82R6568 PMO-F
 
  By: Thompson H.B. No. 2093
 
 
 
A BILL TO BE ENTITLED
 
AN ACT
  relating to the operation and regulation of certain consolidated
  insurance programs; providing administrative penalties.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Title 2, Insurance Code, is amended by adding
  Subtitle C to read as follows:
  SUBTITLE C. PROGRAMS AFFECTING MULTIPLE LINES OF INSURANCE
  CHAPTER 151. CONSOLIDATED INSURANCE PROGRAMS
  SUBCHAPTER A. GENERAL PROVISIONS
         Sec. 151.001.  DEFINITIONS. In this chapter:
               (1)  "Consolidated insurance program" means a program
  under which a principal provides general liability insurance
  coverage, workers' compensation insurance coverage, or both that
  are incorporated into an insurance program for a single
  construction project or multiple construction projects.
               (2)  "Construction project" means construction,
  remodeling, maintenance, or repair of improvements to real
  property.  The term includes the immediate construction location
  and areas incidental and necessary to the work as defined in the
  construction contract documents.  A construction project under this
  chapter does not include a single-family home, duplex, triplex, or
  quadruplex.
               (3)  "Contractor" means any person who has entered into
  a construction contract or a professional services contract and is
  enrolled in the consolidated insurance program.
               (4)  "Insurer" means an insurance company, including a
  mutual insurance company or a capital stock company, a reciprocal
  or interinsurance exchange, a Lloyd's plan, or another legal entity
  authorized to engage in the business of general liability insurance
  or workers' compensation insurance in this state. The term
  includes an eligible surplus lines insurer.
               (5)  "Principal" means the person who procures the
  insurance policy under a consolidated insurance program.
         Sec. 151.002.  RULES. The commissioner shall adopt rules in
  the manner provided by Subchapter A, Chapter 36, as necessary to
  implement and enforce the purpose and intent of this chapter.
  [Sections 151.003-151.050 reserved for expansion]
  SUBCHAPTER B. GENERAL REQUIREMENTS
         Sec. 151.051.  COVERAGE OF CONTRACTORS. (a)  Each
  contractor on a construction project covered by a consolidated
  insurance program must:
               (1)  be included as a named insured on each insurance
  policy under the program; and
               (2)  have equal rights under the policy with the
  principal and other contractors, subject to insurance industry
  standard differences between a first-named insured and a named
  insured.
         (b)  Subsection (a) does not apply to a policy that is issued
  individually in the name of the contractor as the first-named
  insured under a consolidated insurance program.
         Sec. 151.052.  DURATION OF GENERAL LIABILITY COVERAGE. A
  consolidated insurance program that provides completed operations
  insurance coverage separate from or together with general liability
  coverage must continue completed operations insurance coverage
  until the expiration of the limitations period for bringing an
  action for damages under Section 16.009, Civil Practice and
  Remedies Code.
         Sec. 151.053.  NOTICE REGARDING REDUCTION IN LIMIT. (a)  
  Each contractor shall be notified in writing not later than the 10th
  day after the date that the principal becomes aware that the total
  limit of liability for any type of coverage issued under the
  consolidated insurance program is reduced by:
               (1)  50 percent; and
               (2)  each additional 25 percentage point reduction
  after the initial 50 percent reduction.
         (b)  The reduction in the limit under Subsection (a) shall be
  computed based on incurred losses and expenses.
         Sec. 151.054.  DUTY AND COMPLIANCE BY PRINCIPAL. A
  principal under a consolidated insurance program owes a duty to
  each contractor covered under the consolidated insurance program to
  comply with the requirements of this chapter.  The duty includes:
               (1)  payment of the premium for the insurance coverage;
  and
               (2)  securing replacement insurance that meets the
  requirements of this chapter, or reimbursing an enrolled contractor
  for the cost of replacement insurance that meets the requirements
  of this chapter, if the insurer of the consolidated insurance
  program fails to continue to provide the coverage required under
  the program or if the principal elects to discontinue providing
  coverage under the program.
         Sec. 151.055.  CONTRACTOR INSURANCE. This chapter, or a
  requirement of a contract entered into under this chapter, may not
  be construed to prevent a contractor from obtaining any insurance
  coverage not provided by the consolidated insurance program to
  protect the contractor or the construction project.
         Sec. 151.056.  LIMITED EXCEPTION TO RATING STANDARDS.
  Sections 2053.002 and 2251.052, Insurance Code, and Section 1,
  Chapter 50 (H.B. 32), Acts of the 53rd Legislature, Regular
  Session, 1953 (Article 5.77, Vernon's Texas Insurance Code), do not
  apply to rates used for an insurance policy issued under a
  consolidated insurance program under this chapter to the extent
  that those laws require an insurer to produce rates for individual
  risks.
         Sec. 151.057.  PAYMENT OF CERTAIN DEDUCTIBLES OR LOSSES.
  (a) A principal shall pay:
               (1)  any coverage deductible, self-insured retention,
  or loss in a retrospective rating plan or other loss-sensitive
  rating plan under a consolidated insurance program; and
               (2)  all deductible and self-insured retention
  applicable to any policy provided under the consolidated insurance
  program, except as provided by Subsection (b).
         (b)  A principal may not assess a contractor covered under
  the consolidated insurance program for a deductible, self-insured
  retention, or loss described by Subsection (a), except for a
  first-party property damage claim deductible or self-insured
  retention if:
               (1)  the action of the contractor caused the property
  damage claim; and
               (2)  the insurance carrier assesses the deductible or
  self-insured retention against the principal.
         (c)  If the principal fails to pay a deductible, self-insured
  retention, or other item required of the principal by this section,
  a contractor covered under the program may not be required to pay
  the deductible, self-insured retention, or other item required of
  the principal.
  [Sections 151.058-151.100 reserved for expansion]
  SUBCHAPTER C. COVERAGE LIMITS
         Sec. 151.101.  GENERAL REQUIREMENTS. Subject to Section
  151.052, aggregate and per-occurrence limits of all general
  liability insurance and employer liability coverages under a
  consolidated insurance program apply collectively to all
  contractors under the program for the duration of each construction
  project covered by the program.
  [Sections 151.102-151.150 reserved for expansion]
  SUBCHAPTER D. DISCLOSURE REQUIREMENTS FOR
  ADMINISTRATION OF CONSOLIDATED INSURANCE PROGRAM
         Sec. 151.151.  REQUIRED DISCLOSURE AT BID SOLICITATION. At
  the time a principal or contractor is soliciting bids for a
  construction project that may be covered by a consolidated
  insurance program, the principal or contractor must disclose
  prominently in the project specifications or any request for bids
  or proposals that the project may be covered by a consolidated
  insurance program subject to this chapter and provide information
  about the consolidated insurance program sufficient for a bidder to
  understand the program's cost to and coverage for the bidder.
  [Sections 151.152-151.200 reserved for expansion]
  SUBCHAPTER E.  PROGRAM ADMINISTRATION
         Sec. 151.201.  ADMINISTRATOR. Each principal shall appoint
  a qualified administrator for the consolidated insurance program
  whose primary duties to the principal and each contractor are to:
               (1)  administer the program; and
               (2)  comply with the requirements of this chapter.
  [Sections 151.202-151.250 reserved for expansion]
  SUBCHAPTER F.  ENFORCEMENT PROVISIONS
         Sec. 151.251.  GENERAL ENFORCEMENT; ADMINISTRATIVE
  PENALTIES. The commissioner may impose a sanction under Chapter
  82, issue a cease and desist order under Chapter 83, or assess an
  administrative penalty under Chapter 84 on any person regulated by
  the department who violates this chapter or a rule or order adopted
  by the commissioner under this chapter.
  [Sections 151.252-151.300 reserved for expansion]
  SUBCHAPTER G.  NONWAIVER
         Sec. 151.301.  NONWAIVER.  A provision of this chapter may
  not be waived by contract or otherwise.
         SECTION 2.  Chapter 151, Insurance Code, as added by this
  Act, applies only to a new or renewed consolidated insurance
  program for a construction project that begins on or after January
  1, 2012. A consolidated insurance program for a construction
  project that begins before January 1, 2012, 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 3.  This Act takes effect September 1, 2011.