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A BILL TO BE ENTITLED
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AN ACT
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relating to authorizing the commissioner of insurance to further |
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regulate the financial security and operations of certain insurance |
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companies through local districts or chapters. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Section 912.056, Insurance Code, is amended by |
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adding Subsections (d), (e), and (f) to read as follows: |
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(d) A company organized and operating under this chapter |
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that historically appointed managing general agencies, created |
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districts, or organized local chapters and that cedes 90 percent or |
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more of its direct and assumed risks to one or more reinsurers may |
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appoint and contract with a managing general agent in accordance |
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with the provisions of this code to manage a portion of its business |
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independent of all other business of the company. The company shall |
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file, for each managing general agent, district, or local chapter |
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program, the rating information required by the commissioner by |
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rule. Each managing general agent, district, or local chapter |
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program shall be treated as a separate insurer for the purposes of |
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Chapters 544, 2251, 2253, and 2254. |
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(e) Notwithstanding any other provision of this code, a |
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company operating under Subsection (d) that utilizes more than one |
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rate filing per line of business shall maintain a minimum amount of |
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unencumbered surplus or a minimum amount of guaranty fund and |
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unencumbered surplus equal to the greater of $2 million or five |
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percent of the company's net recoverable for reinsurance after |
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taking full credit against the recoverable as otherwise permitted |
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for: |
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(1) premiums payable to cedents net of ceding |
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commission due the company; |
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(2) collateral held as required by Section 493.104, |
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letters of credit, and security trusts that secure the collection |
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of the reinsurance; |
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(3) cut-through policy endorsements approved by the |
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commissioner; and |
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(4) reinsurance through reinsurance companies whose |
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financial strength is rated A or better by the A. M. Best Company, |
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Incorporated. |
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(f) The commissioner by rule shall provide a transition |
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period for insurance companies subject to Subsection (e) to meet |
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the requirements of that subsection and for the pro rata |
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elimination of any deficiencies in the amounts required under that |
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subsection. The transition period must be: |
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(1) not less than five years for companies that have a |
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market share of 10 percent or more; and |
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(2) not less than 10 years for companies that have a |
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market share of less than 10 percent. |
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SECTION 2. This Act takes effect September 1, 2009. |