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A BILL TO BE ENTITLED
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AN ACT
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relating to the continuation and operation of the Texas Department |
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of Insurance and the operation of certain insurance programs; |
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imposing administrative penalties. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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ARTICLE 1. GENERAL PROVISIONS |
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SECTION 1.001. Section 31.002, Insurance Code, is amended |
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to read as follows: |
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Sec. 31.002. DUTIES OF DEPARTMENT. In addition to the |
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other duties required of the Texas Department of Insurance, the |
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department shall: |
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(1) regulate the business of insurance in this state; |
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(2) administer the workers' compensation system of |
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this state as provided by Title 5, Labor Code; [and] |
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(3) ensure that this code and other laws regarding |
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insurance and insurance companies are executed; |
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(4) protect and ensure the fair treatment of |
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consumers; and |
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(5) ensure fair competition in the insurance industry |
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in order to foster a competitive market. |
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SECTION 1.002. Section 31.004(a), Insurance Code, is |
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amended to read as follows: |
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(a) The Texas Department of Insurance is subject to Chapter |
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325, Government Code (Texas Sunset Act). Unless continued in |
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existence as provided by that chapter, the department is abolished |
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September 1, 2021 [2009]. |
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SECTION 1.003. Section 33.004, Insurance Code, is amended |
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to read as follows: |
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Sec. 33.004. TRADE ASSOCIATIONS. (a) In this section, |
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"Texas trade association" means a cooperative and voluntarily |
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joined statewide association of business or professional |
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competitors in this state designed to assist its members and its |
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industry or profession in dealing with mutual business or |
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professional problems and in promoting their common interest. |
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(b) A person may not be the commissioner and may not be a |
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department employee employed in a "bona fide executive, |
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administrative, or professional capacity," as that phrase is used |
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for purposes of establishing an exemption to the overtime |
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provisions of the federal Fair Labor Standards Act of 1938 (29 |
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U.S.C. Section 201 et seq.), if: |
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(1) the person is an officer, employee, or paid |
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consultant of a Texas trade association in the field of insurance; |
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or |
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(2) the person's spouse is an officer, manager, or paid |
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consultant of a Texas trade association in the field of insurance. |
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(c) A person may not be the commissioner or act as the |
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general counsel to the commissioner or the department if the person |
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is required to register as a lobbyist under Chapter 305, Government |
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Code, because of the person's activities for compensation on behalf |
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of a profession related to the operation of the department [A person
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who is an officer, employee, or paid consultant of a trade
|
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association in the field of insurance may not be:
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[(1) the commissioner; or
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[(2)
an employee of the department who is exempt from
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the state's position classification plan or is compensated at or
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above the amount prescribed by the General Appropriations Act for
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step 1, salary group A17, of the position classification salary
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schedule]. |
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[(b)
A person who is the spouse of an officer, manager, or
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paid consultant of a trade association in the field of insurance may
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not be:
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[(1) the commissioner; or
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[(2)
an employee of the department who is exempt from
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the state's position classification plan or is compensated at or
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above the amount prescribed by the General Appropriations Act for
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step 1, salary group A17, of the position classification salary
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schedule.
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[(c)
In this section, "trade association" means a
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nonprofit, cooperative, and voluntarily joined association of
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business or professional competitors designed to assist its members
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and its industry or profession in dealing with mutual business or
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professional problems and in promoting their common interest.] |
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SECTION 1.004. Section 521.003, Insurance Code, is amended |
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to read as follows: |
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Sec. 521.003. COMPLAINTS [NOTIFICATION OF COMPLAINT
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STATUS]. (a) The department shall maintain a system to promptly |
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and efficiently act on complaints filed with the department. The |
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department shall maintain information about parties to the |
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complaint, the subject matter of the complaint, a summary of the |
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results of the review or investigation of the complaint, and its |
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disposition. |
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(b) The department shall make information available |
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describing its procedures for complaint investigation and |
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resolution. |
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(c) The department shall periodically notify the complaint |
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parties of the status of the complaint until final disposition. [If
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a written complaint is filed with the department, the department,
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at least quarterly and until final disposition of the complaint,
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shall notify each party to the complaint of the complaint's status
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unless the notice would jeopardize an undercover investigation.] |
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SECTION 1.005. Subchapter B, Chapter 36, Insurance Code, is |
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amended by adding Sections 36.110 and 36.111 to read as follows: |
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Sec. 36.110. USE OF TECHNOLOGY. The commissioner shall |
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implement a policy requiring the department to use appropriate |
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technological solutions to improve the department's ability to |
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perform its functions. The policy must ensure that the public is |
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able to interact with the department on the Internet. |
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Sec. 36.111. NEGOTIATED RULEMAKING AND ALTERNATIVE DISPUTE |
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RESOLUTION POLICY. (a) The commissioner shall develop and |
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implement a policy to encourage the use of: |
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(1) negotiated rulemaking procedures under Chapter |
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2008, Government Code, for the adoption of department rules; and |
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(2) appropriate alternative dispute resolution |
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procedures under Chapter 2009, Government Code, to assist in the |
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resolution of internal and external disputes under the department's |
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jurisdiction. |
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(b) The department's procedures relating to alternative |
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dispute resolution must conform, to the extent possible, to any |
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model guidelines issued by the State Office of Administrative |
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Hearings for the use of alternative dispute resolution by state |
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agencies. |
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(c) The commissioner shall designate a trained person to: |
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(1) coordinate the implementation of the policy |
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adopted under Subsection (a); |
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(2) serve as a resource for any training needed to |
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implement the procedures for negotiated rulemaking or alternative |
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dispute resolution; and |
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(3) collect data concerning the effectiveness of those |
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procedures, as implemented by the department. |
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SECTION 1.006. Sections 33.005 and 521.004, Insurance Code, |
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are repealed. |
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ARTICLE 2. CERTAIN ADVISORY BOARDS, COMMITTEES, AND COUNCILS |
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SECTION 2.001. Chapter 32, Insurance Code, is amended by |
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adding Subchapter E to read as follows: |
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SUBCHAPTER E. RULES REGARDING USE OF ADVISORY COMMITTEES |
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Sec. 32.151. RULEMAKING AUTHORITY. (a) The commissioner |
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shall adopt rules, in compliance with Section 39.003 of this code |
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and Chapter 2110, Government Code, regarding the purpose, |
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structure, and use of advisory committees by the commissioner, the |
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state fire marshal, or department staff, including rules governing |
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an advisory committee's: |
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(1) purpose, role, responsibility, and goals; |
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(2) size and quorum requirements; |
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(3) qualifications for membership, including |
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experience requirements and geographic representation; |
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(4) appointment procedures; |
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(5) terms of service; |
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(6) training requirements; and |
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(7) duration. |
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(b) An advisory committee must be structured and used to |
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advise the commissioner, the state fire marshal, or department |
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staff. An advisory committee may not be responsible for rulemaking |
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or policymaking. |
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Sec. 32.152. PERIODIC EVALUATION. The commissioner shall |
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by rule establish a process by which the department shall |
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periodically evaluate an advisory committee to ensure its continued |
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necessity. The department may retain or develop committees as |
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appropriate to meet changing needs. |
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Sec. 32.153. COMPLIANCE WITH OPEN MEETINGS ACT. A |
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department advisory committee must comply with Chapter 551, |
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Government Code. |
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SECTION 2.002. Section 523.003, Insurance Code, is amended |
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to read as follows: |
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Sec. 523.003. IMMUNITY. The market assistance program[,
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the members of the executive committee,] and participating insurers |
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and agents are not personally liable for: |
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(1) an act performed in good faith in the scope of the |
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person's authority as determined under this chapter; or |
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(2) damages arising from the person's official acts or |
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omissions, other than a corrupt or malicious act or omission. |
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SECTION 2.003. Section 523.055, Insurance Code, is amended |
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to read as follows: |
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Sec. 523.055. AMENDMENT OF PLAN OF OPERATION. [(a)] The |
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department [executive committee] may develop amendments to the plan |
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of operation and submit the amendments to the commissioner for |
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adoption by rule. |
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[(b)
If the executive committee fails to submit suitable
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amendments to the plan of operation, the department shall develop
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and submit to the commissioner suitable amendments and the
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commissioner shall, after notice and hearing, adopt the amendments
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by rule.] |
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SECTION 2.004. Section 523.201, Insurance Code, is amended |
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to read as follows: |
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Sec. 523.201. COLLECTION OF PROGRAM INFORMATION. |
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Information concerning the number and type of applications received |
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and placed by the market assistance program and other information |
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about the program the [executive committee or the] commissioner |
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considers appropriate shall be collected. |
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SECTION 2.005. Section 1660.102(b), Insurance Code, is |
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amended to read as follows: |
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(b) The commissioner may consider [the] recommendations [of
|
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the advisory committee] or any other information provided in |
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response to a department-issued request for information relating to |
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electronic data exchange, including identification card programs, |
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before adopting rules regarding: |
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(1) information to be included on the identification |
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cards; |
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(2) technology to be used to implement the |
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identification card pilot program; and |
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(3) confidentiality and accuracy of the information |
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required to be included on the identification cards. |
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SECTION 2.006. The following laws are repealed: |
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(1) Sections 523.053, 523.202, 524.004, 1660.002(2), |
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1660.101(c), 4004.002, and 4101.006, Insurance Code; |
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(2) Subchapter M, Chapter 843, Insurance Code; |
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(3) Subchapter B, Chapter 1660, Insurance Code; |
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(4) Subchapter G, Chapter 2210, Insurance Code; |
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(5) Subchapter C, Chapter 6001, Insurance Code; |
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(6) Subchapter C, Chapter 6002, Insurance Code; |
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(7) Subchapter C, Chapter 6003, Insurance Code; |
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(8) Chapter 1212, Insurance Code; and |
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(9) Sections 2154.054 and 2154.055(c), Occupations |
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Code. |
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SECTION 2.007. (a) The following boards, committees, |
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councils, and task forces are abolished on the effective date of |
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this Act: |
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(1) the advisory council on continuing education for |
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insurance agents; |
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(2) the fire detection and alarm devices advisory |
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council; |
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(3) the fire extinguisher advisory council; |
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(4) the fire protection advisory council; |
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(5) the fireworks advisory council; |
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(6) the health maintenance organization solvency |
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surveillance committee; |
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(7) the insurance adjuster examination advisory |
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board; |
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(8) the technical advisory committee on claims |
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processing; |
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(9) the technical advisory committee on electronic |
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data exchange; |
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(10) the health coverage public awareness and |
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education program task force; |
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(11) the executive committee of the residential |
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property insurance market assistance program; and |
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(12) the windstorm building code advisory committee on |
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specifications and maintenance. |
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(b) All powers, duties, obligations, rights, contracts, |
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funds, records, and real or personal property of a board, |
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committee, council, or task force listed under Subsection (a) of |
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this section shall be transferred to the Texas Department of |
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Insurance not later than February 28, 2010. |
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SECTION 2.008. The changes in law made by this Act by |
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amending Section 523.003, Insurance Code, and repealing Section |
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843.439, Insurance Code, apply only to a cause of action that |
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accrues on or after the effective date of this Act. A cause of |
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action that accrues before the effective date of this Act is |
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governed by the law in effect immediately before that date, and that |
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law is continued in effect for that purpose. |
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ARTICLE 3. REGULATION OF PREFERRED PROVIDER ORGANIZATIONS |
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SECTION 3.001. Subtitle D, Title 8, Insurance Code, is |
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amended by adding Chapter 1302 to read as follows: |
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CHAPTER 1302. REGULATION OF INDEPENDENT |
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PREFERRED PROVIDER ORGANIZATIONS |
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SUBCHAPTER A. GENERAL PROVISIONS |
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Sec. 1302.001. DEFINITIONS. In this chapter: |
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(1) "Person" means an individual, corporation, |
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association, or other legal entity. |
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(2) "Preferred provider organization" means an |
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insurer, third-party administrator, or other person that contracts |
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with physicians or health care providers regarding reimbursements |
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to be accepted prospectively by the physicians and health care |
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providers in providing health care services to enrollees of health |
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benefit plans contractually entitled to benefit from the |
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reimbursement agreements. |
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Sec. 1302.002. APPLICABILITY. (a) This chapter does not |
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apply to a self-funded health benefit plan exempt from regulation |
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by this state as an employee welfare benefit plan under the Employee |
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Retirement Income Security Act of 1974 (29 U.S.C. Section 1001 et |
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seq.). |
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(b) Except as specifically provided by this chapter, a |
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reference in Chapter 1301 to a duty imposed under Chapter 1301 on an |
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insurer or third-party administrator in the operation of a |
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preferred provider benefit plan applies to a preferred provider |
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organization that operates a preferred provider benefit plan under |
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a certificate of authority issued under Subchapter B but that is not |
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an insurer or third-party administrator under this code. |
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Sec. 1302.003. RULES. The commissioner shall adopt rules |
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as necessary to implement this chapter. |
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Sec. 1302.004. COMPLAINTS. The department shall track and |
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analyze complaints made against preferred provider organizations |
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regulated under this chapter. |
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[Sections 1302.005-1302.050 reserved for expansion] |
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SUBCHAPTER B. REGULATION OF PREFERRED PROVIDER ORGANIZATIONS |
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Sec. 1302.051. CERTIFICATE OF AUTHORITY REQUIRED; |
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EXCEPTION. (a) Except as provided by Subsection (b), a person may |
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not organize or operate as a preferred provider organization in |
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this state, or sell or offer to sell or solicit offers to purchase |
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or receive consideration in conjunction with a preferred provider |
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benefit plan, without holding a certificate of authority under this |
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chapter. |
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(b) An insurer that holds a certificate of authority to |
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engage in the business of insurance in this state or is otherwise |
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authorized under this code to engage in the business of insurance in |
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this state is not required to obtain an additional certificate of |
|
authority under this subchapter to operate a proprietary preferred |
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provider organization. |
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Sec. 1302.052. USE OF CERTAIN TERMS. A person may not use |
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the term "preferred provider organization" or "PPO" in the course |
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of operation unless the person: |
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(1) complies with this chapter and rules adopted by |
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the commissioner under this chapter; and |
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(2) holds a certificate of authority under this |
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chapter. |
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Sec. 1302.053. DURATION OF CERTIFICATE OF AUTHORITY. A |
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certificate of authority issued under this chapter continues in |
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effect: |
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(1) while the certificate holder meets the |
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requirements of this chapter and rules adopted under this chapter; |
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or |
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(2) until the commissioner suspends or revokes the |
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certificate or the commissioner terminates the certificate at the |
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request of the certificate holder. |
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[Sections 1302.054-1302.100 reserved for expansion] |
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SUBCHAPTER C. APPLICATION; ISSUANCE OF CERTIFICATE |
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Sec. 1302.101. APPLICATION. (a) A person may apply to the |
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department for and obtain a certificate of authority to organize |
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and operate a preferred provider organization. |
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(b) An application for a certificate of authority must: |
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(1) be on a form prescribed by rules adopted by the |
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commissioner; and |
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(2) be verified by the applicant or an officer or other |
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authorized representative of the applicant. |
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Sec. 1302.102. CONTENTS OF APPLICATION. (a) An |
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application for a certificate of authority must include: |
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(1) a copy of the applicant's basic organizational |
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document, if any, such as the articles of incorporation, articles |
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of association, partnership agreement, trust agreement, or other |
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applicable documents; |
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(2) all amendments to the applicant's basic |
|
organizational document; and |
|
(3) a copy of the bylaws, rules and regulations, or |
|
similar documents, if any, regulating the conduct of the |
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applicant's internal affairs. |
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(b) An application for a certificate of authority must |
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include a list of the names, addresses, and official positions of |
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the persons responsible for the conduct of the applicant's affairs, |
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including: |
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(1) each member of the board of directors, board of |
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trustees, executive committee, or other governing body or |
|
committee; |
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(2) the principal officer, if the applicant is a |
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corporation; and |
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(3) each partner or member, if the applicant is a |
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partnership or association. |
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(c) An application for a certificate of authority must |
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include a template of any contract made or to be made between the |
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applicant and any physician or health care provider. |
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Sec. 1302.103. APPLICATION FEE. (a) An applicant for a |
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certificate of authority under this chapter shall pay to the |
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department a filing fee not to exceed $1,000 for processing an |
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original application for a certificate of authority for a preferred |
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provider organization. |
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(b) The commissioner shall deposit a fee collected under |
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this section to the credit of the Texas Department of Insurance |
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operating account. |
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Sec. 1302.104. REQUIREMENTS FOR APPROVAL OF APPLICATION. |
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The commissioner shall approve an application for a certificate of |
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authority to engage in business in this state as a preferred |
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provider organization on payment of the application fee prescribed |
|
by Section 1302.103 and if the commissioner is satisfied that: |
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(1) granting the application would not violate a |
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federal or state law; |
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(2) the applicant has not attempted to obtain the |
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certificate of authority through fraud or bad faith; |
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(3) the applicant has complied with this chapter and |
|
rules adopted by the commissioner under this chapter; and |
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(4) the name under which the applicant will engage in |
|
business in this state is not so similar to that of another |
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preferred provider organization that it is likely to mislead the |
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public. |
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Sec. 1302.105. DENIAL OF APPLICATION. (a) If the |
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commissioner is unable to approve an application for a certificate |
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of authority under this chapter, the commissioner shall: |
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(1) provide the applicant with written notice |
|
specifying each deficiency in the application; and |
|
(2) offer the applicant the opportunity for a hearing |
|
to address each reason and circumstance for possible denial of the |
|
application. |
|
(b) The commissioner must provide an opportunity for a |
|
hearing before the commissioner finally denies an application. |
|
(c) At the hearing, the applicant has the burden to produce |
|
sufficient competent evidence on which the commissioner can make |
|
the determinations required by Section 1302.104. |
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[Sections 1302.106-1302.150 reserved for expansion] |
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SUBCHAPTER D. ENFORCEMENT |
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Sec. 1302.151. GROUNDS FOR DENIAL, SUSPENSION, OR |
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REVOCATION OF CERTIFICATE OF AUTHORITY. The denial, suspension, or |
|
revocation of a certificate of authority under this chapter to act |
|
as a preferred provider organization is subject to: |
|
(1) Subchapter C, Chapter 4005; and |
|
(2) Chapter 82. |
|
SECTION 3.002. Not later than November 1, 2009, the |
|
commissioner of insurance shall adopt rules as necessary to |
|
implement Chapter 1302, Insurance Code, as added by this Act. |
|
SECTION 3.003. (a) Except as provided by Subsections (b) |
|
and (c) of this section, a preferred provider organization that is |
|
operating before the effective date of this Act and that has not |
|
previously submitted an application for a certificate of authority |
|
under the Insurance Code must apply for a certificate of authority |
|
under Chapter 1302, Insurance Code, as added by this Act, not later |
|
than the 60th day after the effective date of this Act. |
|
(b) A preferred provider organization operating in this |
|
state that, as of August 31, 2009, holds a certificate of authority |
|
as an insurer under Chapter 801, Insurance Code, or a certificate of |
|
authority as a third-party administrator under Chapter 4151, |
|
Insurance Code, is not required to obtain a certificate of |
|
authority under Chapter 1302, Insurance Code, as added by this Act. |
|
(c) A preferred provider organization in this state that has |
|
not applied for or does not hold, as of the effective date of this |
|
Act, a certificate of authority under Chapter 801 or 4151, |
|
Insurance Code, and that applies for a certificate of authority |
|
under Chapter 1302, Insurance Code, as added by this Act, may |
|
continue to operate, if the applicant otherwise complies with |
|
applicable law, until the commissioner of insurance acts on the |
|
application. |
|
ARTICLE 4. RATE REGULATION |
|
SECTION 4.001. Subchapter A, Chapter 2251, Insurance Code, |
|
is amended by adding Section 2251.009 to read as follows: |
|
Sec. 2251.009. FILING OF CERTAIN CLAIMS INFORMATION. (a) |
|
This section applies only to an insurer subject to this subchapter |
|
who writes personal automobile insurance or residential property |
|
insurance in this state. |
|
(b) The commissioner shall require each insurer described |
|
by Subsection (a) to file with the commissioner personal automobile |
|
insurance and residential property insurance claims information |
|
for the period covered by the filing, including the number of |
|
claims: |
|
(1) filed during the reporting period; |
|
(2) pending on the last day of the reporting period, |
|
including pending litigation; |
|
(3) paid during the reporting period; |
|
(4) denied during the reporting period; and |
|
(5) carrying over from the reporting period |
|
immediately preceding the current reporting period. |
|
(c) The commissioner may require insurers described by |
|
Subsection (a) to file the information described by Subsection (b) |
|
quarterly or annually. |
|
(d) The commissioner may adopt rules necessary to implement |
|
this section. |
|
SECTION 4.002. Section 2251.101(b), Insurance Code, is |
|
amended to read as follows: |
|
(b) The commissioner by rule shall: |
|
(1) determine the information required to be included |
|
in the filing, including: |
|
(A) [(1)] categories of supporting information |
|
and supplementary rating information; |
|
(B) [(2)] statistics or other information to |
|
support the rates to be used by the insurer, including information |
|
necessary to evidence that the computation of the rate does not |
|
include disallowed expenses; and |
|
(C) [(3)] information concerning policy fees, |
|
service fees, and other fees that are charged or collected by the |
|
insurer under Section 550.001 or 4005.003; and |
|
(2) prescribe the process through which the department |
|
requests supplementary rating information and supporting |
|
information under this section, including: |
|
(A) any time limits concerning and the time frame |
|
in which requests for the information may be made; |
|
(B) the number of times the department may make a |
|
request for information; and |
|
(C) the types of information the department may |
|
request when reviewing a rate filing. |
|
SECTION 4.003. Section 2251.103, Insurance Code, is amended |
|
to read as follows: |
|
Sec. 2251.103. COMMISSIONER ACTION CONCERNING [DISAPPROVAL
|
|
OF RATE IN] RATE FILING; HEARING AND ANALYSIS. (a) Not later than |
|
the 30th day after the date a rate is filed with the department |
|
under Section 2251.101, the [The] commissioner shall disapprove |
|
the [a] rate if the commissioner determines that the rate [filing
|
|
made under this chapter] does not comply with the requirements of |
|
this chapter [meet the standards established under Subchapter B]. |
|
(b) Except as provided by Subsection (c), if a rate has not |
|
been disapproved by the commissioner before the expiration of the |
|
30-day period described by Subsection (a), the rate is considered |
|
approved. |
|
(c) For good cause, the commissioner may, on the expiration |
|
of the 30-day period described by Subsection (a), extend the period |
|
for disapproval of a rate for one additional 30-day period. The |
|
commissioner and the insurer may not by agreement extend the 30-day |
|
period described by Subsection (a). |
|
(d) If the commissioner disapproves a rate under this |
|
section [filing], the commissioner shall issue an order specifying |
|
in what respects the rate [filing] fails to meet the requirements of |
|
this chapter. |
|
(e) An insurer that files a rate that is disapproved under |
|
this section [(c) The filer] is entitled to a hearing on written |
|
request made to the commissioner not later than the 30th day after |
|
the date the order disapproving the rate [filing] takes effect. |
|
(f) The department shall track, compile, and routinely |
|
analyze the factors that contribute to the disapproval of rates |
|
under this section. |
|
SECTION 4.004. Subchapter C, Chapter 2251, Insurance Code, |
|
is amended by adding Section 2251.1031 to read as follows: |
|
Sec. 2251.1031. REQUESTS FOR ADDITIONAL INFORMATION. (a) |
|
If the department determines that the information filed by an |
|
insurer under this subchapter or Subchapter D is incomplete or |
|
otherwise deficient, the department may request additional |
|
information from the insurer. |
|
(b) If the department requests additional information from |
|
the insurer during the 30-day period described by Section |
|
2251.103(a) or 2251.153(a) or under a second 30-day period |
|
described by Section 2251.103(c) or 2251.153(c), as applicable, the |
|
time between the date the department submits the request to the |
|
insurer and the date the department receives the information |
|
requested is not included in the computation of the first 30-day |
|
period or the second 30-day period, as applicable. |
|
(c) For purposes of this section, the date of the |
|
department's submission of a request for additional information is: |
|
(1) the date of the department's electronic mailing or |
|
telephone call relating to the request for additional information; |
|
or |
|
(2) the postmarked date on the department's letter |
|
relating to the request for additional information. |
|
(d) The department shall track, compile, and routinely |
|
analyze the volume and content of requests for additional |
|
information made under this section to ensure that all requests for |
|
additional information are fair and reasonable. |
|
SECTION 4.005. The heading to Section 2251.104, Insurance |
|
Code, is amended to read as follows: |
|
Sec. 2251.104. COMMISSIONER DISAPPROVAL OF RATE IN EFFECT; |
|
HEARING. |
|
SECTION 4.006. Section 2251.107, Insurance Code, is amended |
|
to read as follows: |
|
Sec. 2251.107. PUBLIC [INSPECTION OF] INFORMATION. (a) |
|
Each filing made, and any supporting information filed, under this |
|
chapter, including a claims information filing under Section |
|
2251.009, are [is] open to public inspection as of the date of the |
|
filing. |
|
(b) The department shall make available to the public |
|
information concerning best practices for rate development by |
|
insurers in this state and the factors that contribute to the |
|
disapproval of rates under Section 2251.103. Information provided |
|
under this subsection must be general in nature and may not reveal |
|
proprietary or trade secret information of any insurer. |
|
(c) The department shall post the data contained in claims |
|
information filings under Section 2251.009 on the department's |
|
Internet website. The commissioner by rule may establish a |
|
procedure for posting data under this subsection that includes a |
|
description of the data that must be posted and the manner in which |
|
the data must be posted. |
|
SECTION 4.007. Section 2251.151, Insurance Code, is amended |
|
by adding Subsections (c-1) and (f) and amending Subsection (e) to |
|
read as follows: |
|
(c-1) If the commissioner requires an insurer to file the |
|
insurer's rates under this section, the commissioner shall |
|
periodically assess whether the conditions described by Subsection |
|
(a) continue to exist. If the commissioner determines that the |
|
conditions no longer exist, the commissioner shall issue an order |
|
excusing the insurer from filing the insurer's rates under this |
|
section. |
|
(e) If the commissioner requires an insurer to file the |
|
insurer's rates under this section, the commissioner shall issue an |
|
order specifying the commissioner's reasons for requiring the rate |
|
filing and explaining any steps the insurer must take and any |
|
conditions the insurer must meet in order to be excused from filing |
|
the insurer's rates under this section. An affected insurer is |
|
entitled to a hearing on written request made to the commissioner |
|
not later than the 30th day after the date the order is issued. |
|
(f) The commissioner by rule shall define: |
|
(1) the financial conditions and rating practices that |
|
may subject an insurer to this section under Subsection (a)(1); and |
|
(2) the process by which the commissioner determines |
|
that a statewide insurance emergency exists under Subsection |
|
(a)(2). |
|
SECTION 4.008. Section 2251.156, Insurance Code, is amended |
|
to read as follows: |
|
Sec. 2251.156. RATE FILING DISAPPROVAL BY COMMISSIONER; |
|
HEARING. (a) If the commissioner disapproves a rate filing under |
|
Section 2251.153(a)(2), the commissioner shall issue an order |
|
disapproving the filing in accordance with Section 2251.103(d) |
|
[2251.103(b)]. |
|
(b) An insurer whose rate filing is disapproved is entitled |
|
to a hearing in accordance with Section 2251.103(e) [2251.103(c)]. |
|
SECTION 4.009. Sections 2251.252(a) and (b), Insurance |
|
Code, are amended to read as follows: |
|
(a) Except as provided by Subsections (b) and (c), an |
|
insurer is exempt from the rate filing and approval requirements of |
|
this chapter if the insurer, during the calendar year preceding the |
|
date filing is otherwise required under this chapter, issued |
|
residential property insurance policies in this state that |
|
accounted for less than four [two] percent of the total amount of |
|
premiums collected by insurers for residential property insurance |
|
policies issued in this state, more than 50 percent of which cover |
|
property: |
|
(1) valued at less than $100,000; and |
|
(2) located in an area designated by the commissioner |
|
as underserved for residential property insurance under Chapter |
|
2004. |
|
(b) If an insurer described by Subsection (a) is a member of |
|
an affiliated insurance group, this subchapter applies to the |
|
insurer only if the total aggregate premium collected by the group |
|
accounts for less than four [two] percent of the total amount of |
|
premiums collected by insurers for residential property insurance |
|
policies issued in this state. |
|
SECTION 4.010. Section 2251.154, Insurance Code, is |
|
repealed. |
|
SECTION 4.011. The commissioner of insurance shall require |
|
an insurer to make the insurer's first claims information filing |
|
under Section 2251.009, Insurance Code, as added by this Act, |
|
beginning on or after January 1, 2010. |
|
SECTION 4.012. Section 2251.103, Insurance Code, as amended |
|
by this Act, and Section 2251.1031, Insurance Code, as added by this |
|
Act, apply only to a rate filing made on or after the effective date |
|
of this Act. A rate filing made before the effective date of this |
|
Act is governed by the law in effect at the time the filing was made, |
|
and that law is continued in effect for that purpose. |
|
SECTION 4.013. Section 2251.151(c-1), Insurance Code, as |
|
added by this Act, applies to an insurer that is required to file |
|
the insurer's rates for approval under Section 2251.151, Insurance |
|
Code, on or after the effective date of this Act, regardless of when |
|
the order requiring the insurer to file the insurer's rates for |
|
approval under that section is first issued. |
|
SECTION 4.014. Section 2251.151(e), Insurance Code, as |
|
amended by this Act, applies only to an order issued by the |
|
commissioner of insurance on or after the effective date of this |
|
Act. An order of the commissioner issued before the effective date |
|
of this Act is governed by the law in effect on the date the order |
|
was issued, and that law is continued in effect for that purpose. |
|
ARTICLE 5. STATE FIRE MARSHAL'S OFFICE |
|
SECTION 5.001. Section 417.008, Government Code, is amended |
|
by adding Subsection (f) to read as follows: |
|
(f) The commissioner by rule shall prescribe a reasonable |
|
fee for an inspection performed by the state fire marshal that may |
|
be charged to a property owner or occupant who requests the |
|
inspection, as the commissioner considers appropriate. In |
|
prescribing the fee, the commissioner shall consider the overall |
|
cost to the state fire marshal to perform the inspections, |
|
including the approximate amount of time the staff of the state fire |
|
marshal needs to perform an inspection, travel costs, and other |
|
expenses. |
|
SECTION 5.002. Section 417.0081, Government Code, is amended |
|
to read as follows: |
|
Sec. 417.0081. INSPECTION OF CERTAIN STATE-OWNED OR |
|
STATE-LEASED BUILDINGS. (a) The state fire marshal, at the |
|
commissioner's direction, shall periodically inspect public |
|
buildings under the charge and control of the Texas Facilities |
|
[General Services] Commission and buildings leased for the use of a |
|
state agency by the Texas Facilities Commission. |
|
(b) For the purpose of determining a schedule for conducting |
|
inspections under this section, the commissioner by rule shall |
|
adopt guidelines for assigning potential fire safety risk to |
|
state-owned and state-leased buildings. Rules adopted under this |
|
subsection must provide for the inspection of each state-owned and |
|
state-leased building to which this section applies, regardless of |
|
how low the potential fire safety risk of the building may be. |
|
(c) On or before January 1 of each year, the state fire |
|
marshal shall report to the governor, lieutenant governor, speaker |
|
of the house of representatives, and appropriate standing |
|
committees of the legislature regarding the state fire marshal's |
|
findings in conducting inspections under this section. |
|
SECTION 5.003. Section 417.0082, Government Code, is amended |
|
to read as follows: |
|
Sec. 417.0082. PROTECTION OF CERTAIN STATE-OWNED OR |
|
STATE-LEASED BUILDINGS AGAINST FIRE HAZARDS. (a) The state fire |
|
marshal, under the direction of the commissioner, shall take any |
|
action necessary to protect a public building under the charge and |
|
control of the Texas Facilities [Building and Procurement] |
|
Commission, and the building's occupants, and the occupants of a |
|
building leased for the use of a state agency by the Texas |
|
Facilities Commission, against an existing or threatened fire |
|
hazard. The state fire marshal and the Texas Facilities [Building
|
|
and Procurement] Commission shall include the State Office of Risk |
|
Management in all communication concerning fire hazards. |
|
(b) The commissioner, the Texas Facilities [Building and
|
|
Procurement] Commission, and the risk management board shall make |
|
and each adopt by rule a memorandum of understanding that |
|
coordinates the agency's duties under this section. |
|
SECTION 5.004. Section 417.010, Government Code, is amended |
|
to read as follows: |
|
Sec. 417.010. DISCIPLINARY AND ENFORCEMENT ACTIONS; |
|
ADMINISTRATIVE PENALTIES [ALTERNATE REMEDIES]. (a) This section |
|
applies to each person and firm licensed, registered, or otherwise |
|
regulated by the department through the state fire marshal, |
|
including: |
|
(1) a person regulated under Title 20, Insurance Code; |
|
and |
|
(2) a person licensed under Chapter 2154, Occupations |
|
Code. |
|
(b) The commissioner by rule shall delegate to the state |
|
fire marshal the authority to take disciplinary and enforcement |
|
actions, including the imposition of administrative penalties in |
|
accordance with this section on a person regulated under a law |
|
listed under Subsection (a) who violates that law or a rule or order |
|
adopted under that law. In the rules adopted under this subsection, |
|
the commissioner shall: |
|
(1) specify which types of disciplinary and |
|
enforcement actions are delegated to the state fire marshal; and |
|
(2) outline the process through which the state fire |
|
marshal may, subject to Subsection (e), impose administrative |
|
penalties or take other disciplinary and enforcement actions. |
|
(c) The commissioner by rule shall adopt a schedule of |
|
administrative penalties for violations subject to a penalty under |
|
this section to ensure that the amount of an administrative penalty |
|
imposed is appropriate to the violation. The department shall |
|
provide the administrative penalty schedule to the public on |
|
request. The amount of an administrative penalty imposed under |
|
this section must be based on: |
|
(1) the seriousness of the violation, including: |
|
(A) the nature, circumstances, extent, and |
|
gravity of the violation; and |
|
(B) the hazard or potential hazard created to the |
|
health, safety, or economic welfare of the public; |
|
(2) the economic harm to the public interest or public |
|
confidence caused by the violation; |
|
(3) the history of previous violations; |
|
(4) the amount necessary to deter a future violation; |
|
(5) efforts to correct the violation; |
|
(6) whether the violation was intentional; and |
|
(7) any other matter that justice may require. |
|
(d) In [The state fire marshal, in] the enforcement of a law |
|
that is enforced by or through the state fire marshal, the state |
|
fire marshal may, in lieu of cancelling, revoking, or suspending a |
|
license or certificate of registration, impose on the holder of the |
|
license or certificate of registration an order directing the |
|
holder to do one or more of the following: |
|
(1) cease and desist from a specified activity; |
|
(2) pay an administrative penalty imposed under this |
|
section [remit to the commissioner within a specified time a
|
|
monetary forfeiture not to exceed $10,000 for each violation of an
|
|
applicable law or rule]; or [and] |
|
(3) make restitution to a person harmed by the holder's |
|
violation of an applicable law or rule. |
|
(e) The state fire marshal shall impose an administrative |
|
penalty under this section in the manner prescribed for imposition |
|
of an administrative penalty under Subchapter B, Chapter 84, |
|
Insurance Code. The state fire marshal may impose an |
|
administrative penalty under this section without referring the |
|
violation to the department for commissioner action. |
|
(f) An affected person may dispute the imposition of the |
|
penalty or the amount of the penalty imposed in the manner |
|
prescribed by Subchapter C, Chapter 84, Insurance Code. Failure to |
|
pay an administrative penalty imposed under this section is subject |
|
to enforcement by the department. |
|
ARTICLE 6. TITLE INSURANCE |
|
SECTION 6.001. Section 2602.107, Insurance Code, is amended |
|
by adding Subsection (d) to read as follows: |
|
(d) The association shall pay, from the guaranty fee |
|
account, fees and reasonable and necessary expenses that the |
|
department incurs in an examination of a title agent or direct |
|
operation under Subchapter H, Chapter 2651. |
|
SECTION 6.002. Subchapter D, Chapter 2651, Insurance Code, |
|
is amended by adding Section 2651.1511 and amending Sections |
|
2651.153 and 2651.155 to read as follows: |
|
Sec. 2651.1511. ANNUAL AUDIT OF OPERATING ACCOUNTS: TITLE |
|
INSURANCE AGENTS AND DIRECT OPERATIONS. (a) Each title insurance |
|
agent and direct operation shall submit to the department an annual |
|
audit of operating accounts that is verified by an officer of: |
|
(1) the audited title insurance agent; or |
|
(2) the audited direct operation. |
|
(b) The title insurance agent or direct operation shall pay |
|
for an audit of operating accounts under this section. |
|
(c) Not later than the 90th day after the date of the end of |
|
the agent's or direct operation's fiscal year, the agent or direct |
|
operation shall send by certified mail, postage prepaid, to the |
|
department one copy of the audit report with a transmittal letter. |
|
(d) Notwithstanding Subsection (a), the commissioner may |
|
exempt a title insurance agent or direct operation with an annual |
|
premium volume of less than $100,000 from the requirements of |
|
Subsections (a)-(c). |
|
Sec. 2651.153. RULES. The commissioner by rule shall |
|
adopt: |
|
(1) the standards for an audit conducted under this |
|
subchapter; [and] |
|
(2) the form of the required audit report; and |
|
(3) a process to exempt a title insurance agent under |
|
Section 2651.1511(d). |
|
Sec. 2651.155. CONFIDENTIALITY OF AUDIT. (a) The |
|
commissioner may classify an audit report that is filed with the |
|
department by a title insurance company under this subchapter as |
|
confidential and privileged. |
|
(b) Information obtained in an audit of the operating |
|
accounts of a title insurance agent or direct operation under this |
|
subchapter is confidential and not subject to disclosure under this |
|
code or Chapter 552, Government Code. |
|
SECTION 6.003. Chapter 2651, Insurance Code, is amended by |
|
adding Subchapter H to read as follows: |
|
SUBCHAPTER H. EXAMINATION OF TITLE INSURANCE AGENTS AND DIRECT |
|
OPERATIONS |
|
Sec. 2651.351. EXAMINATION OF TITLE INSURANCE AGENTS AND |
|
DIRECT OPERATIONS. (a) The department shall examine each title |
|
insurance agent and direct operation licensed in this state as |
|
provided by this subchapter. |
|
(b) The department shall: |
|
(1) examine the title insurance agent's or direct |
|
operation's: |
|
(A) financial condition; |
|
(B) trust, escrow, and operating accounts; |
|
(C) ability to meet its liabilities; and |
|
(D) compliance with the laws of this state and |
|
rules adopted by the commissioner that affect the business conduct |
|
of the title insurance agent or direct operation; and |
|
(2) verify the data reported for rate promulgation. |
|
(c) The department shall conduct the examination at the |
|
principal office of the title insurance agent or direct operation, |
|
and may conduct the examination alone or with representatives of |
|
the insurance supervising departments of other states. |
|
(d) Subject to Subsection (e), the department shall examine |
|
a title insurance agent or direct operation as frequently as the |
|
department considers necessary. At a minimum, the department shall |
|
examine a title insurance agent or direct operation not less |
|
frequently than once every three years. |
|
(e) The commissioner shall adopt rules governing the |
|
frequency of examinations of a title insurance agent or direct |
|
operation licensed for less than three years. |
|
Sec. 2652.352. EXAMINATION PERIOD. Unless the department |
|
requests that an examination cover a longer period, the examination |
|
must cover the period beginning on the last day covered by the most |
|
recent examination and ending on December 31 of the year preceding |
|
the year in which the examination is being conducted. |
|
Sec. 2651.353. POWERS RELATED TO EXAMINATION. The |
|
department or the examiner appointed by the department: |
|
(1) has free access, and may require the title |
|
insurance agent or direct operation to provide free access, to all |
|
books and papers of the title insurance agent or direct operation |
|
that relate to the business and affairs of the title insurance agent |
|
or direct operation; and |
|
(2) has the authority to summon and examine under |
|
oath, if necessary, an officer, agent, or employee of the title |
|
insurance agent or direct operation or any other person in relation |
|
to the affairs and condition of the title insurance agent or direct |
|
operation. |
|
Sec. 2651.354. EFFECT OF SUBCHAPTER ON AUTHORITY TO USE |
|
INFORMATION. This subchapter does not limit the commissioner's |
|
authority to use a final or preliminary examination report, the |
|
work papers of an examiner, title insurance agent, or direct |
|
operation, or other documents, or any other information discovered |
|
or developed during an examination in connection with a legal or |
|
regulatory action that the commissioner, in the commissioner's sole |
|
discretion, considers appropriate. |
|
Sec. 2651.355. CONFIDENTIALITY OF REPORTS AND RELATED |
|
INFORMATION. (a) A final or preliminary examination report and any |
|
information obtained during an examination are confidential and are |
|
not subject to disclosure under Chapter 552, Government Code. |
|
(b) Subsection (a) applies if the examined title insurance |
|
agent or direct operation is under supervision or conservatorship. |
|
(c) Subsection (a) does not apply to an examination |
|
conducted in connection with a liquidation or receivership under |
|
this code or another insurance law of this state. |
|
Sec. 2651.356. DISCIPLINARY ACTION FOR FAILURE TO COMPLY |
|
WITH SUBCHAPTER. A title insurance agent or direct operation is |
|
subject to disciplinary action under Chapter 82 for failure or |
|
refusal to comply with: |
|
(1) this subchapter or a rule adopted under this |
|
subchapter; or |
|
(2) a request by the department or an appointed |
|
examiner to be examined or to provide information requested as part |
|
of an examination. |
|
SECTION 6.004. Section 2703.153(c), Insurance Code, is |
|
amended to read as follows: |
|
(c) Not less frequently than once every five years, the |
|
commissioner shall evaluate the information required under this |
|
section to determine whether the department needs additional or |
|
different information or no longer needs certain information to |
|
promulgate rates. If the department requires a title insurance |
|
company or title insurance agent to include new or different |
|
information in the statistical report, that information may be |
|
considered by the commissioner in fixing premium rates if the |
|
information collected is reasonably credible for the purposes for |
|
which the information is to be used. |
|
SECTION 6.005. Sections 2602.103(b), (c), and (d), |
|
Insurance Code, are repealed. |
|
ARTICLE 7. TEXAS WINDSTORM INSURANCE ASSOCIATION |
|
SECTION 7.001. Section 2210.008, Insurance Code, is amended |
|
to read as follows: |
|
Sec. 2210.008. DEPARTMENT RULES; ORDERS. (a) The |
|
commissioner shall adopt rules in the manner prescribed by |
|
Subchapter A, Chapter 36, as the commissioner considers necessary |
|
to implement this chapter. The commissioner shall adopt rules as |
|
provided by this chapter to approve proposed changes to the |
|
operations of the association. |
|
(b) The [After notice and hearing as provided by Subsection
|
|
(b), the] commissioner may issue any orders that the commissioner |
|
considers necessary to implement this chapter[, including orders
|
|
regarding maximum rates, competitive rates, and policy forms]. |
|
[(b)
Before the commissioner adopts an order, the
|
|
department shall post notice of the hearing on the order at the
|
|
secretary of state's office in Austin and shall hold a hearing to
|
|
consider the proposed order.
Any person may appear at the hearing
|
|
and testify for or against the adoption of the order.] |
|
SECTION 7.002. Section 2210.102, Insurance Code, is amended |
|
to read as follows: |
|
Sec. 2210.102. COMPOSITION. (a) The board of directors |
|
is composed of 11 [the following nine] members appointed by the |
|
commissioner as follows: |
|
(1) five representatives of different insurers who are |
|
members of the association[, elected by the members as provided by
|
|
the plan of operation]; |
|
(2) four [two] public representatives [who are
|
|
nominated by the office of public insurance counsel and] who, as of |
|
the date of the appointment: |
|
(A) reside in a catastrophe area; and |
|
(B) are policyholders of the association; and |
|
(3) two property and casualty agents, each of whom |
|
must: |
|
(A) have demonstrated experience in the |
|
association; |
|
(B) maintain the agent's principal office, as of |
|
the date of the appointment, in a catastrophe area; and |
|
(C) hold a license under Chapter 4051 as a |
|
general property and casualty agent or a personal lines property |
|
and casualty agent. |
|
(b) Insurers who are members of the association shall |
|
nominate, from among those members, persons to fill any vacancy in |
|
the five board of director seats reserved for insurers. The board |
|
of directors shall solicit nominations from the members and submit |
|
the nominations to the commissioner. The nominee slate submitted |
|
to the commissioner under this subsection must include more names |
|
than the number of vacancies. The commissioner shall appoint |
|
replacement insurer members from the nominee slate. |
|
(c) The persons appointed under Subsections (a)(2) and (3) |
|
must be from different counties. |
|
SECTION 7.003. Section 2210.103(a), Insurance Code, is |
|
amended to read as follows: |
|
(a) Members of the board of directors serve three-year |
|
staggered terms, with the terms of three members or four members, as |
|
applicable, expiring on the third Tuesday of March of each year. |
|
SECTION 7.004. Section 2210.104, Insurance Code, is amended |
|
to read as follows: |
|
Sec. 2210.104. OFFICERS. The commissioner shall appoint a |
|
presiding officer [board of directors shall elect] from the board's |
|
membership [an executive committee consisting of a presiding
|
|
officer, assistant presiding officer, and secretary-treasurer.
At
|
|
least one of the officers must be a member appointed under Section
|
|
2210.102(a)(2) or (3)]. The board of directors may elect other |
|
officers from the board's membership as considered necessary to |
|
conduct the duties of the board. |
|
SECTION 7.005. Section 2210.152(a), Insurance Code, is |
|
amended to read as follows: |
|
(a) The plan of operation must: |
|
(1) provide for the efficient, economical, fair, and |
|
nondiscriminatory administration of the association; and |
|
(2) include: |
|
(A) a plan for the equitable assessment of the |
|
members of the association to defray losses and expenses; |
|
(B) underwriting standards; |
|
(C) procedures for accepting and ceding |
|
reinsurance; |
|
(D) procedures for determining the amount of |
|
insurance to be provided to specific risks; |
|
(E) time limits and procedures for processing |
|
applications for insurance; [and] |
|
(F) a plan for property inspections for windstorm |
|
and hail insurance; and |
|
(G) other provisions as considered necessary by |
|
the department to implement the purposes of this chapter. |
|
SECTION 7.006. Section 2210.153, Insurance Code, is amended |
|
to read as follows: |
|
Sec. 2210.153. AMENDMENTS TO PLAN OF OPERATION. (a) The |
|
association shall [may] present a recommendation for a change in |
|
the plan of operation to the department [at:
|
|
[(1)
periodic hearings conducted by the department for
|
|
that purpose; or
|
|
[(2)
hearings relating to property and casualty
|
|
insurance rates.
|
|
[(b)
The association must present a proposed change to the
|
|
department] in writing in the manner prescribed by the |
|
commissioner. A proposed change does not take effect unless |
|
adopted by the commissioner by rule. |
|
(b) [(c)] An interested person may, in accordance with |
|
Chapter 2001, Government Code, petition the commissioner to modify |
|
the plan of operation. |
|
SECTION 7.007. Section 2210.202(a), Insurance Code, is |
|
amended to read as follows: |
|
(a) A person who has an insurable interest in insurable |
|
property may apply to the association for insurance coverage |
|
provided under the plan of operation and an inspection of the |
|
property, subject to any rules, including any inspection fee, |
|
established by the board of directors and approved by the |
|
commissioner. The association shall make insurance available to |
|
each applicant in the catastrophe area whose property is insurable |
|
property but who, after diligent efforts, is unable to obtain |
|
property insurance through the voluntary market, as evidenced by |
|
two declinations, cancellations, or a combination of declinations |
|
and cancellations from insurers authorized to engage in the |
|
business of, and writing, property insurance in this state. For |
|
purposes of this section, "declination" has the meaning assigned by |
|
the plan of operation and may include a refusal to offer coverage |
|
and the inability to obtain substantially equivalent insurance |
|
coverage and rates. Notwithstanding Section 2210.203(c), evidence |
|
of two declinations or other comparable evidence is required with |
|
an application for renewal of an association policy unless the |
|
association has evidence that comparable voluntary market coverage |
|
is not available in the area of the property to be insured for the |
|
same class of risk. |
|
SECTION 7.008. Section 2210.207(e), Insurance Code, is |
|
amended to read as follows: |
|
(e) Notwithstanding this chapter or any other law, the |
|
commissioner[, after notice and hearing,] may adopt rules to: |
|
(1) authorize the association to provide actual cash |
|
value coverage instead of replacement cost coverage on the roof |
|
covering of a building insured by the association; and |
|
(2) establish: |
|
(A) the conditions under which the association |
|
may provide that actual cash value coverage; |
|
(B) the appropriate premium reductions when |
|
coverage for the roof covering is provided on an actual cash value |
|
basis; and |
|
(C) the disclosure that must be provided to the |
|
policyholder, prominently displayed on the face of the windstorm |
|
and hail insurance policy. |
|
SECTION 7.009. Section 2210.251, Insurance Code, is amended |
|
by amending Subsections (a), (c), (f), and (g) and adding |
|
Subsections (i), (j), and (k) to read as follows: |
|
(a) Except as provided by this section, to be considered |
|
insurable property eligible for windstorm and hail insurance |
|
coverage from the association, a structure that is constructed or |
|
repaired or to which additions are made on or after January 1, 1988, |
|
must be inspected or approved by the association [department] for |
|
compliance with the plan of operation. |
|
(c) After January 1, 2004, a person must submit a notice of a |
|
windstorm inspection to the association [unit responsible for
|
|
certification of windstorm inspections at the department] before |
|
beginning to construct, alter, remodel, enlarge, or repair a |
|
structure. |
|
(f) The association [department] shall issue a certificate |
|
of compliance for each structure that qualifies for coverage. The |
|
certificate is evidence of insurability of the structure by the |
|
association. |
|
(g) The association [department] may enter into agreements |
|
and contracts as necessary to implement this section. |
|
(i) The association may charge a reasonable fee for each |
|
inspection in an amount set by commissioner rule. The association |
|
may use fees collected under this section for operating expenses. |
|
(j) Without limitation of the department's authority to |
|
otherwise enforce this chapter, the department shall monitor the |
|
association's compliance with this subchapter. To facilitate the |
|
department's oversight of the inspection program, the association |
|
shall report to the department monthly, in the manner prescribed by |
|
the commissioner, regarding: |
|
(1) the number of inspections performed; |
|
(2) the number of structures inspected; |
|
(3) the number and a general description of the type of |
|
inspection deficiencies discovered through the inspection program; |
|
and |
|
(4) any actions taken to resolve problems with |
|
inspections. |
|
(k) The commissioner may adopt rules in the manner |
|
prescribed by Subchapter A, Chapter 36, as necessary to implement |
|
this section. |
|
SECTION 7.010. Sections 2210.254(a) and (c), Insurance |
|
Code, are amended to read as follows: |
|
(a) For purposes of this chapter, a "qualified inspector" |
|
includes: |
|
(1) a person determined by the association |
|
[department] to be qualified because of training or experience to |
|
perform building inspections; |
|
(2) a licensed professional engineer who meets the |
|
requirements specified by the association [commissioner rule] for |
|
appointment to conduct windstorm inspections; and |
|
(3) an inspector who: |
|
(A) is certified by the International Code |
|
Council, the Building Officials and Code Administrators |
|
International, Inc., the International Conference of Building |
|
Officials, or the Southern Building Code Congress International, |
|
Inc.; |
|
(B) has certifications as a buildings inspector |
|
and coastal construction inspector; and |
|
(C) complies with other requirements specified |
|
by the board of directors [commissioner rule]. |
|
(c) Before performing building inspections, a qualified |
|
inspector must enter into a contract with the association [be
|
|
approved and appointed or employed by the department]. |
|
SECTION 7.011. Subchapter F, Chapter 2210, Insurance Code, |
|
is amended by adding Section 2210.2541 to read as follows: |
|
Sec. 2210.2541. ASSOCIATION INSPECTION PROGRAM. (a) The |
|
association shall develop an inspection program to perform |
|
inspections for windstorm and hail insurance as required by this |
|
subchapter. |
|
(b) The association shall adopt inspection standards and |
|
regulations regarding the operation of the inspection program, |
|
including: |
|
(1) inspection training and education requirements, |
|
as determined necessary by the association, for licensed engineers |
|
who contract with the association under Section 2210.255; |
|
(2) guidelines for inspection fees assessed under |
|
Section 2210.251(i) and for fees collected by inspectors under this |
|
subchapter; and |
|
(3) procedures for handling complaints made to the |
|
association regarding inspectors. |
|
(c) The association shall include in the inspection program |
|
an oversight process that includes regular reinspections by the |
|
association to ensure that association inspectors perform duties |
|
under this subchapter appropriately. |
|
(d) The association shall report possible licensing |
|
violations by an inspector selected under Sections 2210.254 and |
|
2210.255 to perform inspections under this subchapter to the Texas |
|
Board of Professional Engineers. |
|
(e) The association shall establish procedures as part of |
|
the inspection program as necessary to issue certificates of |
|
compliance under Section 2210.251(f). |
|
(f) As part of the report required under Section |
|
2210.251(j), the association shall report to the department |
|
regarding the operation of the inspection program. |
|
SECTION 7.012. Section 2210.255, Insurance Code, is amended |
|
to read as follows: |
|
Sec. 2210.255. CONTRACT WITH [APPOINTMENT OF] LICENSED |
|
ENGINEER AS INSPECTOR. (a) On request of an engineer licensed by |
|
the Texas Board of Professional Engineers, the association may |
|
enter into a contract with [commissioner shall appoint] the |
|
engineer under which the engineer serves as an inspector under this |
|
subchapter. The association may enter into a contract under this |
|
subsection only on receipt of information satisfactory to the board |
|
[not later than the 10th day after the date the engineer delivers to
|
|
the commissioner information demonstrating] that the engineer is |
|
qualified to perform windstorm inspections under this subchapter. |
|
(b) The association shall consult with the commissioner |
|
regarding [shall adopt rules establishing] the information to be |
|
considered in contracting with [appointing] engineers under this |
|
section. |
|
SECTION 7.013. Subchapter F, Chapter 2210, Insurance Code, |
|
is amended by adding Section 2210.2565 to read as follows: |
|
Sec. 2210.2565. PROCEDURES REGARDING CONTRACTING WITH |
|
INSPECTORS. The board of directors shall develop procedures for |
|
contracting with and oversight of inspectors selected under |
|
Sections 2210.254 and 2210.255, including procedures relating to |
|
the grounds for the suspension, modification, or revocation of a |
|
contract under this subchapter with an inspector. |
|
SECTION 7.014. Section 2210.351, Insurance Code, is amended |
|
to read as follows: |
|
Sec. 2210.351. ASSOCIATION RATE FILINGS AND SUPPORTING |
|
INFORMATION; USE OF RATE. (a) Except as provided by Section |
|
2210.3562, the [The] association shall [must] file with the |
|
department each manual of classifications, rules, rates, including |
|
condition charges, [and] each rating plan, [and] each modification |
|
of those items that the association proposes to use, supplementary |
|
rating information, and additional information as required by the |
|
commissioner. |
|
(b) The commissioner by rule shall determine the |
|
information required to be included in the filing, including: |
|
(1) categories of supporting information and |
|
supplementary rating information; |
|
(2) statistics or other information to support the |
|
rates to be used by the association, including information |
|
necessary to evidence that the computation of the rate does not |
|
include disallowed expenses; and |
|
(3) information concerning policy fees, service fees, |
|
and other fees that are charged or collected by the association. |
|
(c) After the filing has been made, the association may use |
|
a filed rate. A filed rate is subject to disapproval by the |
|
commissioner in the manner prescribed by this subchapter. |
|
(d) A filing under this section must indicate the character |
|
and the extent of the coverage contemplated and must be accompanied |
|
by the policy and endorsement forms proposed to be used. The forms |
|
may be designed specifically for use by the association without |
|
regard to other forms filed with, approved by, or prescribed by the |
|
department for use in this state. |
|
[(c)
As soon as reasonably possible after the filing has
|
|
been made, the commissioner in writing shall approve, modify, or
|
|
disapprove the filing.
A filing is considered approved unless
|
|
modified or disapproved on or before the 30th day after the date of
|
|
the filing.
|
|
[(d)
If at any time the commissioner determines that a
|
|
filing approved under Subsection (c) no longer meets the
|
|
requirements of this chapter, the commissioner may, after a hearing
|
|
held on at least 20 days' notice to the association that specifies
|
|
the matters to be considered at the hearing, issue an order
|
|
withdrawing approval of the filing.
The order must specify in what
|
|
respects the commissioner determines that the filing no longer
|
|
meets the requirements of this chapter. An order issued under this
|
|
subsection may not take effect before the 30th day after the date of
|
|
issuance of the order.] |
|
(e) The department shall value the loss and loss adjustment |
|
expense data to be used for a filing not earlier than March 31 of the |
|
year before the year in which the filing is to be made. |
|
SECTION 7.015. Sections 2210.352 and 2210.353, Insurance |
|
Code, are amended to read as follows: |
|
Sec. 2210.352. MANUAL RATE FILINGS: ANNUAL FILING. (a) |
|
Not later than August 15 of each year, the association shall file |
|
with the department [for approval by the commissioner] a proposed |
|
manual rate for all types and classes of risks written by the |
|
association. Chapter 40 does not apply to: |
|
(1) a filing made under this subsection; or |
|
(2) a department action with respect to the filing. |
|
(b) The [Before approving, disapproving, or modifying a
|
|
filing, the] commissioner shall provide all interested persons a |
|
reasonable opportunity to: |
|
(1) review the filing; |
|
(2) obtain copies of the filing on payment of any |
|
legally required copying cost; and |
|
(3) submit to the commissioner written comments or |
|
information related to the filing. |
|
(c) [The commissioner shall schedule an open meeting not
|
|
later than the 45th day after the date the department receives a
|
|
filing at which interested persons may present written or oral
|
|
comments relating to the filing.
|
|
[(d)
An open meeting under Subsection (c) is subject to
|
|
Chapter 551, Government Code, but is not a contested case hearing
|
|
under Chapter 2001, Government Code.
|
|
[(e)] The department shall file with the secretary of state |
|
for publication in the Texas Register notice that a filing has been |
|
made under Subsection (a) not later than the seventh day after the |
|
date the department receives the filing. The notice must include |
|
information relating to: |
|
(1) the availability of the filing for public |
|
inspection at the department during regular business hours and the |
|
procedures for obtaining copies of the filing; and |
|
(2) procedures for making written comments related to |
|
the filing[; and
|
|
[(3)
the time, place, and date of the open meeting
|
|
scheduled under Subsection (c) at which interested persons may
|
|
present written or oral comments relating to the filing]. |
|
(d) The [(f) After the conclusion of the open meeting, the] |
|
commissioner shall approve, disapprove, or modify the filing in |
|
writing not later than November 15 of the year in which the filing |
|
was made. If the filing is not approved, disapproved, or modified |
|
on or before that date, the filing is considered approved. |
|
(e) [(g)] If the commissioner disapproves a filing, the |
|
commissioner shall state in the order issued under Section |
|
2210.3561 [writing] the reasons for the disapproval and the |
|
criteria the association is required to meet to obtain approval. |
|
Sec. 2210.353. MANUAL RATE FILINGS: AMENDED FILING. (a) |
|
Not later than the 30th day after the date the association receives |
|
the commissioner's written disapproval under Section 2210.352(d) |
|
[2210.352(f)], the association may file with the commissioner an |
|
amended filing that conforms to all criteria stated in that written |
|
disapproval. |
|
(b) Not later than the 30th day after the date an amended |
|
filing made under Subsection (a) is received, the commissioner |
|
shall approve the amended filing with or without modifications or |
|
disapprove the amended filing. If the filing is not modified or |
|
disapproved on or before the 30th day after the date of receipt, the |
|
filing is considered approved without modification. |
|
(c) Before approving or disapproving an amended filing, the |
|
commissioner shall, in the manner provided by Section 2210.352(b), |
|
provide all interested persons a reasonable opportunity to: |
|
(1) review the amended filing; |
|
(2) obtain copies of the amended filing on payment of |
|
any legally required copying cost; and |
|
(3) submit to the commissioner written comments or |
|
information related to the amended filing. |
|
[(d)
The commissioner may, in the manner provided by
|
|
Sections 2210.352(c) and (d), hold a hearing regarding an amended
|
|
filing not later than the 20th day after the date the department
|
|
receives the amended filing.
|
|
[(e)
Not later than the 10th day after the date the hearing
|
|
is concluded, the commissioner shall approve or disapprove the
|
|
amended filing.
|
|
[(f)
The requirements imposed under Subsection (a) and
|
|
under Sections 2210.352(e), (f), and (g) apply to a hearing
|
|
conducted under this section and the commissioner's decision
|
|
resulting from that hearing.] |
|
SECTION 7.016. Section 2210.356, Insurance Code, is amended |
|
to read as follows: |
|
Sec. 2210.356. UNIFORM RATE REQUIREMENTS[; INFORMATION
|
|
USED IN DEVELOPING RATES]. (a) Each rate used under [approved by
|
|
the commissioner in accordance with] this subchapter must be |
|
uniform throughout the first tier coastal counties. |
|
(b) The catastrophe element used to develop rates under this |
|
subchapter applicable to risks written by the association must be |
|
uniform throughout the seacoast territory. [The catastrophe
|
|
element of the rates must be developed using: |
|
[(1)
90 percent of both the monoline extended coverage
|
|
loss experience and related premium income for all insurers, other
|
|
than the association, for covered property located in the seacoast
|
|
territory, using not less than the most recent 30 years of
|
|
experience available; and
|
|
[(2)
100 percent of both the loss experience and
|
|
related premium income for the association for covered property,
|
|
using not less than the most recent 30 years of experience
|
|
available.
|
|
[(c)
The noncatastrophe element of the noncommercial rates
|
|
must be developed using:
|
|
[(1)
90 percent of both the monoline extended coverage
|
|
loss experience and related premium income for all insurers, other
|
|
than the association, for covered property located in the
|
|
catastrophe area of the seacoast territory, using the most recent
|
|
10 years of experience available; and
|
|
[(2)
100 percent of both the loss experience and
|
|
related premium income for the association for covered property,
|
|
using the most recent 10 years of experience available.
|
|
[(d)
The noncatastrophe element of the commercial rates
|
|
must be developed using 100 percent of both the loss experience and
|
|
related premium income for the association for covered property,
|
|
using the most recent 10 years of experience available.] |
|
SECTION 7.017. Subchapter H, Chapter 2210, Insurance Code, |
|
is amended by adding Sections 2210.3561 and 2210.3562 to read as |
|
follows: |
|
Sec. 2210.3561. DISAPPROVAL OF RATE IN RATE FILING; |
|
HEARING. (a) The commissioner shall disapprove a rate before its |
|
use if the commissioner determines that the rate filing made under |
|
Section 2210.351 does not meet the standards established under |
|
Section 2210.355 or 2210.356. |
|
(b) If the commissioner disapproves a filing, the |
|
commissioner shall issue an order specifying in what respects the |
|
filing fails to meet the requirements of this subchapter. |
|
Sec. 2210.3562. PRIOR APPROVAL OF CERTAIN RATE INCREASES |
|
REQUIRED. (a) The association shall file with the department all |
|
rates, all supplementary rating information, and any supporting |
|
information in accordance with this section if the association |
|
proposes an average rate change of five percent or more during any |
|
12-month period. The commissioner may specify any rate information |
|
and additional information, as described by Section 2210.351(a), to |
|
be filed with the department under this section. |
|
(b) Not later than the 30th day after the date the |
|
association files a proposed rate under Subsection (a), the |
|
commissioner shall enter an order approving or disapproving the |
|
proposed rate. The commissioner may, on notice to the association, |
|
extend the period for entering an order under this section an |
|
additional 30 days. |
|
(c) An order disapproving a rate under this section must |
|
state: |
|
(1) the grounds for the disapproval; and |
|
(2) the findings in support of the disapproval. |
|
(d) The association may not issue an insurance policy or |
|
endorsement subject to this section until the commissioner approves |
|
the rates to be applied to the policy or endorsement. From the date |
|
of the filing of the proposed rate with the department to the |
|
effective date of the new rate, the association's previously filed |
|
rate that is in effect on the date of the filing remains in effect. |
|
(e) For purposes of this section, a rate is filed with the |
|
department on the date the department receives the rate filing. |
|
SECTION 7.018. Section 2210.359, Insurance Code, is amended |
|
to read as follows: |
|
Sec. 2210.359. LIMITATION ON CERTAIN RATE CHANGES. (a) |
|
Except as otherwise provided by this subsection, a rate approved by |
|
the commissioner under this subchapter may not reflect an average |
|
rate change that is more than 10 percent higher or lower than the |
|
rate for commercial windstorm and hail insurance or 10 percent |
|
higher or lower than the rate for noncommercial windstorm and hail |
|
insurance in effect on the date the filing is made. The rate may not |
|
reflect a rate change for an individual rating class that is 15 |
|
percent higher or lower than the rate for that individual rating |
|
class in effect on the date the filing is made. This subsection |
|
does not apply to a rate filed under Section 2210.351 [Sections
|
|
2210.351(a)-(d)]. |
|
(b) The commissioner may, by an order issued under Section |
|
2210.008 after notice and hearing, suspend this section on a |
|
finding that a catastrophe loss or series of occurrences resulting |
|
in losses in the catastrophe area justify a need to ensure: |
|
(1) rate adequacy in the catastrophe area; and |
|
(2) availability of insurance outside the catastrophe |
|
area. |
|
SECTION 7.019. Subchapter H, Chapter 2210, Insurance Code, |
|
is amended by adding Section 2210.364 to read as follows: |
|
Sec. 2210.364. BOARD RATE MEETINGS; PUBLICATION OF PROPOSED |
|
RATE CHANGES. (a) The board of directors shall discuss and make |
|
decisions on proposed rate changes in public meetings of the board. |
|
(b) The board of directors shall publish each proposed rate |
|
change in the Texas Register for public comment before the public |
|
meeting at which that change is to be discussed. |
|
SECTION 7.020. Chapter 2210, Insurance Code, is amended by |
|
adding Subchapter I to read as follows: |
|
SUBCHAPTER I. POLICY FORMS AND ENDORSEMENTS |
|
Sec. 2210.401. FILING OF POLICY FORMS AND ENDORSEMENTS. |
|
(a) The association shall file with the department each policy and |
|
endorsement form proposed to be used. The forms may be designed |
|
specifically for use by the association without regard to other |
|
forms filed with, approved by, or prescribed by the department for |
|
use in this state. |
|
(b) Not later than the 30th day after the date the |
|
association files a proposed form or endorsement under Subsection |
|
(a), the commissioner shall enter an order approving or |
|
disapproving the proposed form or endorsement. The commissioner |
|
may, on notice to the association, extend the period for entering an |
|
order under this section an additional 30 days. |
|
(c) An order disapproving a policy form or endorsement under |
|
this section must state: |
|
(1) the grounds for the disapproval; and |
|
(2) the findings in support of the disapproval. |
|
(d) The association may not use a policy form or endorsement |
|
disapproved under Subsection (b) until the commissioner approves |
|
the policy form or endorsement. |
|
Sec. 2210.402. BOARD MEETINGS RELATING TO FORMS; |
|
PUBLICATION OF PROPOSED CHANGES TO FORMS. (a) The board of |
|
directors shall discuss and make decisions on proposed changes to |
|
policy forms and endorsements used by the association in public |
|
meetings of the board. |
|
(b) The board of directors shall publish each proposed |
|
change to a policy form or endorsement in the Texas Register for |
|
public comment before the public meeting at which that change is to |
|
be discussed. |
|
SECTION 7.021. Section 2210.453, Insurance Code, is amended |
|
to read as follows: |
|
Sec. 2210.453. REINSURANCE PROGRAM. (a) The association |
|
shall: |
|
(1) make payments into the trust fund; or |
|
(2) establish a reinsurance program approved by the |
|
commissioner by rule [department]. |
|
(b) With the approval of the commissioner by rule |
|
[department], the association may establish a reinsurance program |
|
that operates in addition to or in concert with the trust fund. |
|
(c) The commissioner is not required to conduct a hearing |
|
under this section to approve a reinsurance program. |
|
SECTION 7.022. Section 2210.454(b), Insurance Code, is |
|
amended to read as follows: |
|
(b) Each state fiscal year, the department may fund the |
|
mitigation and preparedness plan using the investment income of the |
|
trust fund in an amount not less than $1 million and not more than 10 |
|
percent of the investment income of the prior fiscal year. [From
|
|
that amount and as part of that plan, the department may use in each
|
|
fiscal year $1 million for the windstorm inspection program
|
|
established under Section 2210.251.] |
|
SECTION 7.023. Section 2210.502(b), Insurance Code, is |
|
amended to read as follows: |
|
(b) An adjustment to the maximum liability limits must be |
|
[that is] approved by the commissioner by rule. An adjustment |
|
applies to each windstorm and hail insurance policy delivered, |
|
issued for delivery, or renewed on or after January 1 of the year |
|
following the date of the approval by the commissioner. The |
|
indexing of the limits shall adjust for changes occurring on and |
|
after January 1, 1997. |
|
SECTION 7.024. Section 2210.504(a), Insurance Code, is |
|
amended to read as follows: |
|
(a) Not later than the 60th day after the date of receipt of |
|
a filing under Section 2210.503, [and after notice and hearing,] |
|
the commissioner by rule [order] shall adopt a [approve,
|
|
disapprove, or modify the] proposed adjustment to the maximum |
|
liability limits, as provided by Section 2210.502. |
|
SECTION 7.025. The following laws are repealed: |
|
(1) Section 2210.207(f), Insurance Code; |
|
(2) Section 2210.254(d), Insurance Code; and |
|
(3) Sections 2210.256 and 2210.257, Insurance Code. |
|
SECTION 7.026. (a) The board of directors of the Texas |
|
Windstorm Insurance Association established under Section |
|
2210.102, Insurance Code, as that section existed before amendment |
|
by this Act, is abolished effective January 1, 2010. |
|
(b) Not later than December 31, 2009, the commissioner of |
|
insurance shall appoint the members of the board of directors of the |
|
Texas Windstorm Insurance Association under Section 2210.102, |
|
Insurance Code, as amended by this Act. |
|
(c) The term of a person who is serving as a member of the |
|
board of directors of the Texas Windstorm Insurance Association |
|
immediately before the abolition of that board under Subsection (a) |
|
of this section expires on January 1, 2010. Such a person is |
|
eligible for appointment by the commissioner of insurance to the |
|
new board of directors of the Texas Windstorm Insurance Association |
|
under Section 2210.102, Insurance Code, as amended by this Act. |
|
SECTION 7.027. Section 2210.202, Insurance Code, as amended |
|
by this Act, applies only to an insurance policy delivered, issued |
|
for delivery, or renewed on or after January 1, 2010. A policy |
|
delivered, issued for delivery, or renewed before January 1, 2010, |
|
is governed by the law as it existed immediately before the |
|
effective date of this Act, and that law is continued in effect for |
|
that purpose. |
|
ARTICLE 8. ELECTRONIC TRANSACTIONS |
|
SECTION 8.001. Subtitle A, Title 2, Insurance Code, is |
|
amended by adding Chapter 35 to read as follows: |
|
CHAPTER 35. ELECTRONIC TRANSACTIONS |
|
Sec. 35.001. DEFINITIONS. In this chapter: |
|
(1) "Conduct business" includes engaging in or |
|
transacting any business in which a regulated entity is authorized |
|
to engage or is authorized to transact under the law of this state. |
|
(2) "Regulated entity" means each insurer or other |
|
organization regulated by the department, including: |
|
(A) a domestic or foreign, stock or mutual, life, |
|
health, or accident insurance company; |
|
(B) a domestic or foreign, stock or mutual, fire |
|
or casualty insurance company; |
|
(C) a Mexican casualty company; |
|
(D) a domestic or foreign Lloyd's plan; |
|
(E) a domestic or foreign reciprocal or |
|
interinsurance exchange; |
|
(F) a domestic or foreign fraternal benefit |
|
society; |
|
(G) a domestic or foreign title insurance |
|
company; |
|
(H) an attorney's title insurance company; |
|
(I) a stipulated premium company; |
|
(J) a nonprofit legal service corporation; |
|
(K) a health maintenance organization; |
|
(L) a statewide mutual assessment company; |
|
(M) a local mutual aid association; |
|
(N) a local mutual burial association; |
|
(O) an association exempt under Section 887.102; |
|
(P) a nonprofit hospital, medical, or dental |
|
service corporation, including a company subject to Chapter 842; |
|
(Q) a county mutual insurance company; and |
|
(R) a farm mutual insurance company. |
|
Sec. 35.002. CONSTRUCTION WITH OTHER LAW. (a) |
|
Notwithstanding any other provision of this code, a regulated |
|
entity may conduct business electronically in accordance with this |
|
chapter and the rules adopted under Section 35.004. |
|
(b) To the extent of any conflict between another provision |
|
of this code and a provision of this chapter, the provision of this |
|
chapter controls. |
|
Sec. 35.003. ELECTRONIC TRANSACTIONS AUTHORIZED. A |
|
regulated entity may conduct business electronically to the same |
|
extent that the entity is authorized to conduct business otherwise |
|
if before the conduct of business each party to the business agrees |
|
to conduct the business electronically. |
|
Sec. 35.004. RULES. (a) The commissioner shall adopt rules |
|
necessary to implement and enforce this chapter. |
|
(b) The rules adopted by the commissioner under this section |
|
must include rules that establish minimum standards with which a |
|
regulated entity must comply in the entity's electronic conduct of |
|
business with other regulated entities and consumers. |
|
SECTION 8.002. Chapter 35, Insurance Code, as added by this |
|
Act, applies only to business conducted on or after the effective |
|
date of this Act. Business conducted before the effective date of |
|
this Act is governed by the law in effect on the date the business |
|
was conducted, and that law is continued in effect for that purpose. |
|
ARTICLE 9. TRANSITION; EFFECTIVE DATE |
|
SECTION 9.001. Except as otherwise provided by this Act, |
|
this Act applies only to an insurance policy, contract, or evidence |
|
of coverage that is delivered, issued for delivery, or renewed on or |
|
after January 1, 2010. A policy, contract, or evidence of coverage |
|
delivered, issued for delivery, or renewed before January 1, 2010, |
|
is governed by the law as it existed immediately before the |
|
effective date of this Act, and that law is continued in effect for |
|
that purpose. |
|
SECTION 9.002. This Act takes effect September 1, 2009. |