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A BILL TO BE ENTITLED
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AN ACT
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relating to insurance premium finance agreements regulated by the |
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Texas Department of Insurance. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Section 651.001(5), Insurance Code, is amended |
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to read as follows: |
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(5) "Insurer" means an entity organized or authorized |
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to engage in the business of insurance under this code as a capital |
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stock insurance company, title insurance company, reciprocal or |
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interinsurance exchange, Lloyd's plan, fraternal benefit society, |
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mutual or mutual assessment company of any kind, statewide mutual |
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assessment company, local mutual aid association, burial |
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association, county or farm mutual insurance company, fidelity, |
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guaranty, or surety company, [or] trust company, or eligible |
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surplus lines insurer. The term includes: |
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(A) the Texas Windstorm Insurance Association; |
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(B) the Texas Automobile Insurance Plan |
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Association; and |
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(C) the Texas Medical Liability Insurance |
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Underwriting Association. |
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SECTION 2. Section 651.151(b), Insurance Code, is amended |
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to read as follows: |
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(b) A premium finance agreement must be dated and signed by |
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the insured. [An agreement may be signed on behalf of the insured
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by the insured's agent if:
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[(1)
the agreement contains policies for other than
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personal, family, or household purposes; and
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[(2) the premiums for the policies exceed $1,000.] |
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SECTION 3. Section 651.155, Insurance Code, is amended to |
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read as follows: |
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Sec. 651.155. RESPONSIBILITIES OF INSURANCE AGENT AND |
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INSURANCE PREMIUM FINANCE COMPANY. (a) Each insurance premium |
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finance company is responsible for the acts of its officers, |
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directors, employees, and contracted insurance agents. |
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(b) An insurance premium finance company must have a written |
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contract with each [An] insurance agent that requires the agent, at |
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a minimum, to [shall]: |
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(1) prepare a premium finance agreement; [and] |
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(2) deliver to the insured each disclosure statement |
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required by law; and |
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(3) timely remit or forward insurance premiums to the |
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insurance premium finance company or appropriate insurer. |
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SECTION 4. Section 651.161, Insurance Code, is amended by |
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adding Subsection (g) to read as follows: |
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(g) The insurance premium finance company may not cancel an |
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insurance contract if the insurance agent failed to timely remit or |
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forward insurance premiums to the insurance premium finance company |
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or appropriate insurer. |
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SECTION 5. Section 651.162, Insurance Code, is amended by |
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amending Subsections (c), (d), (f), and (g), and by adding |
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Subsection (h) to read as follows: |
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(c) The insurer may not deduct from the unearned premiums |
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returned to the insurance premium finance company the amount of any |
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unearned commission due from the agent writing the insurance [if
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the insurer notifies the agent to return the unearned commission to
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the insurance premium finance company. If the agent does not return
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the unearned commission to the insurance premium finance company
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before the 91st day after the cancellation date, the insurer shall
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remit the unearned commission to the insurance premium finance
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company before the 121st day after the cancellation date]. |
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(d) Notwithstanding Subsection (c) [Subsections (a)-(c)], |
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an agent is liable for the return of unearned commissions on an |
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insurance contract written through the Texas Windstorm Insurance |
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Association, the Texas Automobile Insurance Plan Association, or |
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the Texas Medical Liability Insurance Underwriting Association. An |
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agent placing business through one of those plans shall return the |
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unearned commissions to the insurance premium finance company |
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before the 61st day after the date the agent is notified of the |
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cancellation. |
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(f) If the insurance premium finance company failed to |
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comply with Section 651.165, the insurer shall determine, not later |
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than the 30th day after the cancellation date, whether it has a[,
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including the Texas Windstorm Insurance Association, the Texas
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Automobile Insurance Plan Association, and the Texas Medical
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Liability Insurance Underwriting Association, may comply with its] |
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legal duty to return the unearned premiums due under the insurance |
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contract to an [the] insurance premium finance company before [by] |
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returning those unearned premiums to the producing agent. If the |
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producing agent does not return unearned premiums to the insurance |
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premium finance company before the 91st day after the cancellation |
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date, the insurer remains liable and shall remit, on demand, the |
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unearned premiums to the insurance premium finance company not |
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later than the 60th day after the date of the demand. |
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(g) If the crediting of return premiums and commissions to |
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the account of an insured results in a surplus over the amount due |
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from the insured, the insurance premium finance company shall |
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refund the excess to the insured. If the amount of the excess is |
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less than $5 [$1], the insured is not entitled to a refund. |
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(h) The insurance premium finance company may not hold the |
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insured liable for any amount covered by the unearned premium or |
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unearned commission returned, or to be returned, by the insurer. |
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SECTION 6. The heading to Section 651.165, Insurance Code, |
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is amended to read as follows: |
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Sec. 651.165. REQUIRED NOTICE OF CERTAIN PREMIUM FINANCE |
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AGREEMENTS AND PREMIUM FINANCE FUNDS. |
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SECTION 7. Section 651.165, Insurance Code, is amended by |
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amending Subsections (a) and (b) and by adding Subsection (d) to |
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read as follows: |
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(a) An insurance premium finance company that enters into a |
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premium finance agreement that includes an assignment or power of |
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attorney shall notify the insurer [or the Texas Windstorm Insurance
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Association, the Texas Automobile Insurance Plan Association, or
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the Texas Medical Liability Insurance Underwriting Association] |
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whose premiums are being financed: |
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(1) of the existence of the agreement; and |
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(2) of the information required under Section |
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651.151(c) [to whom the premium payment has been made]. |
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(b) An insurance premium finance company shall [notify and] |
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fund all premiums to the insurer [a county mutual insurance
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company] unless the insurance premium finance company is authorized |
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in writing by the insurer [county mutual insurance company] to |
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[notify or] fund an insurance agent or managing general agent. |
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(d) If the insurer authorizes the insurance premium finance |
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company to fund premiums to an insurance agent or managing general |
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agent, the insurer is liable for the insurance premium if the |
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insurance agent does not timely remit or forward the insurance |
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premium to the insurance premium finance company or appropriate |
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insurer. |
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SECTION 8. Section 651.162(e), Insurance Code, is repealed. |
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SECTION 9. The changes in law made by this Act apply only to |
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an insurance premium finance agreement entered into on or after the |
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effective date of this Act. An insurance premium finance agreement |
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that is entered into before the effective date of this Act is |
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governed by the law in effect on the date the insurance premium |
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finance agreement was entered, and that law is continued in effect |
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for that purpose. |
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SECTION 10. This Act takes effect immediately if it |
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receives a vote of two-thirds of all the members elected to each |
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house, as provided by Section 39, Article III, Texas Constitution. |
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If this Act does not receive the vote necessary for immediate |
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effect, this Act takes effect September 1, 2009. |