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A BILL TO BE ENTITLED
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AN ACT
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relating to the reserve requirements for credit life and credit |
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accident and health insurance. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Section 425.058(l), Insurance Code, is amended |
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to read as follows: |
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(l)(1) Notwithstanding any other law, the minimum reserve |
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requirements applicable to a policy issued under Chapter 1153 |
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before January 1, 2009, are met if, in the aggregate, the reserves |
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are maintained at 100 percent of the 1980 Commissioner's Standard |
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Ordinary Mortality Table, with interest that does not exceed 5.5 |
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percent. This subsection expires September 1, 2013. |
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(2) The minimum reserve requirements applicable to a |
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credit life policy issued under Chapter 1153 on or after January 1, |
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2009, shall be based on minimum reserve standards established by |
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the commissioner by rule. In adopting rules under this section, the |
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commissioner shall adopt rules based on: |
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(A) the 2001 CSO Male Composite Ultimate |
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Mortality Table for male and female insureds; or |
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(B) the most recent CSO Mortality Table approved |
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by the National Association of Insurance Commissioners for use on |
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credit life policy reserves. |
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(3) The minimum reserve requirements applicable to a |
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single premium credit disability contract issued under Chapter 1153 |
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on or after January 1, 2009, shall be based on minimum reserve |
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standards established by the commissioner by rule. In adopting |
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rules under this section, the commissioner shall adopt rules based |
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on: |
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(A) the 1985 Commissioners Individual Disability |
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Table A (85CIDA); or |
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(B) the most recent Commissioner's Disability |
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Table approved by the National Association of Insurance |
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Commissioners for use on credit disability policy reserves. |
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(4) For all credit insurance contracts, if the net |
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premium refund liability exceeds the aggregate recorded contract |
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reserve, the insurer shall establish an additional reserve |
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liability that is equal to the excess of the net refund liability |
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over the contract reserve recorded. The net refund liability may |
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include consideration of commission, premium tax, and other |
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expenses recoverable. |
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(5) Computation of reserves for policies and contracts |
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described by this subsection shall be computed annually from each |
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applicable table using data from the preceding year. Reserve |
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calculations shall be reported by each insurer as part of the |
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insurer's annual statement required to be filed on March 1 of each |
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year. |
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(6) In addition to the rules required to be adopted |
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under this subsection, the commissioner may adopt other rules to |
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implement this subsection. |
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SECTION 2. (a) The change in law made by this Act applies to |
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all credit life and credit accident and health insurance policies |
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issued on or after January 1, 2009. |
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(b) The commissioner of insurance shall adopt rules as |
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required to implement Section 425.058(l), Insurance Code, as |
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amended by this Act, not later than the 60th day after the effective |
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date of this Act. |
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(c) The initial reserve calculations under Section |
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425.058(l), Insurance Code, as amended by this Act, must be |
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reported in the annual statement required to be filed on March 1, |
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2010. |
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SECTION 3. This Act takes effect immediately if it receives |
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a vote of two-thirds of all the members elected to each house, as |
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provided by Section 39, Article III, Texas Constitution. If this |
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Act does not receive the vote necessary for immediate effect, this |
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Act takes effect September 1, 2009. |