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A BILL TO BE ENTITLED
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AN ACT
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relating to the regulation of stipulated premium insurance |
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companies. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Sections 884.054(a) and (c), Insurance Code, are |
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amended to read as follows: |
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(a) A proposed stipulated premium company's capital stock |
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must be in an amount of at least $25,000 [$15,000]. |
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(c) To be incorporated, a stipulated premium company must |
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possess at the time of incorporation, in addition to its capital, |
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surplus in an amount of at least $12,500 [$7,500]. The amount of |
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the surplus is not required to be stated in the company's articles |
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of incorporation. |
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SECTION 2. Section 884.206(a), Insurance Code, is amended |
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to read as follows: |
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(a) The commissioner by rule may require a stipulated |
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premium company that writes or assumes life insurance, annuity |
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contracts, or accident and health insurance for a risk to one person |
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in an amount that exceeds $25,000 [$10,000] to maintain capital and |
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surplus in amounts that exceed the minimum amounts required by this |
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chapter because of: |
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(1) the nature and kind of risks the company |
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underwrites or reinsures; |
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(2) the premium volume of risks the company |
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underwrites or reinsures; |
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(3) the composition, quality, duration, or liquidity |
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of the company's investment portfolio; |
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(4) fluctuations in the market value of securities the |
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company holds; or |
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(5) the adequacy of the company's reserves. |
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SECTION 3. Section 884.303(b), Insurance Code, is amended |
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to read as follows: |
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(b) A stipulated premium company may not insure one life |
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under this section for more than $25,000 [$15,000], except as |
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provided by Section 884.304 or Subchapter I. |
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SECTION 4. Section 884.304, Insurance Code, is amended to |
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read as follows: |
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Sec. 884.304. LIFE INSURANCE OF MORE THAN $25,000 |
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[$15,000]. (a) Except as provided by this section, a stipulated |
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premium company may not assume liability on a life insurance risk on |
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one life in an amount that exceeds $25,000 [$15,000]. |
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(b) If a stipulated premium company assumes a life insurance |
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risk under a life insurance policy, the initial death benefit of |
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$25,000 [$15,000] or less may increase to an amount greater than |
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$25,000 [$15,000] subject to this section. |
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(c) For each policy year of a policy for which, after |
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issuance, the death benefit exceeds $25,000 [$15,000], the amount |
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of the increase of the death benefit at the end of that policy year |
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from the end of the preceding policy year may not exceed the greater |
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of: |
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(1) the amount computed using the maximum rate of |
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increase provided by the policy, which rate may not exceed five |
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percent a year, compounded annually; or |
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(2) the amount computed using the consumer price index |
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for all urban consumers for all items and for all regions of the |
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United States combined, as determined by the United States |
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Department of Labor, Bureau of Labor Statistics, on September 30 of |
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the year preceding the year in which the policy year ends, |
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compounded annually. |
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SECTION 5. Section 884.404(a), Insurance Code, is amended |
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to read as follows: |
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(a) A stipulated premium company that issues any insurance |
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coverage under this subchapter shall maintain at all times the |
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capital and unencumbered surplus required under Section 884.054 |
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[when the stipulated premium company began writing the coverage]. |
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SECTION 6. Section 4054.051, Insurance Code, is amended to |
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read as follows: |
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Sec. 4054.051. LICENSE REQUIRED. Except as provided by |
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Subchapter G, a person is required to hold a general life, accident, |
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and health license if the person acts as: |
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(1) an agent who represents a health maintenance |
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organization; |
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(2) an industrial life insurance agent for an insurer |
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that writes only weekly premium life insurance on a debit basis |
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under Chapter 1151; |
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(3) an agent who writes life, accident, and health |
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insurance for a life insurance company; |
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(4) an agent who writes only accident and health |
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insurance; |
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(5) an agent who writes fixed or variable annuity |
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contracts or variable life contracts; |
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(6) an agent who writes for a stipulated premium |
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company: |
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(A) only life insurance in excess of $25,000 |
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[$15,000] on any one life; |
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(B) only accident and health insurance; or |
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(C) both kinds of insurance described by |
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Paragraphs (A) and (B); |
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(7) an agent who writes life, accident, and health |
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insurance for any type of authorized life insurance company that is |
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domiciled in this state, including a legal reserve life insurance |
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company, and who represents the company: |
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(A) in a foreign country or territory; and |
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(B) on a United States military installation or |
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with United States military personnel; |
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(8) an agent who writes life, accident, and health |
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insurance for a fraternal benefit society except as provided by |
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Section 885.352; or |
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(9) an agent who writes any other kind of insurance as |
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required by the commissioner for the protection of the insurance |
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consumers of this state. |
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SECTION 7. The heading to Subchapter E, Chapter 4054, |
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Insurance Code, is amended to read as follows: |
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SUBCHAPTER E. LIFE INSURANCE NOT |
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EXCEEDING $25,000 [$15,000] |
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SECTION 8. Section 4054.201(a), Insurance Code, is amended |
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to read as follows: |
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(a) The department shall issue a license to an individual |
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applicant to act as an agent who writes only life insurance policies |
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in an amount that does not exceed $25,000 [$15,000] on any one life |
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on receipt of certification from a stipulated premium company, a |
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statewide mutual assessment company, a local mutual aid |
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association, or a local mutual burial association, that the |
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applicant has: |
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(1) completed a course of study and instruction in |
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compliance with this subchapter; and |
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(2) passed without aid a written examination |
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administered by the insurer. |
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SECTION 9. Section 4054.206, Insurance Code, is amended to |
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read as follows: |
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Sec. 4054.206. LIMIT ON AGENT'S AUTHORITY. An insurance |
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agent licensed under this subchapter may not write any coverage or |
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combination of coverages with an initial guaranteed death benefit |
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that exceeds $25,000 [$15,000] on any life. |
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SECTION 10. Sections 4054.301(a) and (d), Insurance Code, |
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are amended to read as follows: |
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(a) Except as provided by Subsection (b), a person is |
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required to hold a life agent license if the person does not hold a |
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general life, accident, and health license under Subchapter B and |
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the person acts as: |
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(1) an agent who writes insurance coverage on human |
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lives, including endowment benefits and annuities, benefits in the |
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event of death or dismemberment by accident, and benefits for |
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disability income; |
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(2) an industrial life insurance agent for an insurer |
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that writes only weekly premium life insurance on a debit basis |
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under Chapter 1151; |
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(3) an agent who writes fixed or variable annuity |
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contracts or variable life contracts; |
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(4) an agent who writes for a stipulated premium |
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company only life insurance in excess of $25,000 [$15,000] on any |
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one life; or |
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(5) an agent who writes any other kind of insurance as |
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required by the commissioner for the protection of the insurance |
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consumers of this state. |
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(d) A person who holds a license to write life insurance not |
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exceeding $25,000 [$15,000] under Subchapter E and who engages in |
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the business of insurance only within the scope of that license is |
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not required to hold a life agent license. A person who holds a |
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life agent license may write the insurance described by that |
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subchapter. |
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SECTION 11. A stipulated premium company shall increase its |
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capital stock and surplus as required under Chapter 884, Insurance |
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Code, as amended by this Act, not later than March 1, 2010, or |
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another date prescribed by rule by the commissioner of insurance in |
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connection with a reasonable schedule of intermediate increases |
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adopted by the commissioner to provide for a phase-in of the changes |
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in law made by this Act. |
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SECTION 12. This Act applies only to an insurance policy |
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delivered, issued for delivery, or renewed on or after January 1, |
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2010. A policy delivered, issued for delivery, or renewed before |
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January 1, 2010, is governed by the law as it existed immediately |
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before the effective date of this Act, and that law is continued in |
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effect for that purpose. |
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SECTION 13. This Act takes effect September 1, 2009. |