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A BILL TO BE ENTITLED
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AN ACT
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relating to insurance charters and certificates of authority. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Section 801.001(2), Insurance Code, is amended |
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to read as follows: |
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(2) "Insurer" means the issuer of an insurance policy |
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that is issued to another in consideration of a premium and that |
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insures against a loss that may be insured against under the law. |
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The term includes a: |
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(A) fraternal benefit society; |
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(B) Lloyd's plan; |
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(C) mutual company of any kind, including a: |
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(i) statewide mutual assessment |
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association; |
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(ii) local mutual aid association or burial |
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association; and |
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(iii) county or farm mutual insurance |
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company; |
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(D) reciprocal or interinsurance exchange; [and] |
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(E) group hospital service corporation; |
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(F) health maintenance organization; |
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(G) nonprofit legal services corporation; and |
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(H) stock company. |
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SECTION 2. Section 801.051, Insurance Code, is amended to |
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read as follows: |
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Sec. 801.051. APPROVAL, DENIAL, OR DISAPPROVAL OF |
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APPLICATION FOR [ISSUANCE OF] CERTIFICATE; ELIGIBILITY; HEARING. |
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(a) The department shall approve, deny, or disapprove an |
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application for a certificate of authority to act as an insurer. |
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(b) If the department determines that the applicant has |
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complied with the law, the department shall approve the application |
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and issue under the department's seal a certificate of authority to |
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act as an insurer [to an applicant applying for the certificate if
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the department determines that the applicant has complied with the
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law]. |
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(c) On the applicant's request, the commissioner shall hold |
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a hearing on a denial. Not later than the 30th day after the date of |
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the applicant's request for a hearing, the commissioner shall |
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request a hearing date. |
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SECTION 3. Section 801.102, Insurance Code, is amended to |
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read as follows: |
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Sec. 801.102. DENIAL OF APPLICATION OR REVOCATION OF |
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CERTIFICATE. (a) If after conducting an inquiry under Section |
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801.101 the department determines that [, based on substantial
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evidence,] the person who is the subject of the inquiry is not |
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worthy of the public confidence, the department shall [, after
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written notice and hearing]: |
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(1) deny the application for a certificate of |
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authority; or |
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(2) revoke the insurer's certificate of authority. |
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(b) On the applicant's request, the commissioner shall hold |
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a hearing on a denial or revocation. Not later than the 30th day |
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after the date of the applicant's request for a hearing, the |
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commissioner shall request a hearing date. |
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SECTION 4. Section 822.057(b), Insurance Code, is amended |
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to read as follows: |
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(b) If the commissioner is not satisfied with the affidavit |
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filed under Subsection (a)(3), the commissioner may require that |
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the incorporators provide at their expense additional evidence of a |
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matter required in the affidavit before the commissioner: |
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(1) receives the proposed articles of incorporation or |
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the application for charter; or |
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(2) [provides notice of a hearing on the application
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for charter or holds a hearing; or
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[(3)] issues a certificate of authority to the |
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company. |
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SECTION 5. Section 822.058(b), Insurance Code, is amended |
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to read as follows: |
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(b) After the items required for a charter under Sections |
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822.057(a)(1) and (2) are filed with the department and the |
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proposed insurance company has complied with all legal requirements |
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[and before any hearing], the commissioner shall conduct an |
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examination of the company to determine whether: |
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(1) the minimum capital stock and surplus requirements |
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of Section 822.054 are satisfied; |
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(2) the capital stock and surplus is the bona fide |
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property of the company; and |
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(3) the insurance company has fully complied with |
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insurance laws. |
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SECTION 6. Section 822.060, Insurance Code, is amended to |
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read as follows: |
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Sec. 822.060. ACTION ON APPLICATION. (a) In considering |
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the application, the commissioner [, not later than the 30th day
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after the date on which a hearing under Section 822.057 is
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completed,] shall determine if: |
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(1) the proposed capital structure of the company |
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meets the requirements of this code; |
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(2) the proposed officers, directors, attorney in |
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fact, or managing head of the company have sufficient insurance |
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experience, ability, standing, and good record to make success of |
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the proposed company probable; and |
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(3) the applicants are acting in good faith. |
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(b) If the commissioner determines that the applicant has |
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not met the standards set out by [an affirmative finding any of the
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issues under] Subsection (a) [adversely to the applicants], the |
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commissioner shall deny [reject] the application in writing, giving |
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the reason for the denial [rejection]. |
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(c) If the commissioner does not deny [reject] the |
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application under Subsection (b), the commissioner shall approve |
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the application. On approval of an application, the articles of |
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incorporation of the company shall be filed with the department. |
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(d) On the applicant's request, the commissioner shall hold |
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a hearing on a denial. Not later than the 30th day after the date of |
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the applicant's request for a hearing, the commissioner shall |
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request a hearing date. |
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SECTION 7. Sections 822.158(b) and (c), Insurance Code, are |
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amended to read as follows: |
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(b) If the commissioner determines that the applicant has |
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not met the requirements [by an affirmative finding any of the
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issues] set out by Subsection (a) [adversely to the applicants], |
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the commissioner shall deny [reject] the application. On the |
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applicant's request, the commissioner shall hold a hearing on a |
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denial. Not later than the 30th day after the date of the |
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applicant's request for a hearing, the commissioner shall request a |
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hearing date. |
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(c) If the commissioner does not deny [reject] the |
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application under Subsection (b), the commissioner shall approve |
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the application and the amendment shall be filed with the |
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department. |
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SECTION 8. Section 841.059(a), Insurance Code, is amended |
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to read as follows: |
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(a) After the charter fee is paid and all items required for |
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a charter under Section 841.058 are filed with the department, [:
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[(1)
the commissioner may set a date for a hearing on
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the application; and
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[(2)] the department shall make or cause to be made a |
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full and thorough examination of the domestic insurance company |
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[before the hearing]. |
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SECTION 9. Section 841.061, Insurance Code, is amended by |
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amending Subsections (a) and (b) and adding Subsections (b-1) and |
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(b-2) to read as follows: |
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(a) In considering the application, the commissioner [, not
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later than the 30th day after the date a hearing under Section
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841.060 is completed,] shall determine if: |
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(1) the minimum capital and surplus required by |
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Section 841.054 are the bona fide property of the domestic |
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insurance company; |
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(2) the proposed officers, directors, and managing |
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executive of the company have sufficient insurance experience, |
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ability, and standing to make success of the proposed company |
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probable; and |
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(3) the applicants are acting in good faith. |
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(b) If the commissioner determines that the applicant has |
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not met the standards set out by [an affirmative finding any of the
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issues under] Subsection (a) [adversely to the applicants], the |
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commissioner shall deny [reject] the application in writing, giving |
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the reason for the denial [rejection]. An application may not be |
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granted unless it is adequately supported by competent evidence. |
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(b-1) On the applicant's request, the commissioner shall |
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hold a hearing on a denial. Not later than the 30th day after the |
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date of the applicant's request for a hearing, the commissioner |
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shall request a hearing date. |
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(b-2) An interested party may participate fully and in all |
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respects in any proceeding related to the application. An |
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intervenor has the rights and privileges of a proper or necessary |
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party in a civil suit in the courts of this state, including the |
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right to be represented by counsel. |
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SECTION 10. Section 841.061(c), Insurance Code, as |
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effective April 1, 2009, is amended to read as follows: |
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(c) If the commissioner does not deny [reject] the |
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application under Subsection (b), the commissioner shall approve |
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the application. On approval of an application, the department |
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shall record the information required by Section 841.058 in records |
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maintained for that purpose. On receipt of a fee in the amount |
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determined under Chapter 202, the commissioner shall provide to the |
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incorporators a certified copy of the application, articles of |
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incorporation, and submitted affidavit. |
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SECTION 11. Section 846.054, Insurance Code, is amended by |
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amending Subsection (a) and adding Subsection (a-1) to read as |
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follows: |
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(a) The commissioner shall approve, deny, or disapprove an |
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application for [issue] an initial certificate of authority [to a
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multiple employer welfare arrangement] that meets the requirements |
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of Section 846.053 not later than the 60th day after the date on |
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which the application is filed. |
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(a-1) On the applicant's request, the commissioner shall |
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hold a hearing on a denial. Not later than the 30th day after the |
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date of the applicant's request for a hearing, the commissioner |
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shall request a hearing date. |
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SECTION 12. Section 882.057, Insurance Code, is amended to |
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read as follows: |
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Sec. 882.057. APPLICATION PROCESS. (a) After the charter |
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fee is paid and all items required for a charter under Section |
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882.056 are filed with the department, the commissioner shall |
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approve, deny, or disapprove [may set a date for a hearing on] the |
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application. |
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(b) On the applicant's request, the commissioner shall hold |
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a hearing on a denial. Not later than the 30th day after the date of |
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the applicant's request for a hearing, the commissioner shall |
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request a hearing date [The date for a hearing on an application may
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not be before the 11th or later than the 60th day after the date
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notice is provided under Subsection (c)]. |
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(c) [The commissioner shall:
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[(1)
provide written notice of the date of a hearing
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to:
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[(A)
the person or persons who filed the
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application; and
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[(B)
any interested party, including any other
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party who had previously requested a copy of the notice; and
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[(2)
publish, at the expense of the incorporators, a
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copy of the notice in a newspaper of general circulation in the
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county in which the mutual life insurance company's home office is
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proposed to be located.
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[(d)
The department shall make a record of the proceedings
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of a hearing under this section.
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[(e)] An interested party [is entitled to oppose or support
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the granting or denial of the application and] may [intervene and] |
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participate fully and in all respects in any [hearing or other] |
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proceeding related to [on] the application. An intervenor has the |
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rights and privileges of a proper or necessary party in a civil suit |
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in the courts of this state, including the right to be represented |
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by counsel. |
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SECTION 13. Sections 882.058(a) and (b), Insurance Code, |
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are amended to read as follows: |
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(a) In considering the application, the commissioner [, not
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later than the 30th day after the date a hearing under Section
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882.057 is completed,] shall determine if: |
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(1) the minimum unencumbered surplus required by |
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Section 882.055 is the bona fide property of the mutual life |
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insurance company; |
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(2) the proposed officers, directors, and managing |
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executives of the company have sufficient insurance experience, |
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ability, and standing to make success of the proposed company |
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probable; and |
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(3) the applicants are acting in good faith. |
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(b) If the commissioner determines that the applicant has |
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not met the standards set out by [an affirmative finding any of the
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issues under] Subsection (a) [adversely to the applicants], the |
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commissioner shall deny [reject] the application in writing, giving |
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the reason for the denial [rejection]. An application may not be |
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granted unless it is adequately supported by competent evidence. |
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SECTION 14. Section 884.057, Insurance Code, is amended to |
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read as follows: |
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Sec. 884.057. ACTION BY COMMISSIONER AND DEPARTMENT AFTER |
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FILING. (a) After the charter fee is paid and all items required |
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for a charter under Section 884.056 are filed with the department, |
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[:
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[(1)] the commissioner shall approve or deny [may set
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a date for a hearing on] the charter application [; and
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[(2)
the department shall make or cause to be made a
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full and thorough examination of the company before a hearing]. |
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(b) On the applicant's request, the commissioner shall hold |
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a hearing on a denial. Not later than the 30th day after the date of |
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the applicant's request for a hearing, the commissioner shall |
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request a hearing date [The stipulated premium company shall pay
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for the examination required under Subsection (a)(2)]. |
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(c) An interested party may participate fully and in all |
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respects in any proceeding related to the application. An |
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intervenor has the rights and privileges of a proper or necessary |
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party in a civil suit in the courts of this state, including the |
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right to be represented by counsel. |
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SECTION 15. Section 884.058, Insurance Code, is amended to |
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read as follows: |
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Sec. 884.058. EXAMINATION AFTER DETERMINATION [APPLICATION
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PROCESS]. After making a determination [(a)
The date for a
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hearing] on an application under Section 884.057, the [may not be
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before the 11th or later than the 30th day after the date notice is
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provided under Subsection (b).
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[(b) The] commissioner shall immediately make or cause to be |
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made a full and thorough examination of the company. The company |
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shall pay for the examination [:
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[(1)
provide written notice of the date of a hearing
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to:
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[(A)
the person or persons who filed the
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application; and
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[(B)
any interested party, including any other
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party who had previously requested a copy of the notice; and
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[(2)
publish, at the expense of the incorporators, a
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copy of the notice in a newspaper of general circulation in the
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county in which the stipulated premium company's home office is
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proposed to be located.
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[(c)
The department shall make a record of the proceedings
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of a hearing under this section.
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[(d)
An interested party is entitled to oppose or support
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the granting or denial of the application and may intervene and
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participate fully and in all respects in any hearing or other
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proceeding on the application. An intervenor has the rights and
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privileges of a proper or necessary party in a civil suit in the
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courts of this state, including the right to be represented by
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counsel]. |
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SECTION 16. Section 911.056, Insurance Code, is amended by |
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amending Subsection (a) and adding Subsection (a-1) to read as |
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follows: |
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(a) The [On receipt of an application for a permit to
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solicit insurance under Section 911.055, the] department shall |
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approve or deny an [examine the] application for a permit to solicit |
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insurance under Section 911.055. If the department finds that the |
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application complies with this chapter, the department shall issue |
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to the applicants a permit to solicit insurance. |
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(a-1) If the department finds that the application does not |
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comply with this chapter, the department shall deny the |
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application. On the applicant's request, the commissioner shall |
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hold a hearing on a denial. Not later than the 30th day after the |
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date of the applicant's request for a hearing, the commissioner |
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shall request a hearing date. |
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SECTION 17. Section 982.102, Insurance Code, is amended by |
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amending Subsection (c) and adding Subsection (d) to read as |
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follows: |
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(c) Before approving or denying the application of a foreign |
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or alien insurance company for [issuing] a certificate of authority |
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to engage in the business of insurance in this state [to a foreign
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or alien insurance company], the commissioner shall: |
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(1) examine the company, at the company's expense, at |
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its principal office in the United States; or |
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(2) accept a report of an examination made by the |
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insurance department or other insurance supervisory official of |
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another state or government of a foreign country. |
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(d) On the applicant's request, the commissioner shall hold |
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a hearing on a denial. Not later than the 30th day after the date of |
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the applicant's request for a hearing, the commissioner shall |
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request a hearing date. |
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SECTION 18. Section 982.113, Insurance Code, is amended to |
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read as follows: |
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Sec. 982.113. ISSUANCE OF CERTIFICATE OF AUTHORITY TO LIFE, |
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HEALTH, OR ACCIDENT INSURANCE COMPANY. (a) The commissioner shall |
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file in the commissioner's office the documents delivered to the |
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department under this subchapter and shall approve or deny an |
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application for a certificate of authority. |
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(b) The commissioner shall issue to a foreign or alien life |
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insurance company, accident insurance company, life and accident |
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insurance company, health and accident insurance company, or life, |
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health, and accident insurance company a certificate of authority |
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to engage in this state in the kind of business specified in the |
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documents if: |
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(1) the company has complied with the requirements of |
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this chapter and any other requirement imposed on the company by |
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law; and |
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(2) the company's operational history demonstrates |
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that the expanded operation of the company in this state or its |
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operations outside this state will not create a condition that |
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might be hazardous to the company's policyholders or creditors or |
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to the public. |
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(c) [(b)] The operational history of a life insurance |
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company, accident insurance company, life and accident insurance |
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company, health and accident insurance company, or life, health, |
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and accident insurance company under Subsection (b)(2) [(a)(2)] |
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must be reviewed in conjunction with: |
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(1) the company's loss experience; |
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(2) the kinds and nature of risks insured by the |
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company; |
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(3) the company's financial condition and its |
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ownership; |
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(4) the company's proposed method of operation; |
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(5) the company's affiliations; |
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(6) the company's investments; |
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(7) the company's contracts, if any, leading to |
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contingent liability or agreements in respect to guaranty and |
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surety, other than insurance; and |
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(8) the ratio of total annual premium and net |
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investment income to commission expenses, general insurance |
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expenses, policy benefits paid, and required policy reserve |
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increases. |
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(d) On the applicant's request, the commissioner shall hold |
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a hearing on a denial. Not later than the 30th day after the date of |
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the applicant's request for a hearing, the commissioner shall |
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request a hearing date. |
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SECTION 19. The following provisions of the Insurance Code |
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are repealed: |
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(1) Section 822.057(c); |
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(2) Section 822.058(a); |
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(3) Section 822.059; |
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(4) Section 841.060; |
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(5) Section 843.081; and |
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(6) Section 882.058(c). |
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SECTION 20. 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. |
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* * * * * |