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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 credit life policy issued under |
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Chapter 1153 before January 1, 2009, are met if, in the aggregate, |
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the reserves are maintained at 100 percent of the 1980 |
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Commissioner's Standard Ordinary Mortality Table, with interest |
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that does not exceed 5.5 percent. [This subsection expires
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September 1, 2013.] |
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(2) For credit life policy reserves on contracts |
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issued to be effective on or after January 1, 2009, the reserve |
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requirements shall be based on minimum reserve standards |
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established by the commissioner by rule. The commissioner shall |
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adopt the rules based on either: |
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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) another CSO Mortality Table approved by the |
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National Association of Insurance Commissioners on or after January |
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1, 2009, for use on credit life policy reserves. |
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(3) For a single premium credit accident and health |
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contract issued on or after January 1, 2009, the reserve |
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requirements shall be based on minimum reserve standards |
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established by the commissioner by rule. The commissioner shall |
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adopt the rules based on either: |
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(A) the 1985 Commissioners Individual Disability |
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Table A (85CIDA); or |
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(B) another Commissioner's Disability Table |
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approved by the National Association of Insurance Commissioners on |
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or after January 1, 2009, for use on credit accident and health |
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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) 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 120th day after the |
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effective date of this Act. Until rules are adopted as required by |
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this subsection, insurers shall continue to use the minimum reserve |
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standards under Section 425.058(l), Insurance Code, as that section |
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existed immediately before amendment by this Act. |
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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. |
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