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A BILL TO BE ENTITLED
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AN ACT
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relating to the establishment and operation of the unauthorized |
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insurance guaranty fund. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Subtitle D, Title 4, Insurance Code, is amended |
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by adding Chapter 464 to read as follows: |
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CHAPTER 464. UNAUTHORIZED INSURANCE GUARANTY FUND ACT |
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SUBCHAPTER A. GENERAL PROVISIONS |
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Sec. 464.001. SHORT TITLE. This chapter may be cited as the |
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Unauthorized Insurance Guaranty Fund Act. |
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Sec. 464.002. CONSTRUCTION AND PURPOSE. (a) The purpose of |
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this chapter is to alleviate the financial hardship imposed on |
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persons who are harmed by the sale of unauthorized insurance in this |
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state. Persons who suffer damages as a result of unpaid claims on |
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policies issued by unauthorized insurers in this state are not |
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covered under guaranty acts, which provide protection to persons |
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with claims against authorized insurers. The legislature finds |
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that it is appropriate to provide additional remedies to these |
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persons. |
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(b) The commissioner's powers under this Act shall be |
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liberally construed to support the purpose stated in Subsection |
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(a). |
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(c) This chapter does not limit the powers granted the |
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commissioner under other provisions of law. The powers and |
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authority of the commissioner under this chapter are cumulative and |
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are in addition to all other powers and authority that are available |
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to the commissioner. |
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Sec. 464.003. DEFINITIONS. In this chapter: |
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(1) "Delinquency proceeding" has the meaning assigned |
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by Section 443.004. |
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(2) "Fund" means the unauthorized insurance guaranty |
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fund. |
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(3) "Fund account" means the account established for |
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the deposit of money held by the fund. |
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(4) "Policy claim" means an obligation incurred under |
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a contract or policy of insurance issued by an unauthorized insurer |
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as described by Chapter 101. The term does not include claims under |
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reinsurance contracts or claims of other creditors. |
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(5) "Receiver" means the receiver of an unauthorized |
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insurer in a delinquency proceeding, including the commissioner |
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when acting in that capacity, or a special deputy receiver. |
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(6) "Unauthorized insurer" has the meaning assigned by |
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Section 443.004. |
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Sec. 464.004. APPLICABILITY. This chapter applies to a |
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delinquency proceeding under Chapter 443 of an unauthorized |
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insurer. |
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Sec. 464.005. IMMUNITY. Liability does not exist and a |
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cause of action does not arise against the commissioner or an agent, |
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employee, or representative of the commissioner for any good faith |
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act or omission in performing the commissioner's, or the agent's, |
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employee's, or representative's powers and duties under this |
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chapter. |
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Sec. 464.006. EXEMPTION FROM CERTAIN FEES AND TAXES. The |
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fund is exempt from payment of all fees and taxes levied by this |
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state or a political subdivision of this state. |
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Sec. 464.007. RULES. The commissioner may adopt rules as |
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necessary to implement this chapter. |
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[Sections 464.008-464.050 reserved for expansion] |
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SUBCHAPTER B. FUND |
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Sec. 464.051. CREATION OF UNAUTHORIZED INSURANCE GUARANTY |
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FUND. The unauthorized insurance guaranty fund is established. |
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Sec. 464.052. DEPOSIT OF FUNDS. (a) The fund account shall |
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be established with the Texas Treasury Safekeeping Trust Company in |
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accordance with procedures adopted by the comptroller. The |
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comptroller shall account for the deposited money separately from |
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all other money. |
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(b) The commissioner may identify collected penalties to be |
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deposited into the fund account from: |
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(1) administrative penalties assessed by the |
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commissioner for violations of Chapter 101 or penalties under |
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Section 861.702, including amounts collected through state warrant |
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holds; |
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(2) civil penalties assessed under Chapter 101 when |
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the commissioner is the party requesting penalties; |
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(3) administrative penalties assessed by the |
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commissioner against a person holding a certificate of authority, |
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license, registration, or other authorization to engage in the |
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business of insurance that is issued or recognized by the |
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commissioner for engaging in conduct outside the scope of the |
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person's certificate, license, registration, or authorization; |
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(4) administrative penalties assessed by the |
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commissioner against a person holding a certificate of authority, |
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license, registration, or authorization issued or recognized by the |
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commissioner for using unapproved forms, rates, or advertisements |
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if the forms, rates, or advertisements are required to be approved |
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by the commissioner before being used in this state; and |
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(5) forfeitures of bonds issued under Section 101.353 |
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or 101.354. |
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(c) In determining the amounts to be deposited into the fund |
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account, the commissioner shall consider: |
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(1) the amount existing in the fund account; |
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(2) the anticipated penalties described by Subsection |
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(b) that have been or may be collected; |
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(3) the estimated assets, administrative expenses, |
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and claims of any unauthorized insurers subject to a delinquency |
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proceeding; and |
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(4) any anticipated delinquency proceedings of |
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unauthorized insurers. |
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(d) If the commissioner determines that the amounts on |
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deposit in the fund account exceed the amount required to pay |
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administrative expenses and claims of existing and anticipated |
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delinquency proceedings of unauthorized insurers, the commissioner |
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may transfer the excess amount from the fund to the comptroller for |
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deposit into the general revenue fund. |
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(e) The commissioner shall notify the comptroller of the |
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existence of money under Subsection (c) to be credited to the fund |
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account. The commissioner must enter an order to transfer amounts |
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from the fund account. |
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Sec. 464.053. ADVANCE OF FUNDS. (a) In the event of a |
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delinquency proceeding of an unauthorized insurer, the |
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commissioner may advance funds from the fund account if the assets |
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of the unauthorized insurer are insufficient to pay administrative |
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expenses or policy claims. The commissioner shall hold the funds in |
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a separate account. Funds advanced under this section are |
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available to supplement the assets of the unauthorized insurer, and |
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do not become property of the unauthorized insurer or the |
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receivership estate. |
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(b) In determining an amount to be advanced, the |
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commissioner shall consider: |
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(1) the amount existing in the fund, and any estimated |
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future amounts to be deposited in the fund; |
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(2) the assets of the unauthorized insurer that are |
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anticipated to be available to pay administrative expenses and |
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claims; |
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(3) the projected administrative expenses and claims |
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in the delinquency proceeding; and |
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(4) the projected administrative expenses and claims |
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in other existing and anticipated delinquency proceedings of |
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unauthorized insurers. |
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Sec. 464.054. USE OF FUNDS. (a) An amount advanced under |
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Section 464.053 may be used to supplement the assets of an |
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unauthorized insurer to pay administrative expenses and policy |
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claims that are approved by: |
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(1) the commissioner in a proceeding under Section |
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443.051; or |
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(2) the receiver in a proceeding under Section |
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443.052. |
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(b) For the purposes of Section 443.301(b), approved policy |
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claims under this chapter shall be classified as Class 2 claims. |
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(c) The commissioner or receiver, as applicable, is not |
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required to make distributions from the assets of the unauthorized |
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insurer before using amounts advanced under Section 464.053. Any |
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payment of a policy claim made under Subsection (a) shall be treated |
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as a distribution under Section 443.302. If approved policy claims |
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cannot be paid in full from the funds advanced under Section 464.053 |
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and the assets of the unauthorized insurer available for |
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distribution, the claims shall be paid on a pro rata basis in the |
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manner described in Section 443.301. |
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(d) Amounts advanced that are not needed to pay |
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administrative expenses or policy claims shall be returned to the |
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fund account. On a final distribution under Section 443.302 or the |
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termination of a delinquency proceeding, any funds of the |
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unauthorized insurer remaining after the payment in full of |
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administrative expenses and policy claims shall be used to repay |
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the advance, up to the amount of the advance. |
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(e) A person who has a policy claim may receive funds |
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deposited or advanced under this chapter only in accordance with |
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this section. |
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SECTION 2. 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. |