREMIUM DUE DURING RECEIVERSHIP. After a |
|
court enters an order of receivership with respect to an impaired or |
|
insolvent insurer, a premium due for coverage issued by the insurer |
|
is owned by and is payable at the direction of the association. The |
|
association is liable for an unearned premium owed to a policy or |
|
contract owner that arises after the court enters the order. |
|
(d) Section 463.261, Insurance Code, is amended to conform |
|
to Section 5, Chapter 753, Acts of the 79th Legislature, Regular |
|
Session, 2005, by adding Subsections (d) and (e) to read as follows: |
|
(d) The rights of the association under Subsection (c) |
|
include, in the case of a structured settlement annuity, any rights |
|
of the owner, beneficiary, or payee of the annuity, to the extent of |
|
benefits received under this chapter, against any person originally |
|
or by succession responsible for the losses arising from the |
|
personal injury relating to the annuity or payment for the annuity, |
|
other than a person responsible solely by reason of serving as an |
|
assignee in respect of a qualified assignment under Section 130, |
|
Internal Revenue Code of 1986 (26 U.S.C. Section 130). |
|
(e) If a provision of this section is invalid or ineffective |
|
with respect to any person or claim for any reason, the amount |
|
payable by the association with respect to the related covered |
|
obligations is reduced by the amount realized by any other person |
|
with respect to the person or claim that is attributable to the |
|
policies, or portion of the policies, covered by the association. |
|
If the association has provided benefits with respect to a covered |
|
obligation and a person recovers amounts as to which the |
|
association has rights described in this section, the person shall |
|
pay to the association the portion of the recovery attributable to |
|
the policies, or portion of the policies, covered by the |
|
association. |
|
(e) Subchapter F, Chapter 463, Insurance Code, is amended to |
|
conform to Section 5, Chapter 753, Acts of the 79th Legislature, |
|
Regular Session, 2005, by adding Section 463.263 to read as |
|
follows: |
|
Sec. 463.263. DEPOSIT TO BE PAID TO ASSOCIATION. (a) A |
|
deposit in this state, held under law or required by the |
|
commissioner for the benefit of creditors, including policy owners, |
|
that is not turned over to the domiciliary receiver on the entry of |
|
a final order of liquidation or order approving a rehabilitation |
|
plan of an insurer domiciled in this state or a reciprocal state in |
|
accordance with Section 443.402 shall be promptly paid to the |
|
association. |
|
(b) The association is entitled to retain a portion of any |
|
amount paid to the association under this section equal to the |
|
percentage determined by dividing the aggregate amount of policy |
|
owners' claims related to that insolvency for which the association |
|
has provided statutory benefits by the aggregate amount of all |
|
policy owners' claims in this state related to that insolvency and |
|
shall remit to the domiciliary receiver the amount paid to the |
|
association and retained under this section. |
|
(c) The amount paid to the association under this section, |
|
less the amount retained by the association under this section, is |
|
treated as a distribution of estate assets under Section 443.303 or |
|
the similar law of the state of domicile of the impaired or |
|
insolvent insurer. |
|
(f) Section 5, Chapter 753, Acts of the 79th Legislature, |
|
Regular Session, 2005, which amended former Section 8, Article |
|
21.28-D, Insurance Code, by amending Subsections (e), (n), and (v) |
|
and adding Subsections (u-1), (u-2), (u-3), (x), and (y), is |
|
repealed. |
|
SECTION 3B.016. (a) Section 463.151, Insurance Code, is |
|
amended to conform to Section 6, Chapter 753, Acts of the 79th |
|
Legislature, Regular Session, 2005, by amending Subsection (a) and |
|
adding Subsection (a-1) to read as follows: |
|
(a) The association shall assess member insurers, |
|
separately for each account under Section 463.105, in the amounts |
|
and at the times the board determines necessary to provide money for |
|
the association to exercise the association's powers, perform the |
|
association's duties, and carry out the purposes of this chapter. |
|
The association may not authorize and call [make] an assessment to |
|
meet the requirements of the association with respect to an |
|
impaired or insolvent insurer until the assessment is necessary to |
|
carry out the purposes of this chapter. The board shall classify |
|
assessments under Section 463.152 and determine the amount of |
|
assessments with reasonable accuracy, recognizing that exact |
|
determinations may not always be possible. |
|
(a-1) The association shall notify each member insurer of |
|
its anticipated pro rata share of an authorized assessment not yet |
|
called not later than the 180th day after the date the assessment is |
|
authorized. |
|
(b) Section 463.152, Insurance Code, is amended to conform |
|
to Section 6, Chapter 753, Acts of the 79th Legislature, Regular |
|
Session, 2005, by amending Subsections (b) and (c) and adding |
|
Subsection (d) to read as follows: |
|
(b) Class A assessments are authorized and called [made] to |
|
pay: |
|
(1) the association's administrative costs; |
|
(2) administrative expenses that: |
|
(A) are properly incurred under this chapter; and |
|
(B) relate to an unauthorized insurer or to an |
|
entity that is not a member insurer; and |
|
(3) other general expenses not related to a particular |
|
impaired or insolvent insurer. |
|
(c) Class B assessments are authorized and called [made] to |
|
the extent necessary for the association to carry out the |
|
association's powers and duties under Sections 463.101, 463.103, |
|
463.109, and 463.111(c) and Subchapter F with regard to an impaired |
|
or insolvent insurer. |
|
(d) For purposes of this section, an assessment is |
|
authorized at the time a resolution by the board is passed under |
|
which an assessment will be called immediately or in the future from |
|
member insurers for a specified amount and an assessment is called |
|
at the time a notice has been issued by the association to member |
|
insurers requiring that an authorized assessment be paid within a |
|
period stated in the notice. An authorized assessment becomes a |
|
called assessment at the time notice is mailed by the association to |
|
member insurers. |
|
(c) Sections 463.153(b) and (c), Insurance Code, are |
|
amended to conform to Section 6, Chapter 753, Acts of the 79th |
|
Legislature, Regular Session, 2005, to read as follows: |
|
(b) Class B assessments against a member insurer for each |
|
account under Section 463.105 shall be authorized and called [made] |
|
in the proportion that the premiums received on [all] business in |
|
this state by the insurer on policies or contracts covered by each |
|
account for the three most recent calendar years for which |
|
information is available preceding the year in which the insurer |
|
became impaired or insolvent bear to [the] premiums received on |
|
[all] business in this state for those calendar years by all |
|
assessed member insurers. The amount of a Class B assessment shall |
|
be allocated [divided] among the separate accounts in accordance |
|
with an allocation formula that may be based on: |
|
(1) the premiums or reserves of the impaired or |
|
insolvent insurer; or |
|
(2) any other standard deemed by the board in the |
|
board's sole discretion as being fair and reasonable under the |
|
circumstances [the proportion that the premiums on the policies
|
|
covered by each account were received by the impaired or insolvent
|
|
insurer from all covered policies during the year preceding the
|
|
date of the impairment, as shown in the annual statements for the
|
|
year preceding the date of the assessment]. |
|
(c) The total amount of assessments on a member insurer for |
|
each account under Section 463.105 may not exceed two [one] percent |
|
of the insurer's premiums on the policies covered by the account |
|
during the three [in a single] calendar years preceding the year in |
|
which the insurer became an impaired or insolvent insurer. If two |
|
or more assessments are authorized in a calendar year with respect |
|
to insurers that become impaired or insolvent in different calendar |
|
years, the average annual premiums for purposes of the aggregate |
|
assessment percentage limitation described by this subsection |
|
shall be equal to the higher of the three-year average annual |
|
premiums for the applicable subaccount or account as computed in |
|
accordance with this section [year]. If the maximum assessment and |
|
the other assets of the association do not provide in a year an |
|
amount sufficient to carry out the association's responsibilities, |
|
the association shall make necessary additional assessments as soon |
|
as this chapter permits. |
|
(d) Section 6, Chapter 753, Acts of the 79th Legislature, |
|
Regular Session, 2005, which amended former Section 9, Article |
|
21.28-D, Insurance Code, by amending Subsections (b), (d), (f), |
|
(g), and (h) and adding Subsection (b-1), is repealed. |
|
SECTION 3B.017. (a) Section 463.161(a), Insurance Code, is |
|
amended to conform to Section 7, Chapter 753, Acts of the 79th |
|
Legislature, Regular Session, 2005, to read as follows: |
|
(a) A member insurer is entitled to show as an admitted |
|
asset a certificate of contribution in the form the commissioner |
|
approves under Section 463.156. Unless the commissioner requires a |
|
longer period, the certificate may be shown at: |
|
(1) for the calendar year of issuance, an amount equal |
|
to the certificate's original face value approved by the |
|
commissioner; and |
|
(2) beginning with the year following the calendar |
|
year of issuance, an amount equal to the certificate's original |
|
face value, reduced by 20 [10] percent a year for each year after |
|
the year of issuance, for a period of five [10] years. |
|
(b) Section 7, Chapter 753, Acts of the 79th Legislature, |
|
Regular Session, 2005, which amended former Subsection (a), Section |
|
(13), Article 21.28-D, Insurance Code, is repealed. |
|
SECTION 3B.018. (a) Section 463.201, Insurance Code, is |
|
amended to conform to Section 1, Chapter 753, Acts of the 79th |
|
Legislature, Regular Session, 2005, and to conform more closely to |
|
the source law from which the section was derived to read as |
|
follows: |
|
Sec. 463.201. INSUREDS COVERED. (a) Subject to Subsections |
|
(b) and (c), this [This] chapter provides coverage for a policy or |
|
contract described by Section 463.202 to a person who is: |
|
(1) a person, other than a certificate holder under a |
|
group policy or contract who is not a resident, who is a |
|
beneficiary, assignee, or payee of a person described by |
|
Subdivision (2); |
|
(2) a person who is [subject to Subsection (b),] an |
|
owner of or certificate holder under a policy or contract specified |
|
by Section 463.202, other than [or a contract holder under] an |
|
unallocated annuity contract or structured settlement annuity, and |
|
who is: |
|
(A) a resident; or |
|
(B) not a resident, but only under all of the |
|
following conditions: |
|
(i) the insurers that issued the policies |
|
or contracts are domiciled in this state; |
|
(ii) the state in which the person resides |
|
has an association similar to the association; and |
|
(iii) the person is not eligible for |
|
coverage by an association in any other state because the insurer |
|
was not licensed in the state at the time specified in that state's |
|
guaranty association law; |
|
(3) a person who is the owner of an unallocated annuity |
|
contract issued to or in connection with: |
|
(A) a benefit plan whose plan sponsor has the |
|
sponsor's principal place of business in this state; or |
|
(B) a government lottery, if the owner is a |
|
resident; or |
|
(4) a person who is the payee under a structured |
|
settlement annuity, or beneficiary of the payee if the payee is |
|
deceased, if: |
|
(A) the payee is a resident, regardless of where |
|
the contract owner resides; |
|
(B) the payee is not a resident, the contract |
|
owner of the structured settlement annuity is a resident, and the |
|
payee is not eligible for coverage by the association in the state |
|
in which the payee resides; or |
|
(C) the payee and the contract owner are not |
|
residents, the insurer that issued the structured settlement |
|
annuity is domiciled in this state, the state in which the contract |
|
owner resides has an association similar to the association, and |
|
neither the payee or, if applicable, the payee's beneficiary, nor |
|
the contract owner is eligible for coverage by the association in |
|
the state in which the payee or contract owner resides [(2) a
|
|
beneficiary, assignee, or payee, other than a certificate holder
|
|
under a group policy or contract who is not a resident, of a person
|
|
described by Subdivision (1)]. |
|
(b) This chapter does not provide coverage to: |
|
(1) a person who is a payee or the beneficiary of a |
|
payee with respect to a contract the owner of which is a resident of |
|
this state, if the payee or the payee's beneficiary is afforded any |
|
coverage by the association of another state; or |
|
(2) a person otherwise described by Subsection (a)(3), |
|
if any coverage is provided by the association of another state to |
|
that person. |
|
(c) This chapter is intended to provide coverage to persons |
|
who are residents of this state, and in those limited circumstances |
|
as described in this chapter, to nonresidents. In order to avoid |
|
duplicate coverage, if a person who would otherwise receive |
|
coverage under this chapter is provided coverage under the laws of |
|
any other state, the person may not be provided coverage under this |
|
chapter. In determining the application of the provisions of this |
|
subsection in situations in which a person could be covered by the |
|
association of more than one state, whether as an owner, payee, |
|
beneficiary, or assignee, this chapter shall be construed in |
|
conjunction with other state laws to result in coverage by only one |
|
association. [Coverage under Subsection (a)(1) applies to a person
|
|
who is not a resident, only if:
|
|
[(1)
the insurer that issued the policy or contract is
|
|
domiciled in this state;
|
|
[(2)
the insurer never held a certificate of authority
|
|
in the state in which the person resides;
|
|
[(3)
the state in which the person resides has an
|
|
association similar to the association; and
|
|
[(4)
the person is not eligible for coverage by the
|
|
association in the state in which the person resides.] |
|
(b) Sections 463.202(a) and (c), Insurance Code, are |
|
amended to conform to Section 1, Chapter 753, Acts of the 79th |
|
Legislature, Regular Session, 2005, to read as follows: |
|
(a) Except as limited by this chapter, the coverage provided |
|
by this chapter to a person specified by Section 463.201, subject to |
|
Sections 463.201(b) and (c), applies with respect to the following |
|
policies and contracts issued by a member insurer: |
|
(1) a direct, nongroup life, health, accident, |
|
annuity, or supplemental policy or contract; |
|
(2) a certificate under a direct group policy or |
|
contract; |
|
(3) a group hospital service contract; and |
|
(4) an unallocated annuity contract. |
|
(c) For the purposes of this section, an annuity contract or |
|
a certificate under a group annuity contract includes: |
|
(1) a guaranteed investment contract; |
|
(2) a deposit administration contract; |
|
(3) an allocated or unallocated funding agreement; |
|
(4) a structured settlement annuity [agreement]; |
|
(5) an annuity issued to or in connection with a |
|
government lottery [a lottery contract]; and |
|
(6) an immediate or deferred annuity contract. |
|
(c) Section 463.203, Insurance Code, is amended to conform |
|
to Section 1, Chapter 753, Acts of the 79th Legislature, Regular |
|
Session, 2005, by amending Subsection (b) and adding Subsection (c) |
|
to read as follows: |
|
(b) This chapter does not provide coverage for: |
|
(1) any part of a policy or contract not guaranteed by |
|
the insurer or under which the risk is borne by the policy or |
|
contract owner [holder]; |
|
(2) a policy or contract of reinsurance, unless an |
|
assumption certificate has been issued; |
|
(3) any part of a policy or contract to the extent that |
|
the rate of interest on which that part is based: |
|
(A) as averaged over the period of four years |
|
before the date the member insurer becomes impaired or insolvent |
|
under this chapter, whichever is earlier [association became
|
|
obligated with respect to the policy or contract], exceeds a rate of |
|
interest determined by subtracting two percentage points from |
|
Moody's Corporate Bond Yield Average averaged for the same |
|
four-year period or for a lesser period if the policy or contract |
|
was issued less than four years before the date the member insurer |
|
becomes impaired or insolvent under this chapter, whichever is |
|
earlier [association became obligated]; and |
|
(B) on and after the date the member insurer |
|
becomes impaired or insolvent under this chapter, whichever is |
|
earlier [association became obligated with respect to the policy or
|
|
contract], exceeds the rate of interest determined by subtracting |
|
three percentage points from Moody's Corporate Bond Yield Average |
|
as most recently available; |
|
(4) a portion of a policy or contract issued to a plan |
|
or program of an employer, association, [or] similar entity, or |
|
other person to provide life, health, or annuity benefits to the |
|
entity's employees, [or] members, or others, to the extent that the |
|
plan or program is self-funded or uninsured, including benefits |
|
payable by an employer, association, or similar entity under: |
|
(A) a multiple employer welfare arrangement as |
|
defined by Section 3, Employee Retirement Income Security Act of |
|
1974 (29 U.S.C. Section 1002); |
|
(B) a minimum premium group insurance plan; |
|
(C) a stop-loss group insurance plan; or |
|
(D) an administrative services-only contract; |
|
(5) any part of a policy or contract to the extent that |
|
the part provides dividends, [or] experience rating credits, or |
|
voting rights, or provides that fees or allowances be paid to any |
|
person, including the policy or contract owner [holder], in |
|
connection with the service to or administration of the policy or |
|
contract; |
|
(6) a policy or contract issued in this state by a |
|
member insurer at a time the insurer was not authorized to issue the |
|
policy or contract in this state; |
|
(7) an unallocated annuity contract issued to or in |
|
connection with a [an employee] benefit plan protected under the |
|
federal Pension Benefit Guaranty Corporation, regardless of |
|
whether the Pension Benefit Guaranty Corporation has not yet become |
|
liable to make any payments with respect to the benefit plan; |
|
(8) any part of an unallocated annuity contract that |
|
is not issued to or in connection with a specific employee, a |
|
benefit plan for a union or association of individuals, or a |
|
governmental lottery; [or] |
|
(9) any part of a financial guarantee, funding |
|
agreement, or guaranteed investment contract that: |
|
(A) does not contain a mortality guarantee; and |
|
(B) is not issued to or in connection with a |
|
specific employee, a benefit plan, or a governmental lottery; |
|
(10) a part of a policy or contract to the extent that |
|
the assessments required by Subchapter D with respect to the policy |
|
or contract are preempted by federal or state law; |
|
(11) a contractual agreement that established the |
|
member insurer's obligations to provide a book value accounting |
|
guaranty for defined contribution benefit plan participants by |
|
reference to a portfolio of assets that is owned by the benefit plan |
|
or the plan's trustee in a case in which neither the benefit plan |
|
sponsor nor its trustee is an affiliate of the member insurer; or |
|
(12) a part of a policy or contract to the extent the |
|
policy or contract provides for interest or other changes in value |
|
that are to be determined by the use of an index or external |
|
reference stated in the policy or contract, but that have not been |
|
credited to the policy or contract, or as to which the policy or |
|
contract owner's rights are subject to forfeiture, as of the date |
|
the member insurer becomes an impaired or insolvent insurer under |
|
this chapter, whichever date is earlier, subject to Subsection (c). |
|
(c) For purposes of determining the values that have been |
|
credited and are not subject to forfeiture as described by |
|
Subsection (b)(12), if a policy's or contract's interest or changes |
|
in value are credited less frequently than annually, the interest |
|
or change in value determined by using the procedures defined in the |
|
policy or contract is credited as if the contractual date of |
|
crediting interest or changing values is the earlier of the date of |
|
impairment or the date of insolvency, and is not subject to |
|
forfeiture. |
|
(d) Section 463.260(a), Insurance Code, is amended to |
|
conform to Section 1, Chapter 753, Acts of the 79th Legislature, |
|
Regular Session, 2005, to read as follows: |
|
(a) The association is not liable for benefits that exceed |
|
the contractual obligations for which the insurer is liable or |
|
would have been liable if not impaired or insolvent. The |
|
association has no obligation to provide benefits outside the |
|
express written terms of the policy or contract, including: |
|
(1) claims based on marketing materials; |
|
(2) claims based on side letters, riders, or other |
|
documents that were issued without meeting applicable policy form |
|
filing or approval requirements; |
|
(3) claims based on misrepresentation of or regarding |
|
policy benefits; |
|
(4) extracontractual claims; or |
|
(5) claims for penalties or consequential or |
|
incidental damages. |
|
(e) Subchapter F, Chapter 463, Insurance Code, is amended to |
|
conform to Section 1, Chapter 753, Acts of the 79th Legislature, |
|
Regular Session, 2005, by adding Section 463.262 to read as |
|
follows: |
|
Sec. 463.262. EFFECT OF SUBROGATION AND ASSIGNMENT OF |
|
RIGHTS AND AVAILABLE ASSETS ON ASSOCIATION OBLIGATION. (a) The |
|
limitations set forth in this chapter are limitations on the |
|
benefits for which the association is obligated before taking into |
|
account either the association's subrogation and assignment rights |
|
or the extent to which those benefits could be provided out of the |
|
assets of the impaired or insolvent insurer attributable to covered |
|
policies. |
|
(b) The costs of the association's obligations under this |
|
chapter may be met by the use of assets attributable to covered |
|
policies or reimbursed to the association pursuant to the |
|
association's subrogation and assignment rights. |
|
(f) Section 1, Chapter 753, Acts of the 79th Legislature, |
|
Regular Session, 2005, which amended former Section 3, Article |
|
21.28-D, Insurance Code, is repealed. |
|
SECTION 3B.019. (a) Section 463.302(d), Insurance Code, |
|
is amended to conform to Section 8, Chapter 753, Acts of the 79th |
|
Legislature, Regular Session, 2005, to read as follows: |
|
(d) The maximum amount recoverable under Subsections (b) |
|
and (c) is the amount needed in excess of all other available assets |
|
of the impaired or insolvent insurer to pay the insurer's |
|
contractual obligations. |
|
(b) Section 463.304, Insurance Code, is amended to conform |
|
to Section 8, Chapter 753, Acts of the 79th Legislature, Regular |
|
Session, 2005, to read as follows: |
|
Sec. 463.304. DISTRIBUTION OF OWNERSHIP RIGHTS OF IMPAIRED |
|
OR INSOLVENT INSURER. In making an equitable distribution of the |
|
ownership rights of an impaired or insolvent insurer before the |
|
termination of a receivership, the court: |
|
(1) shall consider the welfare of the policyholders of |
|
the continuing or successor insurer; and |
|
(2) may consider the contributions of the respective |
|
parties, including the association, the shareholders and |
|
policyholders of the impaired or insolvent insurer, and any other |
|
party with a bona fide interest. |
|
(c) Section 8, Chapter 753, Acts of the 79th Legislature, |
|
Regular Session, 2005, which amended former Subsections (d) and |
|
(i), Section 14, Article 21.28-D, Insurance Code, is repealed. |
|
SECTION 3B.020. (a) Article 21.79H, Insurance Code, is |
|
transferred to Chapter 542, Insurance Code, redesignated as |
|
Subchapter G of that chapter, and amended to read as follows: |
|
SUBCHAPTER G. INSURER'S RECOVERY FROM UNINSURED THIRD PARTY |
|
Sec. 542.301. APPLICABILITY OF SUBCHAPTER [Art.
21.79H.
|
|
RECOVERY OF CERTAIN COSTS FROM THIRD PARTY]. [(a)] This subchapter |
|
[article] applies to any insurer that delivers, issues for |
|
delivery, or renews a private passenger automobile insurance policy |
|
in this state, including a county mutual, a reciprocal or |
|
interinsurance exchange, or a Lloyd's plan. |
|
Sec. 542.302. RECOVERY IN SUIT OR OTHER ACTION. [(b)] An |
|
insurer that brings suit or takes other action described by Section |
|
542.202 [of this code] against a responsible third party relating |
|
to a loss that is covered under a private passenger automobile |
|
insurance policy issued by the insurer and for which the |
|
responsible third party is uninsured is entitled to recover, in |
|
addition to payments made by the insurer or insured, the costs of |
|
bringing the suit or taking the action, including reasonable |
|
attorney's fees and court costs. |
|
(b) For organizational purposes, the heading to Subchapter |
|
E, Chapter 542, Insurance Code, is amended to read as follows: |
|
SUBCHAPTER E. RECOVERY OF DEDUCTIBLE [COLLECTION] FROM THIRD |
|
PARTIES UNDER CERTAIN AUTOMOBILE INSURANCE POLICIES |
|
SECTION 3B.021. (a) Section 544.303, Insurance Code, is |
|
amended to conform to Section 1, Chapter 149, Acts of the 79th |
|
Legislature, Regular Session, 2005, to read as follows: |
|
Sec. 544.303. PROHIBITION OF CERTAIN UNDERWRITING |
|
DECISIONS BASED ON PREVIOUS MOLD CLAIM OR DAMAGE. An insurer may |
|
not make an underwriting decision regarding a residential property |
|
insurance policy based on previous mold damage or a claim for mold |
|
damage if: |
|
(1) the applicant for insurance coverage has property |
|
eligible for coverage under a residential property policy; |
|
(2) the property has had mold damage; |
|
(3) mold remediation has been performed on the |
|
property; and |
|
(4) the property was: |
|
(A) remediated, as evidenced by a certificate of |
|
mold remediation issued to the property owner under Section |
|
1958.154, Occupations Code, that establishes with reasonable |
|
certainty that the underlying cause of the mold at the property has |
|
been remediated; or |
|
(B) inspected by an independent assessor or |
|
adjustor who determined, based on the inspection, that the property |
|
does not contain evidence of mold damage. |
|
(b) Section 1, Chapter 149, Acts of the 79th Legislature, |
|
Regular Session, 2005, which amended former Section 3, Article |
|
21.21-11, Insurance Code, is repealed. |
|
SECTION 3B.022. (a) Section 544.352, Insurance Code, is |
|
amended to conform to Section 1, Chapter 528, Acts of the 79th |
|
Legislature, Regular Session, 2005, and further amended to read as |
|
follows: |
|
Sec. 544.352. DEFINITIONS. In this subchapter: |
|
(1) "Appliance" means a household device operated by |
|
gas or electric current, including hoses directly attached to the |
|
device. The term includes air conditioning units, heating units, |
|
refrigerators, dishwashers, icemakers, clothes washers, water |
|
heaters, and disposals. |
|
(2) "Insurer" means an insurance company, reciprocal |
|
or interinsurance exchange, mutual insurance company, capital |
|
stock company, county mutual insurance company, farm mutual |
|
insurance company, association, Lloyd's plan, or other entity |
|
writing residential property insurance in this state. The term |
|
includes an affiliate, as described by Section 823.003(a), if that |
|
affiliate is authorized to write and is writing residential |
|
property insurance in this state. The term does not include: |
|
(A) the Texas Windstorm Insurance Association |
|
created and operated under Chapter 2210 [Article 21.49]; or |
|
(B) the FAIR Plan created and operated under |
|
Chapter 2211 [Article 21.49A]. |
|
(3) [(2)] "Residential property insurance" means |
|
insurance against loss to residential real property at a fixed |
|
location or tangible personal property provided in a homeowners |
|
policy, which includes a tenant policy, a condominium owners |
|
policy, or a residential fire and allied lines policy. |
|
(4) [(3)] "Underwriting guideline" means a rule, |
|
standard, guideline, or practice, whether written, oral, or |
|
electronic, that is used by an insurer or an agent of an insurer to: |
|
(A) decide whether to accept or reject an |
|
application for a residential property insurance policy; or |
|
(B) determine how to classify the risks that are |
|
accepted for the purpose of determining a rate. |
|
(b) Section 1, Chapter 528, Acts of the 79th Legislature, |
|
Regular Session, 2005, which added Subdivision (4) to former |
|
Section 2, Article 5.35-4, Insurance Code, is repealed. |
|
SECTION 3B.023. (a) Chapter 544, Insurance Code, is |
|
amended to codify Article 21.53X, Insurance Code, as added by |
|
Section 8, Chapter 97, Acts of the 79th Legislature, Regular |
|
Session, 2005, by adding Subchapter J and is further amended to read |
|
as follows: |
|
SUBCHAPTER J. PROHIBITED PRACTICES RELATING TO EXPOSURE TO |
|
ASBESTOS OR SILICA |
|
Sec. 544.451. DEFINITION. In this subchapter, "health |
|
benefit plan" means a plan that provides benefits for medical, |
|
surgical, or other treatment expenses incurred as a result of a |
|
health condition, a mental health condition, an accident, sickness, |
|
or substance abuse, including an individual, group, blanket, or |
|
franchise insurance policy or insurance agreement, a group hospital |
|
service contract, or an individual or group evidence of coverage or |
|
similar coverage document. The term includes: |
|
(1) a small employer health benefit plan or a health |
|
benefit plan written to provide coverage with a cooperative under |
|
Chapter 1501; |
|
(2) a standard health benefit plan offered under |
|
Subchapter A or Subchapter B, Chapter 1507; and |
|
(3) a health benefit plan offered under Chapter 1551, |
|
1575, 1579, or 1601. |
|
Sec. 544.452. APPLICABILITY OF SUBCHAPTER. This subchapter |
|
applies to any entity that offers a health benefit plan or an |
|
annuity or life insurance policy or contract in this state, |
|
including: |
|
(1) a stock or mutual life, health, or accident |
|
insurance company; |
|
(2) a group hospital service corporation operating |
|
under Chapter 842; |
|
(3) a fraternal benefit society operating under |
|
Chapter 885; |
|
(4) a stipulated premium insurance company operating |
|
under Chapter 884; |
|
(5) a Lloyd's plan operating under Chapter 941; |
|
(6) an exchange operating under Chapter 942; |
|
(7) a health maintenance organization operating under |
|
Chapter 843; |
|
(8) a multiple employer welfare arrangement that holds |
|
a certificate of authority under Chapter 846; |
|
(9) an approved nonprofit health corporation that |
|
holds a certificate of authority under Chapter 844; |
|
(10) a statewide mutual assessment company operating |
|
under Chapter 881; |
|
(11) a local mutual aid association operating under |
|
Chapter 886; and |
|
(12) a local mutual burial association operating under |
|
Chapter 888. |
|
Sec. 544.453. PROHIBITION. An entity that offers a health |
|
benefit plan or an annuity or life insurance policy or contract may |
|
not use the fact that a person has been exposed to asbestos fibers |
|
or silica or has filed a claim governed by Chapter 90, Civil |
|
Practice and Remedies Code, to reject, deny, limit, cancel, refuse |
|
to renew, increase the premiums for, or otherwise adversely affect |
|
the person's eligibility for or coverage under the policy or |
|
contract. |
|
(b) Article 21.53X, Insurance Code, as added by Section 8, |
|
Chapter 97, Acts of the 79th Legislature, Regular Session, 2005, is |
|
repealed. |
|
SECTION 3B.024. Section 551.004, Insurance Code, is amended |
|
to correct references to read as follows: |
|
Sec. 551.004. TRANSFER NOT CONSIDERED A REFUSAL TO RENEW. |
|
For purposes of this chapter and Subchapters C and D, Chapter 1952 |
|
[Articles 5.06-1 and 5.06-3 of this code], the transfer of a |
|
policyholder between admitted companies within the same insurance |
|
group is not considered a refusal to renew. |
|
SECTION 3B.0245. (a) Subchapter A, Chapter 551, Insurance |
|
Code, is amended to conform to the enactment of Article 21.49-2V, |
|
Insurance Code, by Section 8.02, Chapter 206, Acts of the 78th |
|
Legislature, Regular Session, 2003, by adding Section 551.005 to |
|
read as follows: |
|
Sec. 551.005. MEMBERSHIP DUES. (a) In this section, |
|
"insurer" includes a county mutual insurance company, a Lloyd's |
|
plan, and a reciprocal or interinsurance exchange. |
|
(b) Except as otherwise provided by law, an insurer may |
|
require that membership dues in its sponsoring organization be paid |
|
as a condition for issuance or renewal of a policy. |
|
(b) Article 21.49-2V, Insurance Code, as added by Section |
|
8.02, Chapter 206, Acts of the 78th Legislature, Regular Session, |
|
2003, is repealed. |
|
SECTION 3B.025. Section 843.318(a), Insurance Code, is |
|
amended to conform more closely to the source law from which the |
|
section was derived to read as follows: |
|
(a) This chapter and this code do not prohibit a physician |
|
or provider who is participating in a health maintenance |
|
organization delivery network, whether by contracting with a health |
|
maintenance organization under Section 843.101 or by |
|
subcontracting with a physician or provider in the health |
|
maintenance organization delivery network, from entering into a |
|
contractual arrangement [authorized by this section] within a |
|
health maintenance organization delivery network described by |
|
Subsections (b)-(e). |
|
SECTION 3B.026. Section 941.003(b), Insurance Code, as |
|
amended by Chapters 631 and 1295, Acts of the 79th Legislature, |
|
Regular Session, 2005, is reenacted and is amended to correct |
|
references to read as follows: |
|
(b) A Lloyd's plan is subject to: |
|
(1) Subchapter [Section 5, Article 1.10;
|
|
[(2) Article 1.15A;
|
|
[(3) Subchapters] A, [Q, T, and U,] Chapter 5, Chapter |
|
254, Subchapters A and B, Chapter 1806, and Subtitle C, Title 10; |
|
(2) [(4)] Articles [5.20,] 5.35, [5.38,] 5.39, and |
|
5.40; |
|
(3) [(5) Article 21.49-8;
|
|
[(6) Sections 822.203, 822.205, 822.210, and 822.212;
|
|
[(7)] Article 5.13-2, as provided by that article, |
|
Subchapters A-D, Chapter 2251, as provided by that chapter, and |
|
Chapter 2301, as provided by that chapter; |
|
(4) [(8)] Chapters 251, 252, 402, [and] 541, and 2253; |
|
(5) Subchapter A, Chapter 401; |
|
(6) Subchapter B, Chapter 404; |
|
(7) Subchapter C, Chapter 1806; and |
|
(8) Sections [(9) Section] 38.001, 501.159, 822.203, |
|
822.205, 822.210, 822.212, 2002.005, 2002.051, and 2002.052. |
|
SECTION 3B.027. Section 942.003(b), Insurance Code, as |
|
amended by Chapters 631 and 1295, Acts of the 79th Legislature, |
|
Regular Session, 2005, is reenacted and is amended to correct |
|
references to read as follows: |
|
(b) An exchange is subject to: |
|
(1) Subchapter [Section 5, Article 1.10;
|
|
[(2) Articles 1.15, 1.15A, and 1.16;
|
|
[(3) Subchapters] A, [Q, T, and U,] Chapter 5, Chapter |
|
254, Subchapters A and B, Chapter 1806, and Subtitle C, Title 10; |
|
(2) [(4)] Articles [5.20,] 5.35, [5.37, 5.38,] 5.39, |
|
and 5.40; |
|
(3) [(5) Article 21.49-8;
|
|
[(6)
Sections 822.203, 822.205, 822.210, 822.212,
|
|
861.254(a)-(f), 861.255, 862.001(b), and 862.003;
|
|
[(7)] Article 5.13-2, as provided by that article, |
|
Subchapters A-D, Chapter 2251, as provided by that chapter, and |
|
Chapter 2301, as provided by that chapter; |
|
(4) Chapters 402, [(8) Chapter] 541, and 2253; |
|
(5) Subchapter A, Chapter 401, and Sections 401.051, |
|
401.052, 401.054, 401.055, 401.056, 401.057, 401.058, 401.059, |
|
401.060, 401.061, 401.062, 401.151, 401.152, 401.155, and 401.156; |
|
(6) Subchapter B, Chapter 404; |
|
(7) Subchapter C, Chapter 1806; and |
|
(8) Sections [(9) Section] 38.001, 501.159, 822.203, |
|
822.205, 822.210, 822.212, 861.254(a)-(f), 861.255, 862.001(b), |
|
862.003, 2002.002, 2002.005, 2002.051, and 2002.052. |
|
SECTION 3B.0271. (a) Section 1301.004, Insurance Code, to |
|
conform more closely to the source law from which it was derived, is |
|
transferred to Section 1301.061, Insurance Code, redesignated as |
|
Subsection (c) of that section, and amended to read as follows: |
|
(c) [Sec.
1301.004. COMPLIANCE WITH CHAPTER
|
|
REQUIRED.] Each preferred provider benefit plan offered in this |
|
state must comply with this chapter. |
|
(b) Subchapter A, Chapter 1301, Insurance Code, is amended |
|
to conform more closely to the source law from which Chapter 1301 |
|
was derived by adding Section 1301.0041 to read as follows: |
|
Sec. 1301.0041. APPLICABILITY. This chapter applies to any |
|
preferred provider benefit plan in which an insurer provides, |
|
through the insurer's health insurance policy, for the payment of a |
|
level of coverage that is different from the basic level of coverage |
|
provided by the health insurance policy if the insured uses a |
|
preferred provider. |
|
SECTION 3B.028. Section 1365.004, Insurance Code, is |
|
amended to conform more closely to the source law from which the |
|
section was derived to read as follows: |
|
Sec. 1365.004. RIGHT TO REJECT COVERAGE OR SELECT |
|
ALTERNATIVE BENEFITS [COVERAGE]. An offer of coverage required |
|
under Section 1365.003 is subject to the right of the group contract |
|
holder to reject the coverage or to select an alternative level of |
|
benefits [coverage] that is offered by or negotiated with the group |
|
health benefit plan issuer. |
|
SECTION 3B.0281. Section 1367.053(c), Insurance Code, is |
|
amended to conform more closely to the source law from which the |
|
section was derived to read as follows: |
|
(c) In addition to the immunizations required under |
|
Subsection (a), a health maintenance organization that issues a |
|
health benefit plan shall provide under the plan coverage for |
|
immunization against rotovirus and any other immunization required |
|
for a child by law. |
|
SECTION 3B.029. (a) Section 1507.003(b), Insurance Code, |
|
is amended to conform to Section 2, Chapter 577, Acts of the 79th |
|
Legislature, Regular Session, 2005, to read as follows: |
|
(b) For purposes of this subchapter, "state-mandated health |
|
benefits" does not include benefits that are mandated by federal |
|
law or standard provisions or rights required under this code or |
|
other laws of this state to be provided in an individual, blanket, |
|
or group policy for accident and health insurance that are |
|
unrelated to a specific health illness, injury, or condition of an |
|
insured, including provisions related to: |
|
(1) continuation of coverage under: |
|
(A) Subchapters F and G, Chapter 1251; |
|
(B) Section 1201.059; and |
|
(C) Subchapter B, Chapter 1253; |
|
(2) termination of coverage under Sections 1202.051 |
|
and 1501.108; |
|
(3) preexisting conditions under Subchapter D, |
|
Chapter 1201, and Sections 1501.102-1501.105; |
|
(4) coverage of children, including newborn or adopted |
|
children, under: |
|
(A) Subchapter D, Chapter 1251; |
|
(B) Sections 1201.053, 1201.061, |
|
1201.063-1201.065, and Subchapter A, Chapter 1367; |
|
(C) Chapter 1504; |
|
(D) Chapter 1503; |
|
(E) Section 1501.157; |
|
(F) Section 1501.158; and |
|
(G) Sections 1501.607-1501.609; |
|
(5) services of practitioners under: |
|
(A) Subchapters A, B, and C, Chapter 1451; or |
|
(B) Section 1301.052; |
|
(6) supplies and services associated with the |
|
treatment of diabetes under Subchapter B, Chapter 1358; |
|
(7) coverage for serious mental illness under |
|
Subchapter A, Chapter 1355[, if the standard health benefit plan is
|
|
issued to a large employer as defined by Section 1501.002]; |
|
(8) coverage for childhood immunizations and hearing |
|
screening as required by Subchapters B and C, Chapter 1367, other |
|
than Section 1367.053(c) and Chapter 1353; |
|
(9) coverage for reconstructive surgery for certain |
|
craniofacial abnormalities of children as required by Subchapter D, |
|
Chapter 1367; |
|
(10) coverage for the dietary treatment of |
|
phenylketonuria as required by Chapter 1359; |
|
(11) coverage for referral to a non-network physician |
|
or provider when medically necessary covered services are not |
|
available through network physicians or providers, as required by |
|
Section 1271.055; and |
|
(12) coverage for cancer screenings under: |
|
(A) Chapter 1356; |
|
(B) Chapter 1362; [and] |
|
(C) Chapter 1363; and |
|
(D) Chapter 1370. |
|
(b) Section 2, Chapter 577, Acts of the 79th Legislature, |
|
Regular Session, 2005, which amended former Subsection (b), Section |
|
3, Article 3.80, Insurance Code, is repealed. |
|
SECTION 3B.030. (a) Section 1507.053(b), Insurance Code, |
|
is amended to conform to Section 3, Chapter 577, Acts of the 79th |
|
Legislature, Regular Session, 2005, to read as follows: |
|
(b) For purposes of this subchapter, "state-mandated health |
|
benefits" does not include coverage that is mandated by federal law |
|
or standard provisions or rights required under this code or other |
|
laws of this state to be provided in an evidence of coverage that |
|
are unrelated to a specific health illness, injury, or condition of |
|
an enrollee, including provisions related to: |
|
(1) continuation of coverage under Subchapter G, |
|
Chapter 1251; |
|
(2) termination of coverage under Sections 1202.051 |
|
and 1501.108; |
|
(3) preexisting conditions under Subchapter D, |
|
Chapter 1201, and Sections 1501.102-1501.105; |
|
(4) coverage of children, including newborn or adopted |
|
children, under: |
|
(A) Chapter 1504; |
|
(B) Chapter 1503; |
|
(C) Section 1501.157; |
|
(D) Section 1501.158; and |
|
(E) Sections 1501.607-1501.609; |
|
(5) services of providers under Section 843.304; |
|
(6) coverage for serious mental health illness under |
|
Subchapter A, Chapter 1355[, if the standard health benefit plan is
|
|
issued to a large employer as defined by Section 1501.002]; and |
|
(7) coverage for cancer screenings under: |
|
(A) Chapter 1356; |
|
(B) Chapter 1362; [and] |
|
(C) Chapter 1363; and |
|
(D) Chapter 1370. |
|
(b) Section 3, Chapter 577, Acts of the 79th Legislature, |
|
Regular Session, 2005, which amended former Subsection (d), Article |
|
20A.09N, Insurance Code, is repealed. |
|
SECTION 3B.031. Section 1801.002, Insurance Code, is |
|
repealed to conform to Section 5.01(4), Chapter 1227, Acts of the |
|
79th Legislature, Regular Session, 2005. |
|
SECTION 3B.032. (a) Section 1806.101, Insurance Code, is |
|
amended to conform to Section 2, Chapter 631, Acts of the 79th |
|
Legislature, Regular Session, 2005, to read as follows: |
|
Sec. 1806.101. DEFINITIONS. In this subchapter: |
|
(1) "Insurance" includes a suretyship. |
|
(2) "Insurer" means an insurance company or other |
|
legal entity described by Sections 1806.102(a) and (b). |
|
(3) "Policy" includes a bond. |
|
(b) Sections 1806.104(a) and (b), Insurance Code, are |
|
amended to conform to Section 2, Chapter 631, Acts of the 79th |
|
Legislature, Regular Session, 2005, to read as follows: |
|
(a) Except as otherwise provided by this subchapter, an |
|
insurer, an insurer's employee, or a broker or agent may not |
|
knowingly: |
|
(1) issue an insurance policy that is not in |
|
accordance with an applicable filing [that is filed and in effect
|
|
under Chapter 2251 or 2301 or Article 5.13-2]; or |
|
(2) charge, demand, or receive a premium on an |
|
insurance policy that is not in accordance with an applicable |
|
filing [that is filed and in effect under Chapter 2251 or 2301 or
|
|
Article 5.13-2]. |
|
(b) Except as provided in an applicable filing [that is
|
|
filed and in effect under Chapter 2251 or 2301 or Article 5.13-2], |
|
an insurer, an insurer's employee, or a broker or agent may not |
|
directly or indirectly pay, allow, or give, or offer to pay, allow, |
|
or give, as an inducement to insurance, or after insurance has been |
|
written, a rebate, discount, abatement, credit or reduction of the |
|
premium stated in an insurance policy, or a special favor or |
|
advantage in the dividends or other benefits to accrue on the |
|
policy, or any valuable consideration or inducement, not specified |
|
in the policy. |
|
(c) Section 2, Chapter 631, Acts of the 79th Legislature, |
|
Regular Session, 2005, which amended former Subsections (a) and |
|
(d), Article 5.20, Insurance Code, is repealed. |
|
SECTION 3B.033. Section 1806.102, Insurance Code, is |
|
amended to conform to Section 1, Chapter 631, Acts of the 79th |
|
Legislature, Regular Session, 2005, to read as follows: |
|
Sec. 1806.102. APPLICABILITY OF SUBCHAPTER. (a) This |
|
[Except as provided by Subsections (b) and (c), this] subchapter |
|
applies to an insurer, including a corporation, reciprocal or |
|
interinsurance exchange, mutual insurance company, association, |
|
Lloyd's plan, or other organization, writing casualty insurance or |
|
writing fidelity, surety, or guaranty bonds, on risks or operations |
|
in this state. |
|
(b) This subchapter applies [does not apply] to: |
|
(1) a farm mutual insurance company with respect to |
|
each line of insurance that a farm mutual insurance company is |
|
authorized to write under Section 911.151 [or association regulated
|
|
under Chapter 911]; and [or] |
|
(2) a county mutual insurance company with respect to |
|
each line of insurance that a county mutual insurance company is |
|
authorized to write under Section 912.151 [regulated under Chapter
|
|
912]. |
|
(c) Except as otherwise provided by this subchapter, this |
|
[This] subchapter does not apply to the writing of: |
|
(1) automobile insurance; |
|
(2) life, health, or accident insurance; |
|
(3) professional liability insurance; |
|
(4) reinsurance; |
|
(5) aircraft insurance; |
|
(6) fraternal benefit insurance; |
|
(7) fire insurance; |
|
(8) workers' compensation insurance; |
|
(9) marine insurance, including noncommercial inland |
|
marine insurance and ocean marine insurance; |
|
(10) title insurance; |
|
(11) explosion insurance, except insurance against |
|
loss from personal injury or property damage resulting accidentally |
|
from: |
|
(A) a steam boiler; |
|
(B) a heater or pressure vessel; |
|
(C) an electrical device; |
|
(D) an engine; or |
|
(E) all machinery and appliances used in |
|
connection with or in the operation of a boiler, heater, vessel, |
|
electrical device, or engine described by Paragraphs (A)-(D); or |
|
(12) insurance coverage for any of the following |
|
conditions or risks: |
|
(A) weather or climatic conditions, including |
|
lightning, tornado, windstorm, hail, cyclone, rain, or frost and |
|
freeze; |
|
(B) earthquake or volcanic eruption; |
|
(C) smoke or smudge; |
|
(D) excess or deficiency of moisture; |
|
(E) flood; |
|
(F) the rising water of an ocean or an ocean's |
|
tributary; |
|
(G) bombardment, invasion, insurrection, riot, |
|
civil war or commotion, military or usurped power, or any order of a |
|
civil authority made to prevent the spread of a conflagration, |
|
epidemic or catastrophe; |
|
(H) vandalism or malicious mischief; |
|
(I) strike or lockout; |
|
(J) water or other fluid or substance resulting |
|
from: |
|
(i) the breakage or leakage of a sprinkler, |
|
pump, or other apparatus erected for extinguishing fire, or a water |
|
pipe or other conduit or container; or |
|
(ii) casual water entering a building |
|
through a leak or opening in the building or by seepage through |
|
building walls; or |
|
(K) accidental damage to a sprinkler, pump, fire |
|
apparatus, pipe, or other conduit or container described by |
|
Paragraph (J)(i). |
|
SECTION 3B.034. (a) Section 1901.054(b), Insurance Code, |
|
is amended to conform to Section 1, Chapter 1135, Acts of the 79th |
|
Legislature, Regular Session, 2005, to read as follows: |
|
(b) A rate is not excessive unless[:
|
|
[(1)] the rate is unreasonably high for the insurance |
|
coverage provided[; and
|
|
[(2)
a reasonable degree of competition does not exist
|
|
in the area with respect to the classification to which the rate
|
|
applies]. |
|
(b) Section 1901.057, Insurance Code, is amended to conform |
|
to Section 1, Chapter 1135, Acts of the 79th Legislature, Regular |
|
Session, 2005, to read as follows: |
|
Sec. 1901.057. CONSIDERATIONS IN APPROVING RATES. In |
|
approving rates under this chapter, the department [commissioner] |
|
shall consider the impact of risk management courses taken by |
|
physicians and health care providers in this state. |
|
(c) Section 1, Chapter 1135, Acts of the 79th Legislature, |
|
Regular Session, 2005, which amended former Section 3, Article |
|
5.15-1, Insurance Code, is repealed. |
|
SECTION 3B.035. (a) Subchapter B, Chapter 1901, Insurance |
|
Code, is amended by adding Section 1901.0541 to conform to Section |
|
2, Chapter 1135, Acts of the 79th Legislature, Regular Session, |
|
2005, to read as follows: |
|
Sec. 1901.0541. USE IN UNDERWRITING OF CERTAIN INFORMATION |
|
RELATED TO LAWSUITS; REFUND. (a) Notwithstanding any other |
|
provision of this code, an insurer may not consider for the purpose |
|
of setting premiums or reducing a claims-free discount for a |
|
particular insured physician's professional liability insurance a |
|
lawsuit filed against the physician if: |
|
(1) before trial, the lawsuit was dismissed by the |
|
claimant or nonsuited; and |
|
(2) no payment was made to the claimant under a |
|
settlement agreement. |
|
(b) An insurer that, in setting premiums or reducing a |
|
claims-free discount for a physician's professional liability |
|
insurance, considers a lawsuit filed against the physician shall |
|
refund to the physician any increase in premiums paid by the |
|
physician that is attributable to that lawsuit or reinstate the |
|
claims-free discount if the lawsuit is dismissed by the claimant or |
|
nonsuited without payment to the claimant under a settlement |
|
agreement. The insurer shall issue the refund or reinstate the |
|
discount on or before the 30th day after the date the insurer |
|
receives written evidence that the lawsuit was dismissed or |
|
nonsuited without payment to the claimant under a settlement |
|
agreement. |
|
(c) This section does not prohibit an insurer from |
|
considering and using aggregate historical loss and expense |
|
experience applicable generally to a classification of physicians' |
|
professional liability insurance to set rates for that |
|
classification to the extent authorized by Chapter 2251 and Article |
|
5.13-2. Notwithstanding Section 2251.052(c), an insurer may not |
|
assign a physician to a particular classification based on a factor |
|
described by Subsection (a). |
|
(b) Subchapter F, Chapter 1901, Insurance Code, is amended |
|
by adding Section 1901.254 to conform to Section 2, Chapter 1135, |
|
Acts of the 79th Legislature, Regular Session, 2005, to read as |
|
follows: |
|
Sec. 1901.254. PROHIBITION OF USE OF CERTAIN INFORMATION |
|
FOR PHYSICIAN OR HEALTH CARE PROVIDER. (a) For the purpose of |
|
writing professional liability insurance for physicians and health |
|
care providers, an insurer may not consider whether, or the extent |
|
to which, a physician or health care provider provides services in |
|
this state to individuals who are recipients of Medicaid or covered |
|
by the state child health plan program established by Chapter 62, |
|
Health and Safety Code, including any consideration resulting in: |
|
(1) denial of coverage; |
|
(2) refusal to renew coverage; |
|
(3) cancellation of coverage; |
|
(4) limitation of the amount, extent, or kind of |
|
coverage available; or |
|
(5) a determination of the rate or premium to be paid. |
|
(b) The commissioner may adopt rules as necessary to |
|
implement this section. |
|
(c) Section 2, Chapter 1135, Acts of the 79th Legislature, |
|
Regular Session, 2005, which added Sections 12 and 13 to former |
|
Article 5.15-1, Insurance Code, is repealed. |
|
SECTION 3B.036. (a) Subchapter F, Chapter 1901, Insurance |
|
Code, is amended by adding Section 1901.255 to conform to Section 1, |
|
Chapter 184, Acts of the 79th Legislature, Regular Session, 2005, |
|
to read as follows: |
|
Sec. 1901.255. COVERAGE FOR VOLUNTEER HEALTH CARE |
|
PROVIDERS. (a) In this section: |
|
(1) "Charitable organization" has the meaning |
|
assigned by Section 84.003, Civil Practice and Remedies Code. |
|
(2) "Volunteer health care provider" has the meaning |
|
assigned by Section 84.003, Civil Practice and Remedies Code. |
|
(b) An insurer may make available professional liability |
|
insurance covering a volunteer health care provider for an act or |
|
omission resulting in death, damage, or injury to a patient while |
|
the person is acting in the course and scope of the person's duties |
|
as a volunteer health care provider as described by Chapter 84, |
|
Civil Practice and Remedies Code. |
|
(c) This section does not affect the liability of a |
|
volunteer health care provider who is serving as a direct service |
|
volunteer of a charitable organization. Section 84.004(c), Civil |
|
Practice and Remedies Code, applies to the volunteer health care |
|
provider without regard to whether the volunteer health care |
|
provider obtains liability insurance under this section. |
|
(d) An insurer may make professional liability insurance |
|
available under this section to a volunteer health care provider |
|
without regard to whether the volunteer health care provider is a |
|
"health care provider" as defined by Section 1901.001. |
|
(b) Section 1, Chapter 184, Acts of the 79th Legislature, |
|
Regular Session, 2005, which added Section 12 to former Article |
|
5.15-1, Insurance Code, is repealed. |
|
SECTION 3B.037. (a) Section 1952.101(c), Insurance Code, |
|
is amended to conform to Section 3, Chapter 1159, Acts of the 79th |
|
Legislature, Regular Session, 2005, to read as follows: |
|
(c) The coverage required by this subchapter does not apply |
|
if any insured named in the insurance policy rejects the coverage in |
|
writing. Unless the named insured requests in writing the coverage |
|
required by this subchapter, the insurer is not required to provide |
|
that coverage in or supplemental to a reinstated insurance policy |
|
or renewal insurance policy if the named insured rejected the |
|
coverage in connection with that insurance policy or an insurance |
|
policy previously issued to the insured by the same insurer or by an |
|
affiliated insurer. |
|
(b) Section 3, Chapter 1159, Acts of the 79th Legislature, |
|
Regular Session, 2005, which amended former Section (1), Article |
|
5.06-1, Insurance Code, is repealed. |
|
SECTION 3B.038. (a) Section 1952.152(b), Insurance Code, |
|
is amended to conform to Section 4, Chapter 1159, Acts of the 79th |
|
Legislature, Regular Session, 2005, to read as follows: |
|
(b) The coverage required by this subchapter does not apply |
|
if any insured named in the insurance policy rejects the coverage in |
|
writing. Unless the named insured requests in writing the coverage |
|
required by this subchapter, the insurer is not required to provide |
|
that coverage in or supplemental to a reinstated insurance policy |
|
or renewal insurance policy if the named insured rejected the |
|
coverage in connection with that insurance policy or an insurance |
|
policy previously issued to the insured by the same insurer or by an |
|
affiliated insurer. |
|
(b) Section 4, Chapter 1159, Acts of the 79th Legislature, |
|
Regular Session, 2005, which amended former Subsection (a), Article |
|
5.06-3, Insurance Code, is repealed. |
|
SECTION 3B.039. (a) Section 1952.155, Insurance Code, is |
|
amended by amending Subsection (b) and adding Subsection (c) to |
|
conform to Section 2, Chapter 1074, Acts of the 79th Legislature, |
|
Regular Session, 2005, to read as follows: |
|
(b) Except as provided by Subsection (c), an [An] insurer |
|
paying benefits under coverage required by this subchapter does not |
|
have a right of subrogation or claim against any other person or |
|
insurer to recover any benefits by reason of the alleged fault of |
|
the other person in causing or contributing to the accident. |
|
(c) An insurer paying benefits pursuant to this subchapter, |
|
including a county mutual insurance company, shall have a right of |
|
subrogation and a claim against a person causing or contributing to |
|
the accident if, on the date of loss, financial responsibility as |
|
required by Chapter 601, Transportation Code, has not been |
|
established for a motor vehicle involved in the accident and |
|
operated by that person. |
|
(b) Section 2, Chapter 1074, Acts of the 79th Legislature, |
|
Regular Session, 2005, which amended former Article 5.06-3, |
|
Insurance Code, by amending Subsection (c) and adding Subsection |
|
(i), is repealed. |
|
SECTION 3B.040. (a) Section 2006.052, Insurance Code, is |
|
amended to conform to Sections 4 and 6, Chapter 291, Acts of the |
|
79th Legislature, Regular Session, 2005, by amending Subsection (b) |
|
and adding Subsection (c) to read as follows: |
|
(b) This section applies to an insurer that uses a tier |
|
classification or discount program that has a premium consequence |
|
based in whole or in part on claims experience, regardless of |
|
whether any of the policies that continuously covered the |
|
policyholder was a different kind of residential property insurance |
|
policy from the policy eligible for the premium discount. |
|
(c) A residential property insurance claim under this |
|
section does not include a claim: |
|
(1) resulting from a loss caused by natural causes; |
|
(2) that is filed but is not paid or payable under the |
|
policy; or |
|
(3) that an insurer is prohibited from using under |
|
Section 544.353. |
|
(b) Subchapter B, Chapter 2006, Insurance Code, is amended |
|
to conform to Section 4, Chapter 291, Acts of the 79th Legislature, |
|
Regular Session, 2005, by adding Section 2006.0521 to read as |
|
follows: |
|
Sec. 2006.0521. COMPLIANCE WITH OTHER LAW REQUIRED. Any |
|
change in the amount of a premium discount provided under this |
|
subchapter must comply with the requirements of Section 551.107. |
|
(c) Sections 4 and 6, Chapter 291, Acts of the 79th |
|
Legislature, Regular Session, 2005, which amended former Article |
|
5.43, Insurance Code, by amending Subsection (d) and adding |
|
Subsections (a-1) and (f), are repealed. |
|
SECTION 3B.041. (a) Section 2051.151(a), Insurance Code, |
|
is amended to conform to Section 6.062, Chapter 265, Acts of the |
|
79th Legislature, Regular Session, 2005, to read as follows: |
|
(a) Except as otherwise provided by Subsection (b), an |
|
insurance company that writes workers' compensation insurance in |
|
this state shall notify a policyholder of a claim that is filed |
|
against the policyholder's policy and, after the initial notice, |
|
the company shall notify the policyholder of: |
|
(1) any proposal to settle the claim; or |
|
(2) on receipt of a written request from the |
|
policyholder, any administrative or judicial proceeding relating |
|
to the resolution of the claim[, including a benefit review
|
|
conference conducted by the Texas Workers' Compensation
|
|
Commission]. |
|
(b) Section 6.062, Chapter 265, Acts of the 79th |
|
Legislature, Regular Session, 2005, which amended former Section |
|
(a), Article 5.65A, Insurance Code, is repealed. |
|
SECTION 3B.042. (a) Section 2053.001, Insurance Code, is |
|
amended to conform to Section 5.01, Chapter 265, Acts of the 79th |
|
Legislature, Regular Session, 2005, by amending Subdivision (2) and |
|
adding Subdivision (2-a) to read as follows: |
|
(2) "Insurance company" means a person authorized to |
|
engage in the business of workers' compensation insurance in this |
|
state. The term includes: |
|
(A) the Texas Mutual Insurance Company; |
|
(B) a Lloyd's plan under Chapter 941; and |
|
(C) a reciprocal and interinsurance exchange |
|
under Chapter 942. |
|
(2-a) "Premium" means the amount charged for a |
|
workers' compensation insurance policy, including any |
|
endorsements, after the application of individual risk variations |
|
based on loss or expense considerations. |
|
(b) Section 5.01, Chapter 265, Acts of the 79th Legislature, |
|
Regular Session, 2005, which amended former Section 1, Article |
|
5.55, Insurance Code, by amending Subdivision (2) and adding |
|
Subdivision (2-a), is repealed. |
|
SECTION 3B.043. (a) Sections 2053.002(a) and (b), |
|
Insurance Code, are amended to conform to Section 5.02, Chapter |
|
265, Acts of the 79th Legislature, Regular Session, 2005, to read as |
|
follows: |
|
(a) In setting rates, an insurance company shall consider: |
|
(1) past and prospective loss cost experience; |
|
(2) operation expenses; |
|
(3) investment income; |
|
(4) a reasonable margin for profit and contingencies; |
|
[and] |
|
(5) the effect on premiums of individual risk |
|
variations based on loss or expense considerations; and |
|
(6) any other relevant factor. |
|
(b) A rate or premium established under this subchapter may |
|
not be excessive, inadequate, or unfairly discriminatory. |
|
(b) Section 5.02, Chapter 265, Acts of the 79th Legislature, |
|
Regular Session, 2005, which amended former Subsections (b) and |
|
(d), Section 2, Article 5.55, Insurance Code, is repealed. |
|
SECTION 3B.044. Section 2053.007(c), Insurance Code, is |
|
repealed to conform to Section 5.04, Chapter 265, Acts of the 79th |
|
Legislature, Regular Session, 2005. |
|
SECTION 3B.045. (a) Section 2053.010, Insurance Code, is |
|
amended to conform to Section 5.05, Chapter 265, Acts of the 79th |
|
Legislature, Regular Session, 2005, to read as follows: |
|
Sec. 2053.010. PENALTIES [ADMINISTRATIVE PENALTY]. If a |
|
workers' compensation insurance policy is issued and the |
|
commissioner subsequently disapproves the rate or filing on which |
|
the premium is based, the commissioner, after notice and the |
|
opportunity for a hearing, may: |
|
(1) impose sanctions under Chapter 82; |
|
(2) issue a cease and desist order under Chapter 83; |
|
(3) impose administrative penalties under Chapter 84; |
|
or |
|
(4) take any combination of these actions. [(a)
The
|
|
commissioner may assess an administrative penalty against an
|
|
insurance company if the commissioner determines, based on a
|
|
pattern of charges for premiums, that the company is consistently
|
|
overcharging or undercharging the company's policyholders for
|
|
workers'
compensation insurance.
|
|
[(b) An administrative penalty under this section must be:
|
|
[(1)
assessed in accordance with Section 415.021,
|
|
Labor Code; and
|
|
[(2)
set by the commissioner in an amount reasonable
|
|
and necessary to deter overcharging or undercharging of
|
|
policyholders.] |
|
(b) Section 5.05, Chapter 265, Acts of the 79th Legislature, |
|
Regular Session, 2005, which amended former Section 7, Article |
|
5.55, Insurance Code, is repealed. |
|
SECTION 3B.046. (a) Subchapter A, Chapter 2053, Insurance |
|
Code, is amended to conform to Section 5.055, Chapter 265, Acts of |
|
the 79th Legislature, Regular Session, 2005, by adding Section |
|
2053.011 to read as follows: |
|
Sec. 2053.011. EXCLUSIVE JURISDICTION. The department has |
|
exclusive jurisdiction over all rates and premiums subject to this |
|
subchapter. |
|
(b) Section 5.055, Chapter 265, Acts of the 79th |
|
Legislature, Regular Session, 2005, which added Section 8 to former |
|
Article 5.55, Insurance Code, is repealed. |
|
SECTION 3B.047. (a) Subchapter A, Chapter 2053, Insurance |
|
Code, is amended to conform to Section 5.03, Chapter 265, Acts of |
|
the 79th Legislature, Regular Session, 2005, by adding Sections |
|
2053.012 and 2053.013 to read as follows: |
|
Sec. 2053.012. REPORT ON LEGISLATIVE REFORMS REQUIRED. (a) |
|
Not later than December 1 of each even-numbered year, the |
|
commissioner shall report to the governor, lieutenant governor, and |
|
speaker of the house of representatives regarding the impact that |
|
legislation enacted during the regular session of the 79th |
|
Legislature reforming the workers' compensation system of this |
|
state has had on the affordability and availability of workers' |
|
compensation insurance for the employers of this state. The report |
|
must include an analysis of: |
|
(1) the projected workers' compensation premium |
|
savings realized by employers as a result of the reforms; |
|
(2) the impact of the reforms on: |
|
(A) the percentage of employers who provide |
|
workers' compensation insurance coverage for their employees; and |
|
(B) to the extent possible, economic development |
|
and job creation; |
|
(3) the effects of the reforms on market competition |
|
and carrier financial solvency, including an analysis of how |
|
carrier loss ratios, combined ratios, and use of individual risk |
|
variations have changed since implementation of the reforms; and |
|
(4) the extent of participation in workers' |
|
compensation health care networks by small and medium-sized |
|
employers. |
|
(b) If the commissioner determines that workers' |
|
compensation rate filings or premium levels analyzed by the |
|
department do not appropriately reflect the savings associated with |
|
the reforms described by Subsection (a), the commissioner shall |
|
include in the report required under Subsection (a) any |
|
recommendations, including any recommended legislative changes, |
|
necessary to identify the tools needed by the department to more |
|
effectively regulate workers' compensation rates. |
|
(c) At the request of the department, each insurance company |
|
shall submit to the department all data and other information |
|
considered necessary by the commissioner to generate the report |
|
required under Subsection (a). Failure by an insurance company to |
|
submit the data and information in a timely fashion, as determined |
|
by commissioner rule, constitutes grounds for sanctions under |
|
Chapter 82. |
|
Sec. 2053.013. REVIEW OF RATES; CONSIDERATION OF OTHER LAW. |
|
In reviewing rates under this subchapter, the commissioner shall |
|
consider any state or federal legislation that has been enacted and |
|
that may impact rates and premiums for workers' compensation |
|
insurance coverage in this state. |
|
(b) Section 5.03, Chapter 265, Acts of the 79th Legislature, |
|
Regular Session, 2005, which added Subsections (e) through (h) to |
|
former Section 3, Article 5.55, Insurance Code, is repealed. |
|
SECTION 3B.048. (a) Chapter 2053, Insurance Code, is |
|
amended to conform to Section 5.06, Chapter 265, Acts of the 79th |
|
Legislature, Regular Session, 2005, by adding Subchapter A-1 to |
|
read as follows: |
|
SUBCHAPTER A-1. UNDERWRITING GUIDELINES |
|
Sec. 2053.031. DEFINITIONS. In this subchapter: |
|
(1) "Insurance company" has the meaning assigned by |
|
Section 2053.001. |
|
(2) "Underwriting guideline" means a rule, standard, |
|
guideline, or practice, whether written, oral, or electronic, that |
|
is used by an insurance company or its agent to decide whether to |
|
accept or reject an application for coverage under a workers' |
|
compensation insurance policy or to determine how to classify those |
|
risks that are accepted for the purpose of determining a rate. |
|
Sec. 2053.032. UNDERWRITING GUIDELINES. Each underwriting |
|
guideline used by an insurance company in writing workers' |
|
compensation insurance must be sound, actuarially justified, or |
|
otherwise substantially commensurate with the contemplated risk. |
|
An underwriting guideline may not be unfairly discriminatory. |
|
Sec. 2053.033. ENFORCEMENT. This subchapter may be |
|
enforced in the manner provided by Section 38.003(g). |
|
Sec. 2053.034. FILING REQUIREMENTS. Each insurance company |
|
shall file with the department a copy of the insurance company's |
|
underwriting guidelines. The insurance company shall update its |
|
filing each time the underwriting guidelines are changed. If a |
|
group of insurance companies files one set of underwriting |
|
guidelines for the group, the group shall identify which |
|
underwriting guidelines apply to each insurance company in the |
|
group. |
|
Sec. 2053.035. APPLICABILITY OF SECTION 38.003. Section |
|
38.003 applies to this subchapter to the extent consistent with |
|
this subchapter. |
|
(b) Section 5.06, Chapter 265, Acts of the 79th Legislature, |
|
Regular Session, 2005, which added Article 5.55A to former |
|
Subchapter D, Chapter 5, Insurance Code, is repealed. |
|
SECTION 3B.049. (a) Subchapter B, Chapter 2053, Insurance |
|
Code, is amended to conform to Section 5.08, Chapter 265, Acts of |
|
the 79th Legislature, Regular Session, 2005, by adding Section |
|
2053.056 to read as follows: |
|
Sec. 2053.056. RATE HEARINGS. (a) The commissioner shall |
|
conduct a public hearing each biennium, beginning not later than |
|
December 1, 2008, to review rates to be charged for workers' |
|
compensation insurance written in this state. A public hearing |
|
under this section is not a contested case as defined by Section |
|
2001.003, Government Code. |
|
(b) Not later than the 30th day before the date of the public |
|
hearing required under Subsection (a), each insurance company |
|
subject to this subtitle and Article 5.66 shall file the insurance |
|
company's rates, supporting information, and supplementary rating |
|
information with the commissioner. |
|
(c) The commissioner shall review the information submitted |
|
under Subsection (b) to determine the positive or negative impact |
|
of the enactment of workers' compensation reform legislation |
|
enacted by the 79th Legislature, Regular Session, 2005, on workers' |
|
compensation rates and premiums. The commissioner may consider |
|
other factors, including relativities under Section 2053.051, in |
|
determining whether a change in rates has impacted the premium |
|
charged to policyholders. |
|
(d) The commissioner shall implement rules as necessary to |
|
mandate rate reductions or to modify the use of individual risk |
|
variations if the commissioner determines that the rates or |
|
premiums charged by insurance companies do not meet the rating |
|
standards as defined in this code. |
|
(e) The commissioner shall adopt rules as necessary to |
|
mandate rate or premium reductions by insurance companies for the |
|
use of cost-containment strategies that result in savings to the |
|
workers' compensation system, including use of a workers' |
|
compensation health care network health care delivery system, as |
|
described by Chapter 1305. |
|
(b) Section 5.08, Chapter 265, Acts of the 79th Legislature, |
|
Regular Session, 2005, which amended former Article 5.60A, |
|
Insurance Code, is repealed. |
|
SECTION 3B.050. (a) Section 2053.151(b), Insurance Code, |
|
is amended to conform to Section 5.07, Chapter 265, Acts of the 79th |
|
Legislature, Regular Session, 2005, to read as follows: |
|
(b) For purposes of Subsection (a), the commissioner shall |
|
establish standards and procedures for categorizing insurance and |
|
medical benefits required to be reported on each workers' |
|
compensation claim. In establishing the standards, the |
|
commissioner shall consult with the commissioner of workers' |
|
compensation [Texas Workers' Compensation Commission] to ensure |
|
that the data collection methodology will yield data necessary for |
|
research and medical cost containment efforts. |
|
(b) Section 5.07, Chapter 265, Acts of the 79th Legislature, |
|
Regular Session, 2005, which amended former Subsection (b), Article |
|
5.58, Insurance Code, is repealed. |
|
SECTION 3B.051. (a) Section 2054.008(d), Insurance Code, |
|
is amended to conform to Section 6.065, Chapter 265, Acts of the |
|
79th Legislature, Regular Session, 2005, to read as follows: |
|
(d) Except as provided by Subsection (e), a company |
|
investigation file: |
|
(1) is confidential and not subject to required |
|
disclosure under Chapter 552, Government Code; and |
|
(2) may be disclosed only: |
|
(A) in a criminal proceeding; |
|
(B) in a hearing conducted by the division of |
|
workers' compensation of the department [commission]; |
|
(C) on a judicial determination of good cause; or |
|
(D) to a governmental agency, political |
|
subdivision, or regulatory body if the disclosure is necessary or |
|
proper for the enforcement of a law of this state, another state, or |
|
the United States. |
|
(b) Section 6.065, Chapter 265, Acts of the 79th |
|
Legislature, Regular Session, 2005, which amended former |
|
Subsection (a), Section 10, Article 5.76-3, Insurance Code, is |
|
repealed. |
|
SECTION 3B.052. (a) Section 2054.204(a), Insurance Code, |
|
is amended to conform to Section 6.066, Chapter 265, Acts of the |
|
79th Legislature, Regular Session, 2005, to read as follows: |
|
(a) The company shall file annual statements with the |
|
department [and commission] in the same manner as is required of |
|
other workers' compensation insurance companies. |
|
(b) Section 6.066, Chapter 265, Acts of the 79th |
|
Legislature, Regular Session, 2005, which amended former |
|
Subsection (e), Section 12, Article 5.76-3, Insurance Code, is |
|
repealed. |
|
SECTION 3B.053. (a) Section 2054.206, Insurance Code, is |
|
amended to conform to Section 6.067, Chapter 265, Acts of the 79th |
|
Legislature, Regular Session, 2005, to read as follows: |
|
Sec. 2054.206. ADDITIONAL REPORTS. The company shall file |
|
with the department [and the commission] all reports required of |
|
other workers' compensation insurance companies. |
|
(b) Section 6.067, Chapter 265, Acts of the 79th |
|
Legislature, Regular Session, 2005, which amended former |
|
Subsection (b), Section 16, Article 5.76-3, Insurance Code, is |
|
repealed. |
|
SECTION 3B.0531. Section 2054.253(b), Insurance Code, is |
|
amended to conform more closely to the source law from which the |
|
section was derived to read as follows: |
|
(b) The systems may provide for a higher or lower premium |
|
payment by an insured based on[:
|
|
[1] the company's evaluation of the underwriting |
|
characteristics of the individual risk[;] and |
|
[2] the appropriate premium to be charged for the |
|
policy coverages. |
|
SECTION 3B.054. (a) Section 2054.451(b), Insurance Code, |
|
is amended to conform to Section 6.064, Chapter 265, Acts of the |
|
79th Legislature, Regular Session, 2005, to read as follows: |
|
(b) The company shall cooperate with the division of |
|
workers' compensation of the department [commission] to compile and |
|
maintain information necessary to detect practices or patterns of |
|
conduct that violate this code relating to workers' compensation |
|
insurance or that violate Subtitle A, Title 5, Labor Code. |
|
(b) Section 2054.452, Insurance Code, is amended to conform |
|
to Section 6.064, Chapter 265, Acts of the 79th Legislature, |
|
Regular Session, 2005, to read as follows: |
|
Sec. 2054.452. INVESTIGATIONS; COORDINATION [WITH
|
|
COMMISSION]. (a) The company may investigate cases of suspected |
|
fraud and violations of this code relating to workers' compensation |
|
insurance. |
|
(b) The company may: |
|
(1) coordinate the company's investigations with those |
|
conducted by the division of workers' compensation of the |
|
department [commission] to avoid duplication of efforts; and |
|
(2) refer to the division of workers' compensation of |
|
the department [commission] a case that is not otherwise resolved |
|
by the company so that the division [commission] may: |
|
(A) perform any further investigation necessary |
|
under the circumstances; |
|
(B) conduct administrative violation |
|
proceedings; and |
|
(C) assess and collect penalties and |
|
restitution. |
|
(c) Section 2054.454, Insurance Code, is amended to conform |
|
to Section 6.064, Chapter 265, Acts of the 79th Legislature, |
|
Regular Session, 2005, to read as follows: |
|
Sec. 2054.454. DEPOSIT AND USE OF PENALTIES COLLECTED BY |
|
DIVISION [COMMISSION]. A penalty collected under Section |
|
2054.452(b): |
|
(1) must be deposited in the Texas Department of |
|
Insurance operating account [general revenue fund to the credit of
|
|
the commission]; and |
|
(2) may be appropriated only to the division of |
|
workers' compensation of the department [commission] to offset the |
|
costs of the program under Section 2054.451. |
|
(d) Section 6.064, Chapter 265, Acts of the 79th |
|
Legislature, Regular Session, 2005, which amended former |
|
Subsections (a), (b), and (e), Section 9, Article 5.76-3, Insurance |
|
Code, is repealed. |
|
SECTION 3B.055. (a) Section 2054.501, Insurance Code, is |
|
amended to conform to Section 6.063, Chapter 265, Acts of the 79th |
|
Legislature, Regular Session, 2005, to read as follows: |
|
Sec. 2054.501. DEFINITION. In this subchapter, "division" |
|
means the [commission's] division of workers' compensation of the |
|
department [health and safety]. |
|
(b) Section 2054.502, Insurance Code, is amended to conform |
|
to Section 6.063, Chapter 265, Acts of the 79th Legislature, |
|
Regular Session, 2005, to read as follows: |
|
Sec. 2054.502. REQUIREMENTS FOR PREVENTION OF INJURIES. |
|
The company may make and enforce requirements for the prevention of |
|
injuries to an employee of a policyholder or applicant for |
|
insurance under this chapter. On reasonable notice, a policyholder |
|
or applicant shall grant representatives of the company[, the
|
|
commission,] or the department free access to the premises of the |
|
policyholder or applicant during regular working hours for purposes |
|
of this section. |
|
(c) Section 2054.506, Insurance Code, is amended to conform |
|
to Section 6.063, Chapter 265, Acts of the 79th Legislature, |
|
Regular Session, 2005, to read as follows: |
|
Sec. 2054.506. SAFETY CONSULTANT REPORT. A safety |
|
consultant acting under this subchapter shall file a written report |
|
with the division [commission] and the policyholder specifying any |
|
hazardous condition or practice identified in the safety |
|
consultation. |
|
(d) Section 2054.509, Insurance Code, is amended to conform |
|
to Section 6.063, Chapter 265, Acts of the 79th Legislature, |
|
Regular Session, 2005, to read as follows: |
|
Sec. 2054.509. FOLLOW-UP INSPECTION. (a) Not earlier than |
|
the 90th day after or later than the sixth month after the date an |
|
accident prevention plan is developed under Section 2054.507, the |
|
division shall conduct a follow-up inspection of the policyholder's |
|
premises in accordance with rules adopted by the commissioner of |
|
workers' compensation [commission]. |
|
(b) The division [commission] may require the participation |
|
of the safety consultant who performed the initial consultation and |
|
developed the accident prevention plan. |
|
(c) If the commissioner of workers' compensation [division] |
|
determines that a policyholder has complied with the terms of the |
|
accident prevention plan or has implemented other accepted |
|
corrective measures, the commissioner of workers' compensation |
|
[division] shall certify that determination. |
|
(d) If the commissioner of workers' compensation [division] |
|
determines that a policyholder has failed or refuses to implement |
|
the accident prevention plan or other suitable hazard abatement |
|
measures, the policyholder may elect to cancel coverage not later |
|
than the 30th day after the date of the determination. |
|
(e) Sections 2054.510(a), (c), and (d), Insurance Code, are |
|
amended to conform to Section 6.063, Chapter 265, Acts of the 79th |
|
Legislature, Regular Session, 2005, to read as follows: |
|
(a) If a policyholder described by Section 2054.509(d) does |
|
not elect to cancel coverage as provided by that section: |
|
(1) the company may cancel the coverage; or |
|
(2) the commissioner of workers' compensation |
|
[commission] may impose an administrative penalty on the |
|
policyholder. |
|
(c) In imposing an administrative penalty, the commissioner |
|
of workers' compensation [commission] may consider any matter that |
|
justice may require and shall consider: |
|
(1) the seriousness of the violation, including the |
|
nature, circumstances, consequences, extent, and gravity of the |
|
prohibited act; |
|
(2) the history and extent of previous administrative |
|
violations; |
|
(3) the demonstrated good faith of the violator, |
|
including actions taken to rectify the consequences of the |
|
prohibited act; |
|
(4) any economic benefit resulting from the prohibited |
|
act; and |
|
(5) the penalty necessary to deter future violations. |
|
(d) A penalty collected under this section [must be]: |
|
(1) must be deposited in the general revenue fund [to
|
|
the credit of the commission]; and [or] |
|
(2) may be appropriated [reappropriated] to the |
|
division [commission] to offset the costs of implementing and |
|
administering this subchapter. |
|
(f) Section 2054.512, Insurance Code, is amended to conform |
|
to Section 6.063, Chapter 265, Acts of the 79th Legislature, |
|
Regular Session, 2005, to read as follows: |
|
Sec. 2054.512. FEES FOR SERVICES. The division |
|
[commission] shall: |
|
(1) charge a policyholder for the reasonable cost of |
|
services provided to the policyholder under Sections 2054.505, |
|
2054.506, 2054.507, 2054.509, and 2054.510(a); and |
|
(2) set the fees for the services at a |
|
cost-reimbursement level, including a reasonable allocation of the |
|
division's [commission's] administrative costs. |
|
(g) Section 2054.513, Insurance Code, is amended to conform |
|
to Section 6.063, Chapter 265, Acts of the 79th Legislature, |
|
Regular Session, 2005, to read as follows: |
|
Sec. 2054.513. ENFORCEMENT OF SUBCHAPTER. The [compliance
|
|
and practices] division [of the commission] shall enforce |
|
compliance with this subchapter through the administrative |
|
violation proceedings under Chapter 415, Labor Code. |
|
(h) Section 6.063, Chapter 265, Acts of the 79th |
|
Legislature, Regular Session, 2005, which amended former |
|
Subsections (a), (e), (g), (h), (i), (k), and (l), Section 8, |
|
Article 5.76-3, Insurance Code, is repealed. |
|
SECTION 3B.056. Section 2054.001(2), Insurance Code, is |
|
repealed to conform to Section 7.01, Chapter 265, Acts of the 79th |
|
Legislature, Regular Session, 2005. |
|
SECTION 3B.057. Section 6.068, Chapter 265, Acts of the |
|
79th Legislature, Regular Session, 2005, which amended former |
|
Subsections (a) and (c), Section 10, Article 5.76-5, Insurance |
|
Code, is repealed. |
|
SECTION 3B.058. Section 2151.154, Insurance Code, is |
|
amended to conform more closely to the source law from which the |
|
section was derived to read as follows: |
|
Sec. 2151.154. ASSIGNMENT DISTRIBUTION PLAN. (a) The |
|
plan of operation must include a voluntary, competitive limited |
|
assignment distribution plan that allows an authorized insurer to |
|
contract directly with a servicing carrier [insurer] to accept |
|
assignments to the servicing carrier [insurer] by the association. |
|
(b) A servicing carrier [insurer] must be authorized to |
|
write automobile insurance in this state and must: |
|
(1) have written automobile liability insurance in |
|
this state for at least five years; or |
|
(2) be currently engaged as a servicing carrier |
|
[insurer] for assigned risk automobile business in at least one |
|
other state. |
|
(c) After notice and hearing, the commissioner may prohibit |
|
an insurer from acting as a servicing carrier [insurer]. |
|
(d) An authorized insurer and a servicing carrier [insurer] |
|
shall determine through negotiation the terms of a contract |
|
described by this section, including the buy-out fee. |
|
(e) The governing committee may: |
|
(1) adopt reasonable rules for the conduct of business |
|
under a contract described by this section; and |
|
(2) establish reasonable standards of eligibility for |
|
servicing carriers [insurers]. |
|
SECTION 3B.059. (a) Section 2154.005(a), Insurance Code, |
|
is amended to conform to Section 1, Chapter 217, Acts of the 79th |
|
Legislature, Regular Session, 2005, to read as follows: |
|
(a) The fund is an account in a depository selected by the |
|
board of regents of The Texas A&M University System in the manner |
|
provided by Section 51.003, Education Code, for funds subject to |
|
the control of institutions of higher education under Section |
|
51.002, Education Code [the general revenue fund]. |
|
(b) Section 1, Chapter 217, Acts of the 79th Legislature, |
|
Regular Session, 2005, which amended former Subsections (a) and |
|
(c), Section 5, Article 21.61, Insurance Code, is repealed. |
|
SECTION 3B.0591. (a) The following changes are made to |
|
Subtitle A, Title 5, Labor Code, and Subtitle E, Title 10, Insurance |
|
Code, for organizational purposes: |
|
(1) Chapter 406A, Labor Code, is redesignated as |
|
Chapter 2055, Subtitle E, Title 10, Insurance Code; and |
|
(2) Sections 406A.001, 406A.002, 406A.003, 406A.004, |
|
406A.005, 406A.006, 406A.007, and 406A.008 in the redesignated |
|
chapter are redesignated as Sections 2055.001, 2055.002, 2055.003, |
|
2055.004, 2055.005, 2055.006, 2055.007, and 2055.008, Insurance |
|
Code, respectively. |
|
(b) Section 406A.001, Labor Code, redesignated as Section |
|
2055.001, Insurance Code, by Subsection (a)(2) of this section, is |
|
amended to conform to that redesignation to read as follows: |
|
Sec. 2055.001 [406A.001]. DEFINITION [DEFINITIONS]. In |
|
this chapter, "business[:
|
|
[(1) "Business] entity" means a business enterprise |
|
owned by a single person or a corporation, organization, business |
|
trust, trust, partnership, joint venture, association, or other |
|
business entity. |
|
[(2)
"Commissioner" means the commissioner of
|
|
insurance.
|
|
[(3)
"Department" means the Texas Department of
|
|
Insurance.] |
|
(c) Section 406A.008, Labor Code, redesignated as Section |
|
2055.008, Insurance Code, by Subsection (a)(2) of this section, is |
|
amended to conform to that redesignation to read as follows: |
|
Sec. 2055.008 [406A.008]. APPLICABILITY OF OTHER LAW. (a) |
|
A group established under this chapter is entitled to any deviation |
|
applicable under Section 2052.004, 2053.051, or 2053.052(a) or |
|
(b)[, Insurance Code]. |
|
(b) A member of a group is not subject to the discounts and |
|
surcharges established under Subchapter F, Chapter 2053[,
|
|
Insurance Code]. |
|
(d) Section 36.002, Insurance Code, is amended to conform to |
|
the redesignation of Chapter 406A, Labor Code, as Chapter 2055, |
|
Insurance Code, by Subsection (a)(1) of this section to read as |
|
follows: |
|
Sec. 36.002. ADDITIONAL RULEMAKING AUTHORITY. The |
|
commissioner may adopt reasonable rules that are: |
|
(1) necessary to effect the purposes of a provision |
|
of: |
|
(A) Subchapter B, Chapter 5; |
|
(B) Subchapter C, Chapter 1806; |
|
(C) Subchapter A, Chapter 2301; |
|
(D) Chapter 251, as that chapter relates to |
|
casualty insurance and fidelity, guaranty, and surety bond |
|
insurance; |
|
(E) Chapter 253; |
|
(F) Chapter 2251 or 2252; or |
|
(G) Subtitle B, Title 10; or |
|
(2) appropriate to accomplish the purposes of a |
|
provision of: |
|
(A) Section 37.051(a), 403.002, 492.051(b) or |
|
(c), 501.159, 941.003(b)(3) or (c), or 942.003(b)(3) or (c); |
|
(B) Subchapter H, Chapter 544; |
|
(C) Chapter 251, as that chapter relates to: |
|
(i) automobile insurance; |
|
(ii) casualty insurance and fidelity, |
|
guaranty, and surety bond insurance; |
|
(iii) fire insurance and allied lines; |
|
(iv) workers' compensation insurance; or |
|
(v) aircraft insurance; |
|
(D) Chapter 5, 252, 253, 254, 255, 256, 426, 493, |
|
494, 1804, 1805, 1806, or 2171; |
|
(E) Subtitle B, C, D, E, F, H, or I, Title 10; |
|
(F) Section 417.008, Government Code; or |
|
(G) [Chapter 406A, Labor Code; or
|
|
[(H)] Chapter 2154, Occupations Code. |
|
(e) Section 1805.001, Insurance Code, is amended to conform |
|
to the redesignation of Chapter 406A, Labor Code, as Chapter 2055, |
|
Insurance Code, by Subsection (a)(1) of this section to read as |
|
follows: |
|
Sec. 1805.001. APPLICABILITY OF CHAPTER. This chapter |
|
applies to the kinds of insurance and insurers subject to: |
|
(1) Section 403.002; |
|
(2) Section 941.003 with respect to the application of |
|
a law described by Section 941.003(b)(3) or (c); |
|
(3) Section 942.003 with respect to the application of |
|
a law described by Section 942.003(b)(3) or (c); |
|
(4) Subchapter A, B, C, or D, Chapter 5; |
|
(5) Subchapter H, Chapter 544; |
|
(6) Subchapter A, Chapter 2301; |
|
(7) Chapter 252, 253, 254, 255, 426, 1806, 1807, 2001, |
|
2002, 2003, 2004, 2005, 2006, 2051, 2052, 2053, 2055, 2171, 2251, or |
|
2252; |
|
(8) Subtitle B or C, Title 10; or |
|
(9) [Chapter 406A, Labor Code; or
|
|
[(10)] Chapter 2154, Occupations Code. |
|
(f) Section 2051.002, Insurance Code, is amended to conform |
|
to the redesignation of Chapter 406A, Labor Code, as Chapter 2055, |
|
Insurance Code, by Subsection (a)(1) of this section to read as |
|
follows: |
|
Sec. 2051.002. CONSTRUCTION OF CERTAIN LAWS. The following |
|
shall be construed and applied independently of any other law that |
|
relates to insurance rates and forms or prescribes the duties of the |
|
commissioner or the department: |
|
(1) this chapter; |
|
(2) Subchapter D, Chapter 5; |
|
(3) Chapter 251, as that chapter relates to workers' |
|
compensation insurance; and |
|
(4) Chapters 255, 426, 2052, [and] 2053, and 2055[;
|
|
and
|
|
[(5) Chapter 406A, Labor Code]. |
|
SECTION 3B.060. (a) Subchapter C, Chapter 2203, Insurance |
|
Code, is amended to conform to Section 1, Chapter 246, Acts of the |
|
79th Legislature, Regular Session, 2005, and Section 2, Chapter |
|
1136, Acts of the 79th Legislature, Regular Session, 2005, by |
|
adding Section 2203.1021 to read as follows: |
|
Sec. 2203.1021. VOLUNTEER HEALTH CARE PROVIDERS. (a) In |
|
this section: |
|
(1) "Charitable organization" has the meaning |
|
assigned by Section 84.003, Civil Practice and Remedies Code. |
|
(2) "Volunteer health care provider" has the meaning |
|
assigned by Section 84.003, Civil Practice and Remedies Code. |
|
(b) The association shall make available medical liability |
|
insurance or appropriate health care liability insurance covering a |
|
volunteer health care provider for the legal liability of the |
|
person against any loss, damage, or expense incident to a claim |
|
arising out of the death or injury of any person as the result of |
|
negligence in rendering or the failure to render professional |
|
service while acting in the course and scope of the person's duties |
|
as a volunteer health care provider as described by Chapter 84, |
|
Civil Practice and Remedies Code. |
|
(c) A volunteer health care provider who is serving as a |
|
direct service volunteer of a charitable organization is eligible |
|
to obtain from the association the liability insurance made |
|
available under this section. A volunteer health care provider who |
|
obtains coverage under this section is subject to Section 2203.302 |
|
and the other provisions of this chapter in the same manner as |
|
physicians who are eligible to obtain medical liability insurance |
|
from the association. |
|
(d) This section does not affect the liability of a |
|
volunteer health care provider who is serving as a direct service |
|
volunteer of a charitable organization. Section 84.004(c), Civil |
|
Practice and Remedies Code, applies to the volunteer health care |
|
provider without regard to whether the volunteer health care |
|
provider obtains liability insurance under this section. |
|
(b) Section 1, Chapter 246, Acts of the 79th Legislature, |
|
Regular Session, 2005, and Section 2, Chapter 1136, Acts of the 79th |
|
Legislature, Regular Session, 2005, which added Section 3C to |
|
former Article 21.49-3, Insurance Code, are repealed. |
|
SECTION 3B.061. (a) Sections 2210.004(a) and (g), |
|
Insurance Code, are amended to conform to Section 1, Chapter 1153, |
|
Acts of the 79th Legislature, Regular Session, 2005, to read as |
|
follows: |
|
(a) For purposes of this chapter and subject to this |
|
section, "insurable property" means immovable property at a fixed |
|
location in a catastrophe area or corporeal movable property |
|
located in that immovable property, as designated in the plan of |
|
operation, that is determined by the association according to the |
|
criteria specified in the plan of operation to be in an insurable |
|
condition against windstorm and hail or fire and explosion, as |
|
appropriate, as determined by normal underwriting standards. The |
|
term includes property described by Section 2210.209. |
|
(g) For purposes of this chapter, a residential structure is |
|
insurable property if: |
|
(1) the residential structure is not: |
|
(A) a condominium, apartment, duplex, or other |
|
multifamily residence; or |
|
(B) a hotel or resort facility; |
|
(2) the residential structure is located within an |
|
area designated as a unit under the Coastal Barrier Resources Act |
|
(Pub. L. No. 97-348); and |
|
(3) a building permit or plat for the residential |
|
structure was filed with the municipality, the county, or the |
|
United States Army Corps of Engineers before June 11, 2003 [January
|
|
1, 2004]. |
|
(b) Section 1, Chapter 1153, Acts of the 79th Legislature, |
|
Regular Session, 2005, which amended former Subsection (f), Section |
|
3, Article 21.49, Insurance Code, is repealed. |
|
SECTION 3B.062. (a) Subchapter E, Chapter 2210, Insurance |
|
Code, is amended to conform to Section 2, Chapter 1153, Acts of the |
|
79th Legislature, Regular Session, 2005, by adding Section 2210.209 |
|
to read as follows: |
|
Sec. 2210.209. WINDSTORM AND HAIL INSURANCE: COVERAGE FOR |
|
CERTAIN PROPERTY LOCATED OVER WATER. (a) A windstorm and hail |
|
insurance policy issued by the association may include coverage |
|
for: |
|
(1) a building or other structure located in the |
|
seacoast territory that is built wholly or partially over water; |
|
and |
|
(2) the corporeal movable property contained in a |
|
building or structure described by Subdivision (1). |
|
(b) The association may impose appropriate limits of |
|
coverage and deductibles for coverage described by Subsection (a). |
|
(c) The board of directors of the association shall submit |
|
any proposed changes to the plan of operation necessary to |
|
implement Subsections (a) and (b) to the commissioner in the manner |
|
provided by Section 2210.153. |
|
(d) The commissioner shall adopt rules as necessary to |
|
implement this section, including any rules necessary to implement |
|
changes in the plan of operation proposed under Subsection (c). |
|
(b) Section 2, Chapter 1153, Acts of the 79th Legislature, |
|
Regular Session, 2005, which added Section 3A to former Article |
|
21.49, Insurance Code, is repealed. |
|
SECTION 3B.063. (a) Section 2210.006(b), Insurance Code, |
|
is amended to conform to Section 1, Chapter 1251, Acts of the 79th |
|
Legislature, Regular Session, 2005, to read as follows: |
|
(b) This chapter does not apply to: |
|
(1) a farm mutual insurance company operating under |
|
Chapter 911; |
|
(2) a nonaffiliated county mutual fire insurance |
|
company described by Section 912.310 that is writing exclusively |
|
industrial fire insurance policies as described by Section |
|
912.310(a)(2); or |
|
(3) a mutual insurance company or a statewide mutual |
|
assessment company engaged in business under Chapter 12 or 13, |
|
Title 78, Revised Statutes, respectively, before those chapters' |
|
repeal by Section 18, Chapter 40, Acts of the 41st Legislature, 1st |
|
Called Session, 1929, as amended by Section 1, Chapter 60, General |
|
Laws, Acts of the 41st Legislature, 2nd Called Session, 1929, that |
|
retains the rights and privileges under the repealed law to the |
|
extent provided by those sections. |
|
(b) Section 1, Chapter 1251, Acts of the 79th Legislature, |
|
Regular Session, 2005, which amended former Subsection (k), Section |
|
3, Article 21.49, Insurance Code, is repealed. |
|
SECTION 3B.0631. Section 2210.359(a), Insurance Code, is |
|
amended to conform more closely to the source law from which it was |
|
derived to read as follows: |
|
(a) Except as otherwise provided by this subsection, a [A] |
|
rate approved by the commissioner under this subchapter may not |
|
reflect an average rate change that is more than 10 percent higher |
|
or lower than the rate for commercial windstorm and hail insurance |
|
or 10 percent higher or lower than the rate for noncommercial |
|
windstorm and hail insurance in effect on the date the filing is |
|
made. The rate may not reflect a rate change for an individual |
|
rating class that is 15 percent higher or lower than the rate for |
|
that individual rating class in effect on the date the filing is |
|
made. This subsection does not apply to a rate filed under Sections |
|
2210.351(a)-(d). |
|
SECTION 3B.064. Subchapter I, Chapter 2210, Insurance Code, |
|
is repealed to conform to Section 1, Chapter 222, Acts of the 79th |
|
Legislature, Regular Session, 2005. |
|
SECTION 3B.065. (a) Section 2211.051, Insurance Code, is |
|
amended to conform to Section 1, Chapter 1082, Acts of the 79th |
|
Legislature, Regular Session, 2005, to read as follows: |
|
Sec. 2211.051. ESTABLISHMENT OF FAIR PLAN. The |
|
commissioner may establish a Fair Access to Insurance Requirements |
|
Plan to deliver residential property insurance to residents of this |
|
state in underserved areas if the commissioner determines, after a |
|
public hearing, that: |
|
(1) in all or any part of the state, residential |
|
property insurance is not reasonably available in the voluntary |
|
market to a substantial number of insurable risks; or [and] |
|
(2) at least 25 percent of the applicants to the |
|
residential property market assistance program who are qualified |
|
under that program's plan of operation have not been placed with an |
|
insurer in the preceding six months. |
|
(b) Section 2211.052, Insurance Code, is amended to conform |
|
to Section 2, Chapter 1082, Acts of the 79th Legislature, Regular |
|
Session, 2005, by amending Subsections (b) and (d) and adding |
|
Subsection (e) to read as follows: |
|
(b) The governing committee is composed of 11 members |
|
appointed by the commissioner as follows: |
|
(1) five members who represent the interests of |
|
insurers; |
|
(2) four public members who reside in this state; and |
|
(3) two members who are general property and casualty |
|
agents. |
|
(d) Each member of the governing committee who represents |
|
the interests of insurers must be a full-time employee of an insurer |
|
that is a member of the association. |
|
(e) The commissioner may remove a member of the governing |
|
committee without cause and may replace the member in accordance |
|
with Subsection (b). |
|
(c) Subchapter B, Chapter 2211, Insurance Code, is amended |
|
to conform to Section 2, Chapter 1082, Acts of the 79th Legislature, |
|
Regular Session, 2005, by adding Section 2211.0521 to read as |
|
follows: |
|
Sec. 2211.0521. MEETINGS OF GOVERNING BODY. (a) |
|
Notwithstanding Chapter 551, Government Code, or any other law, |
|
members of the governing committee may meet by telephone conference |
|
call, video conference, or other similar telecommunication method. |
|
The governing committee may use telephone conference call, video |
|
conference, or other similar telecommunication method for purposes |
|
of establishing a quorum or voting or for any other meeting purpose |
|
in accordance with this subsection and Subsection (b). This |
|
subsection applies without regard to the subject matter discussed |
|
or considered by the members of the governing committee at the |
|
meeting. |
|
(b) A meeting held by telephone conference call, video |
|
conference, or other similar telecommunication method: |
|
(1) is subject to the notice requirements applicable |
|
to other meetings of the governing committee; |
|
(2) may not be held unless notice of the meeting |
|
specifies the location of the meeting at which at least one member |
|
of the governing committee is physically present; |
|
(3) must be audible to the public at the location |
|
specified in the notice under Subdivision (2); and |
|
(4) must provide two-way audio communication between |
|
all members of the governing committee attending the meeting during |
|
the entire meeting, and if the two-way audio communication link |
|
with members attending the meeting is disrupted so that a quorum of |
|
the governing committee is no longer participating in the meeting, |
|
the meeting may not continue until the two-way audio communication |
|
link is reestablished. |
|
(d) Sections 2211.101(b) and (c), Insurance Code, are |
|
amended to conform to Sections 1, 2, and 3, Chapter 1082, Acts of |
|
the 79th Legislature, Regular Session, 2005, to read as follows: |
|
(b) Except as provided by this subsection, each [Each] |
|
insurer, as a condition of the insurer's authority to engage in the |
|
business of residential property insurance in this state, shall |
|
participate in the association in accordance with this chapter, |
|
including participating in the association's assessments |
|
[writings, expenses, and losses] in the proportion that the |
|
insurer's net direct premiums written in this state during the |
|
preceding calendar year bear to the aggregate net direct premiums |
|
written in this state by all participating insurers. The Texas |
|
Windstorm Insurance Association established by Chapter 2210 may not |
|
participate in the association for any purpose. |
|
(c) An insurer's participation under Subsection (b) in the |
|
association's assessments [writings, expenses, and losses] must be |
|
determined in accordance with the residential property statistical |
|
plan adopted by the commissioner. |
|
(e) The following are repealed: |
|
(1) Section 1, Chapter 1082, Acts of the 79th |
|
Legislature, Regular Session, 2005, which amended former |
|
Subsections (a) and (b), Section 1, Article 21.49A, Insurance Code; |
|
(2) Section 2, Chapter 1082, Acts of the 79th |
|
Legislature, Regular Session, 2005, which amended former Section 3, |
|
Article 21.49A, Insurance Code, by amending Subsections (b), (d), |
|
and (e) and adding Subsections (f) and (g); and |
|
(3) Section 3, Chapter 1082, Acts of the 79th |
|
Legislature, Regular Session, 2005, which amended former |
|
Subsection (d), Section 5, Article 21.49A, Insurance Code. |
|
SECTION 3B.066. (a) Section 2211.104, Insurance Code, is |
|
amended to conform to Section 4, Chapter 1082, Acts of the 79th |
|
Legislature, Regular Session, 2005, by amending Subsections (b), |
|
(c), and (d) and adding Subsection (e) to read as follows: |
|
(b) As reimbursement for assessments paid under this |
|
section or service fees paid under Section 2211.209, each [If the
|
|
association assesses participating insurers under this section,
|
|
each] insurer may charge a premium surcharge on every property |
|
insurance policy insuring property in this state that the insurer |
|
issues, the effective date of which is within the three-year period |
|
beginning on the 90th day after the date of the assessment or the |
|
90th day after the date the service fee under Section 2211.209 is |
|
paid, as applicable. |
|
(c) The insurer shall compute the amount of the surcharge |
|
under Subsection (b) as a uniform percentage of the premium on each |
|
policy described by Subsection (b). The percentage must be equal to |
|
one-third of the ratio of the amount of the participating insurer's |
|
assessment or service fee payment to the amount of the insurer's |
|
direct earned premiums, as reported to the department in the |
|
insurer's financial statement for the calendar year preceding the |
|
year in which the assessment or service fee payment is made so that, |
|
over the three-year period, the aggregate of all surcharges by the |
|
insurer under this section is at least equal to [equals] the amount |
|
of the assessment or service fee payment. |
|
(d) The amount of any assessment paid and surcharged under |
|
this section may be carried by the insurer as an admitted asset of |
|
the insurer for all purposes, including exhibition in annual |
|
statements under Section 862.001, until collected [The minimum
|
|
surcharge on a policy may be $1.
A surcharge may be rounded to the
|
|
nearest dollar]. |
|
(e) The commissioner shall adopt rules and procedures as |
|
necessary to implement this section. |
|
(b) Section 4, Chapter 1082, Acts of the 79th Legislature, |
|
Regular Session, 2005, which amended former Section 11, Article |
|
21.49A, Insurance Code, is repealed. |
|
SECTION 3B.067. (a) Subchapter B, Chapter 2211, Insurance |
|
Code, is amended to conform to Section 5, Chapter 1082, Acts of the |
|
79th Legislature, Regular Session, 2005, by adding Section 2211.059 |
|
to read as follows: |
|
Sec. 2211.059. ASSETS OF ASSOCIATION. On dissolution of |
|
the association, all assets of the association shall be deposited |
|
in the general revenue fund. |
|
(b) Section 5, Chapter 1082, Acts of the 79th Legislature, |
|
Regular Session, 2005, which added Section 16 to former Article |
|
21.49A, Insurance Code, is repealed. |
|
SECTION 3B.068. (a) Subchapter D, Chapter 2211, Insurance |
|
Code, is amended to conform to Section 3, Chapter 1153, Acts of the |
|
79th Legislature, Regular Session, 2005, by adding Section 2211.157 |
|
to read as follows: |
|
Sec. 2211.157. COVERAGE FOR CERTAIN WINDSTORM AND HAIL |
|
DAMAGE; COVERAGE FOR CERTAIN PROPERTY LOCATED OVER WATER. (a) A |
|
policy issued by the association may include coverage against loss |
|
or damage by windstorm or hail for: |
|
(1) a building or other structure that is built wholly |
|
or partially over water; and |
|
(2) the corporeal movable property contained in a |
|
building or structure described by Subdivision (1). |
|
(b) The association may impose appropriate limits of |
|
coverage and deductibles for coverage described by Subsection (a). |
|
(c) The governing committee of the association shall submit |
|
any proposed changes to the plan of operation necessary to |
|
implement Subsections (a) and (b) to the commissioner for the |
|
approval of the commissioner in the manner provided by Section |
|
2211.053. |
|
(d) The commissioner shall adopt rules as necessary to |
|
implement this section, including any rules necessary to implement |
|
changes in the plan of operation proposed under Subsections (a) and |
|
(b). |
|
(b) Section 3, Chapter 1153, Acts of the 79th Legislature, |
|
Regular Session, 2005, which added Section 5A to former Article |
|
21.49A, Insurance Code, is repealed. |
|
SECTION 3B.069. (a) Section 2212.001, Insurance Code, is |
|
amended to conform to Section 2, Chapter 184, Acts of the 79th |
|
Legislature, Regular Session, 2005; Section 2, Chapter 246, Acts of |
|
the 79th Legislature, Regular Session, 2005; and Section 3, Chapter |
|
1136, Acts of the 79th Legislature, Regular Session, 2005, to read |
|
as follows: |
|
Sec. 2212.001. DEFINITIONS. In this chapter: |
|
(1) "Charitable organization" has the meaning |
|
assigned by Section 84.003, Civil Practice and Remedies Code. |
|
(2) "Dentist" means a person licensed to practice |
|
dentistry in this state. |
|
(3) [(2)] "Health care liability claim" means a cause |
|
of action against a physician or dentist for treatment, lack of |
|
treatment, or other claimed departure from accepted standards of |
|
health care or safety that proximately results in injury to or death |
|
of the patient, whether the patient's claim or cause of action |
|
sounds in tort or contract. |
|
(4) [(3)] "Physician" means a person licensed to |
|
practice medicine in this state. |
|
(5) [(4)] "Trust" means a self-insurance trust |
|
organized and operated under this chapter. |
|
(6) "Volunteer health care provider" has the meaning |
|
assigned by Section 84.003, Civil Practice and Remedies Code. |
|
(b) Section 2, Chapter 184, Acts of the 79th Legislature, |
|
Regular Session, 2005; Section 2, Chapter 246, Acts of the 79th |
|
Legislature, Regular Session, 2005; and Section 3, Chapter 1136, |
|
Acts of the 79th Legislature, Regular Session, 2005, all of which |
|
added Subdivisions (4) and (5) to former Subsection (a), Article |
|
21.49-4, Insurance Code, are repealed. |
|
SECTION 3B.070. (a) Subchapter C, Chapter 2212, Insurance |
|
Code, is amended to conform to Section 3, Chapter 184, Acts of the |
|
79th Legislature, Regular Session, 2005; Section 3, Chapter 246, |
|
Acts of the 79th Legislature, Regular Session, 2005; and Section 4, |
|
Chapter 1136, Acts of the 79th Legislature, Regular Session, 2005, |
|
by adding Section 2212.102 to read as follows: |
|
Sec. 2212.102. COVERAGE FOR VOLUNTEER HEALTH CARE |
|
PROVIDERS. (a) The trust, in accordance with Section 2212.054, may |
|
make available professional liability insurance covering a |
|
volunteer health care provider for an act or omission resulting in |
|
death, damage, or injury to a patient while the person is acting in |
|
the course and scope of the person's duties as a volunteer health |
|
care provider as described by Chapter 84, Civil Practice and |
|
Remedies Code. |
|
(b) This section does not affect the liability of a |
|
volunteer health care provider who is serving as a direct service |
|
volunteer of a charitable organization. Section 84.004(c), Civil |
|
Practice and Remedies Code, applies to the volunteer health care |
|
provider without regard to whether the volunteer health care |
|
provider obtains liability insurance under this section. |
|
(c) The trust may make professional liability insurance |
|
available under this section to a volunteer health care provider |
|
without regard to whether the volunteer health care provider is a |
|
physician or dentist. |
|
(b) Section 3, Chapter 184, Acts of the 79th Legislature, |
|
Regular Session, 2005; Section 3, Chapter 246, Acts of the 79th |
|
Legislature, Regular Session, 2005; and Section 4, Chapter 1136, |
|
Acts of the 79th Legislature, Regular Session, 2005, all of which |
|
added Subsection (c-1) to former Article 21.49-4, Insurance Code, |
|
are repealed. |
|
SECTION 3B.071. (a) Section 2251.003(b), Insurance Code, |
|
is amended to conform to Section 1, Chapter 70, Acts of the 79th |
|
Legislature, Regular Session, 2005; Section 1, Chapter 71, Acts of |
|
the 79th Legislature, Regular Session, 2005; and Section 4, Chapter |
|
102, Acts of the 79th Legislature, Regular Session, 2005, to read as |
|
follows: |
|
(b) This subchapter and Subchapters B, C, D, and E apply to |
|
all lines of the following kinds of insurance written under an |
|
insurance policy or contract issued by an insurer authorized to |
|
engage in the business of insurance in this state: |
|
(1) general liability insurance; |
|
(2) residential and commercial property insurance, |
|
including farm and ranch insurance and farm and ranch owners |
|
insurance; |
|
(3) personal and commercial casualty insurance, |
|
except as provided by Section 2251.004; |
|
(4) medical professional liability insurance; |
|
(5) fidelity, guaranty, and surety bonds other than |
|
criminal court appearance bonds; |
|
(6) personal umbrella insurance; |
|
(7) personal liability insurance; |
|
(8) guaranteed auto protection (GAP) insurance; |
|
(9) involuntary unemployment insurance; |
|
(10) financial guaranty insurance; |
|
(11) inland marine insurance; |
|
(12) rain insurance; |
|
(13) hail insurance on farm crops; [and] |
|
(14) personal and commercial automobile insurance; |
|
(15) multi-peril insurance; and |
|
(16) identity theft insurance issued under Chapter |
|
706. |
|
(b) Section 2301.003(b), Insurance Code, is amended to |
|
conform to Section 1, Chapter 70, Acts of the 79th Legislature, |
|
Regular Session, 2005; Section 1, Chapter 71, Acts of the 79th |
|
Legislature, Regular Session, 2005; and Section 4, Chapter 102, |
|
Acts of the 79th Legislature, Regular Session, 2005, to read as |
|
follows: |
|
(b) This subchapter applies to all lines of the following |
|
kinds of insurance written under an insurance policy or contract |
|
issued by an insurer authorized to engage in the business of |
|
insurance in this state: |
|
(1) general liability insurance; |
|
(2) residential and commercial property insurance, |
|
including farm and ranch insurance and farm and ranch owners |
|
insurance; |
|
(3) personal and commercial casualty insurance, |
|
except as provided by Section 2301.005; |
|
(4) medical professional liability insurance; |
|
(5) fidelity, guaranty, and surety bonds other than |
|
criminal court appearance bonds; |
|
(6) personal umbrella insurance; |
|
(7) personal liability insurance; |
|
(8) guaranteed auto protection (GAP) insurance; |
|
(9) involuntary unemployment insurance; |
|
(10) financial guaranty insurance; |
|
(11) inland marine insurance; |
|
(12) rain insurance; |
|
(13) hail insurance on farm crops; [and] |
|
(14) personal and commercial automobile insurance; |
|
(15) multi-peril insurance; and |
|
(16) identity theft insurance issued under Chapter |
|
706. |
|
(c) Section 1, Chapter 70, Acts of the 79th Legislature, |
|
Regular Session, 2005; Section 1, Chapter 71, Acts of the 79th |
|
Legislature, Regular Session, 2005; and Section 4, Chapter 102, |
|
Acts of the 79th Legislature, Regular Session, 2005, all of which |
|
amended former Subsection (a), Section 2, Article 5.13-2, Insurance |
|
Code, are repealed. |
|
SECTION 3B.072. (a) Subchapter E, Chapter 2251, Insurance |
|
Code, is amended by adding Section 2251.205 to conform to Section 1, |
|
Chapter 1118, Acts of the 79th Legislature, Regular Session, 2005, |
|
to read as follows: |
|
Sec. 2251.205. APPLICATION OF FILING REQUIREMENTS TO OTHER |
|
INSURERS. An insurer is subject to the filing requirements |
|
determined by the commissioner by rule under Section 2251.204 if: |
|
(1) the insurer, along with the insurer's affiliated |
|
companies or group, issues personal automobile liability insurance |
|
policies only below 101 percent of the minimum limits required by |
|
Chapter 601, Transportation Code; and |
|
(2) the insurer, along with the insurer's affiliated |
|
companies or group, has a market share of less than 3.5 percent of |
|
the personal automobile insurance market in this state. |
|
(b) Section 1, Chapter 1118, Acts of the 79th Legislature, |
|
Regular Session, 2005, which added Subsection (h) to former Section |
|
13, Article 5.13-2, Insurance Code, is repealed. |
|
SECTION 3B.073. (a) Section 2253.001, Insurance Code, is |
|
amended to conform to Section 2, Chapter 291, Acts of the 79th |
|
Legislature, Regular Session, 2005, to read as follows: |
|
Sec. 2253.001. RATING TERRITORIES. (a) Notwithstanding |
|
any other provision of this code, an insurer, in writing |
|
residential property or personal automobile insurance, may use |
|
rating territories that subdivide a county only if: |
|
(1) the county is subdivided; and |
|
(2) the rate for any subdivision in the county is not |
|
greater than 15 percent higher than the rate used in any other |
|
subdivision in the county by that insurer. |
|
(b) The [For residential property insurance or personal
|
|
automobile insurance, the] commissioner by rule may allow a greater |
|
rate difference than the rate difference specified by Subsection |
|
(a). |
|
(b) Section 2, Chapter 291, Acts of the 79th Legislature, |
|
Regular Session, 2005, which amended former Article 5.171, |
|
Insurance Code, is repealed. |
|
SECTION 3B.074. Section 4151.206(a), Insurance Code, is |
|
amended to conform more closely to the source law from which the |
|
section was derived to read as follows: |
|
(a) The commissioner shall collect and an applicant or |
|
administrator shall pay to the commissioner fees in an amount to be |
|
determined by the commissioner as follows: |
|
(1) a filing fee not to exceed $1,000 for processing an |
|
original application for a certificate of authority for an |
|
administrator; |
|
(2) a fee not to exceed $500 for an examination under |
|
Section 4151.201 [4201.201]; and |
|
(3) a filing fee not to exceed $200 for an annual |
|
report. |
|
SECTION 3B.075. (a) Sections 4201.054(a) and (d), |
|
Insurance Code, are amended to conform to Section 6.072, Chapter |
|
265, Acts of the 79th Legislature, Regular Session, 2005, to read as |
|
follows: |
|
(a) Except as provided by this section, this chapter applies |
|
to utilization review of a health care service provided to a person |
|
eligible for workers' compensation medical benefits under Title 5, |
|
Labor Code. The commissioner of workers' compensation shall |
|
regulate as provided by this chapter a person who performs |
|
utilization review of a medical benefit provided under Title 5 |
|
[Chapter 408], Labor Code. |
|
(d) The commissioner of workers' compensation [and the
|
|
Texas Workers' Compensation Commission] may adopt rules [and enter
|
|
into memoranda of understanding] as necessary to implement this |
|
section. |
|
(b) Section 4201.054(b), Insurance Code, is repealed to |
|
conform to Section 6.072, Chapter 265, Acts of the 79th |
|
Legislature, Regular Session, 2005. |
|
(c) Section 6.072, Chapter 265, Acts of the 79th |
|
Legislature, Regular Session, 2005, which amended former |
|
Subsection (c), Section 14, Article 21.58A, Insurance Code, is |
|
repealed. |
|
SECTION 3B.076. (a) Section 4201.207(b), Insurance Code, |
|
is amended to conform to Section 6.071, Chapter 265, Acts of the |
|
79th Legislature, Regular Session, 2005, to read as follows: |
|
(b) A health care provider's charges for providing medical |
|
information to a utilization review agent may not: |
|
(1) exceed the cost of copying records regarding a |
|
workers' compensation claim as set by rules adopted by the |
|
commissioner of workers' compensation [Texas Workers' Compensation
|
|
Commission]; or |
|
(2) include any costs otherwise recouped as part of |
|
the charges for health care. |
|
(b) Section 6.071, Chapter 265, Acts of the 79th |
|
Legislature, Regular Session, 2005, which amended former |
|
Subsection (l), Section 4, Article 21.58A, Insurance Code, is |
|
repealed. |
|
SECTION 3B.077. This article takes effect September 1, 2007. |