|
|
|
|
AN ACT
|
|
relating to the Texas Life, Accident, Health, and Hospital Service |
|
Insurance Guaranty Association. |
|
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
|
SECTION 1. The heading to Chapter 463, Insurance Code, is |
|
amended to read as follows: |
|
CHAPTER 463. TEXAS LIFE AND[, ACCIDENT,] HEALTH[, AND HOSPITAL
|
|
SERVICE] INSURANCE GUARANTY ASSOCIATION |
|
SECTION 2. Section 463.001, Insurance Code, is amended to |
|
read as follows: |
|
Sec. 463.001. SHORT TITLE. This chapter may be cited as |
|
the Texas Life and[, Accident,] Health[, and Hospital Service] |
|
Insurance Guaranty Association Act. |
|
SECTION 3. Subdivision (1), Section 463.003, Insurance |
|
Code, is amended to read as follows: |
|
(1) "Association" means the Texas Life and[,
|
|
Accident,] Health[, and Hospital Service] Insurance Guaranty |
|
Association. |
|
SECTION 4. Subsection (a), Section 463.051, Insurance Code, |
|
is amended to read as follows: |
|
(a) The Texas Life and[, Accident,] Health[, and Hospital
|
|
Service] Insurance Guaranty Association is a nonprofit legal entity |
|
existing to pay benefits and continue coverage as provided by this |
|
chapter. |
|
SECTION 5. Subchapter B, Chapter 463, Insurance Code, is |
|
amended by adding Section 463.059 to read as follows: |
|
Sec. 463.059. MEETINGS BY TELEPHONE AND VIDEOCONFERENCE. |
|
(a) Notwithstanding Chapter 551, Government Code, or any other |
|
law, the board or a committee of the board may meet by telephone |
|
conference call, videoconference, or other similar |
|
telecommunication method if immediate action is required and |
|
convening a quorum of the board or committee of the board at a |
|
single location is not reasonable or practical. A board or |
|
committee member who is unable to attend a meeting in person and who |
|
is participating in a board or committee meeting by telephone |
|
conference call, videoconference, or other similar |
|
telecommunication method may be counted to establish a quorum and |
|
may vote. |
|
(b) A meeting authorized by this section is subject to the |
|
notice requirements that apply to other meetings. |
|
(c) The notice of a meeting authorized by this section must |
|
specify that the location of the meeting is the location at which |
|
meetings of the board and committees of the board are usually held. |
|
(d) Each part of a meeting authorized by this section that |
|
must be open to the public must be audible to the public at the |
|
location specified by Subsection (c). |
|
(e) Two-way audio communication must be available during |
|
the entire meeting between all members of the board or committee |
|
attending a meeting authorized by this section, and if the two-way |
|
audio communication is disrupted so that a quorum of the board or |
|
committee is no longer participating in the meeting, the meeting |
|
may not continue until the two-way audio communication is |
|
reestablished. |
|
(f) An audio or digital recording of a meeting authorized by |
|
this section must be made in accordance with the association's |
|
bylaws. The recording of the open portion of the meeting must be |
|
made available to the public. |
|
(g) A vote during a meeting authorized by this section must |
|
be taken in such a manner that the vote of each member is audible and |
|
may be verified as the vote of the member. |
|
SECTION 6. Subsection (c), Section 463.153, Insurance Code, |
|
is amended to read as follows: |
|
(c) The total amount of assessments on a member insurer for |
|
each account under Section 463.105 may not in one calendar year |
|
exceed two percent of the insurer's average annual premiums on the |
|
policies covered by the account during the three calendar years |
|
preceding the year in which the insurer became an impaired or |
|
insolvent insurer. If two or more assessments are authorized in a |
|
calendar year with respect to insurers that become impaired or |
|
insolvent in different calendar years, the average annual premiums |
|
for purposes of the aggregate assessment percentage limitation |
|
described by this subsection shall be equal to the higher of the |
|
three-year average annual premiums for the applicable subaccount or |
|
account as computed in accordance with this section. If the maximum |
|
assessment and the other assets of the association do not provide in |
|
a year an amount sufficient to carry out the association's |
|
responsibilities, the association shall make necessary additional |
|
assessments as soon as this chapter permits. |
|
SECTION 7. Subsection (b), Section 463.203, Insurance Code, |
|
is amended to read as follows: |
|
(b) This chapter does not provide coverage for: |
|
(1) any part of a policy or contract not guaranteed by |
|
the insurer or under which the risk is borne by the policy or |
|
contract owner; |
|
(2) a policy or contract of reinsurance, unless an |
|
assumption certificate has been issued; |
|
(3) any part of a policy or contract to the extent that |
|
the rate of interest on which that part is based: |
|
(A) as averaged over the period of four years |
|
before the date the member insurer becomes impaired or insolvent |
|
under this chapter, whichever is earlier, exceeds a rate of |
|
interest determined by subtracting two percentage points from |
|
Moody's Corporate Bond Yield Average averaged for the same |
|
four-year period or for a lesser period if the policy or contract |
|
was issued less than four years before the date the member insurer |
|
becomes impaired or insolvent under this chapter, whichever is |
|
earlier; and |
|
(B) on and after the date the member insurer |
|
becomes impaired or insolvent under this chapter, whichever is |
|
earlier, exceeds the rate of interest determined by subtracting |
|
three percentage points from Moody's Corporate Bond Yield Average |
|
as most recently available; |
|
(4) a portion of a policy or contract issued to a plan |
|
or program of an employer, association, similar entity, or other |
|
person to provide life, health, or annuity benefits to the entity's |
|
employees, members, or others, to the extent that the plan or |
|
program is self-funded or uninsured, including benefits payable by |
|
an employer, association, or similar entity under: |
|
(A) a multiple employer welfare arrangement as |
|
defined by Section 3, Employee Retirement Income Security Act of |
|
1974 (29 U.S.C. Section 1002); |
|
(B) a minimum premium group insurance plan; |
|
(C) a stop-loss group insurance plan; or |
|
(D) an administrative services-only contract; |
|
(5) any part of a policy or contract to the extent that |
|
the part provides dividends, experience rating credits, or voting |
|
rights, or provides that fees or allowances be paid to any person, |
|
including the policy or contract owner, in connection with the |
|
service to or administration of the policy or contract; |
|
(6) a policy or contract issued in this state by a |
|
member insurer at a time the insurer was not authorized to issue the |
|
policy or contract in this state; |
|
(7) an unallocated annuity contract issued to or in |
|
connection with a benefit plan protected under the federal Pension |
|
Benefit Guaranty Corporation, regardless of whether the Pension |
|
Benefit Guaranty Corporation has not yet become liable to make any |
|
payments with respect to the benefit plan; |
|
(8) any part of an unallocated annuity contract that |
|
is not issued to or in connection with a specific employee, a |
|
benefit plan for a union or association of individuals, or a |
|
governmental lottery; |
|
(9) any part of a financial guarantee, funding |
|
agreement, or guaranteed investment contract that: |
|
(A) does not contain a mortality guarantee; and |
|
(B) is not issued to or in connection with a |
|
specific employee, a benefit plan, or a governmental lottery; |
|
(10) a part of a policy or contract to the extent that |
|
the assessments required by Subchapter D with respect to the policy |
|
or contract are preempted by federal or state law; |
|
(11) a contractual agreement that established the |
|
member insurer's obligations to provide a book value accounting |
|
guaranty for defined contribution benefit plan participants by |
|
reference to a portfolio of assets that is owned by the benefit plan |
|
or the plan's trustee in a case in which neither the benefit plan |
|
sponsor nor its trustee is an affiliate of the member insurer; [or] |
|
(12) a part of a policy or contract to the extent the |
|
policy or contract provides for interest or other changes in value |
|
that are to be determined by the use of an index or external |
|
reference stated in the policy or contract, but that have not been |
|
credited to the policy or contract, or as to which the policy or |
|
contract owner's rights are subject to forfeiture, as of the date |
|
the member insurer becomes an impaired or insolvent insurer under |
|
this chapter, whichever date is earlier, subject to Subsection (c); |
|
or |
|
(13) a policy or contract providing a hospital, |
|
medical, prescription drug, or other health care benefit under 42 |
|
U.S.C. Sections 1395w-21 et seq. and 1395w-101 et seq. (Medicare |
|
Parts C and D) or a regulation adopted under those federal statutes. |
|
SECTION 8. Section 463.204, Insurance Code, is amended to |
|
read as follows: |
|
Sec. 463.204. OBLIGATIONS EXCLUDED. A contractual |
|
obligation does not include: |
|
(1) death benefits in an amount in excess of $300,000 |
|
or a net cash surrender or net cash withdrawal value in an amount in |
|
excess of $100,000 under one or more policies on a single life; |
|
(2) an amount in excess of: |
|
(A) $250,000 [$100,000] in the present value |
|
under one or more annuity contracts issued with respect to a single |
|
life under individual annuity policies or group annuity policies; |
|
or |
|
(B) $5 million in unallocated annuity contract |
|
benefits with respect to a single contract owner regardless of the |
|
number of those contracts; |
|
(3) an amount in excess of the following amounts, |
|
including any net cash surrender or cash withdrawal values, under |
|
one or more accident, health, accident and health, or long-term |
|
care insurance policies on a single life: |
|
(A) $500,000 for basic hospital, |
|
medical-surgical, or major medical insurance, as those terms are |
|
defined by this code or rules adopted by the commissioner; |
|
(B) $300,000 for disability and long-term care |
|
insurance, as those terms are defined by this code or rules adopted |
|
by the commissioner; or |
|
(C) $200,000 for coverages that are not defined |
|
as basic hospital, medical-surgical, major medical, disability, or |
|
long-term care insurance; |
|
(4) an amount in excess of $250,000 [$100,000] in |
|
present value annuity benefits, in the aggregate, including any net |
|
cash surrender and net cash withdrawal values, with respect to each |
|
individual participating in a governmental retirement benefit plan |
|
established under Section 401, 403(b), or 457, Internal Revenue |
|
Code of 1986 (26 U.S.C. Sections 401, 403(b), and 457), covered by |
|
an unallocated annuity contract or the beneficiary or beneficiaries |
|
of the individual if the individual is deceased; |
|
(5) an amount in excess of $250,000 [$100,000] in |
|
present value annuity benefits, in the aggregate, including any net |
|
cash surrender and net cash withdrawal values, with respect to each |
|
payee of a structured settlement annuity or the beneficiary or |
|
beneficiaries of the payee if the payee is deceased; |
|
(6) aggregate benefits in an amount in excess of |
|
$300,000 with respect to a single life, except with respect to: |
|
(A) benefits paid under basic hospital, |
|
medical-surgical, or major medical insurance policies, described |
|
by Subdivision (3)(A), in which case the aggregate benefits are |
|
$500,000; and |
|
(B) benefits paid to one owner of multiple |
|
nongroup policies of life insurance, whether the policy owner is an |
|
individual, firm, corporation, or other person, and whether the |
|
persons insured are officers, managers, employees, or other |
|
persons, in which case the maximum benefits are $5 million |
|
regardless of the number of policies and contracts held by the |
|
owner; |
|
(7) an amount in excess of $5 million in benefits, with |
|
respect to either one plan sponsor whose plans own directly or in |
|
trust one or more unallocated annuity contracts not included in |
|
Subdivision (4) irrespective of the number of contracts with |
|
respect to the contract owner or plan sponsor or one contract owner |
|
provided coverage under Section 463.201(a)(3)(B), except that, if |
|
one or more unallocated annuity contracts are covered contracts |
|
under this chapter and are owned by a trust or other entity for the |
|
benefit of two or more plan sponsors, coverage shall be afforded by |
|
the association if the largest interest in the trust or entity |
|
owning the contract or contracts is held by a plan sponsor whose |
|
principal place of business is in this state, and in no event shall |
|
the association be obligated to cover more than $5 million in |
|
benefits with respect to all these unallocated contracts; |
|
(8) any contractual obligations of the insolvent or |
|
impaired insurer under a covered policy or contract that do not |
|
materially affect the economic value of economic benefits of the |
|
covered policy or contract; or |
|
(9) punitive, exemplary, extracontractual, or bad |
|
faith damages, regardless of whether the damages are: |
|
(A) agreed to or assumed by an insurer or |
|
insured; or |
|
(B) imposed by a court. |
|
SECTION 9. Subsection (b), Section 463.263, Insurance Code, |
|
is amended to read as follows: |
|
(b) The association is entitled to retain a portion of any |
|
amount paid to the association under this section equal to the |
|
percentage determined by dividing the aggregate amount of policy |
|
owners' claims related to that insolvency for which the association |
|
has provided statutory benefits by the aggregate amount of all |
|
policy owners' claims in this state related to that insolvency and |
|
shall remit to the domiciliary receiver the amount paid to the |
|
association less the amount [and] retained under this section. |
|
SECTION 10. Subchapter F, Chapter 463, Insurance Code, is |
|
amended by adding Section 463.264 to read as follows: |
|
Sec. 463.264. REINSURANCE. (a) The association may elect |
|
to succeed to the rights of an insolvent insurer under a contract of |
|
reinsurance to which the insolvent insurer is a party to the extent: |
|
(1) of the contractual obligations of the covered |
|
policies for which the association may become obligated; and |
|
(2) that the reinsurance contract provides coverage |
|
for losses occurring after the association is obligated to provide |
|
coverage. |
|
(b) As a condition to making an election under Subsection |
|
(a), the association shall pay all unpaid premiums due under the |
|
reinsurance contract to which Subsection (a) refers for coverage |
|
relating to a period before and after the date the association is |
|
obligated to provide coverage. |
|
SECTION 11. Subsection (c), Section 154.359, Finance Code, |
|
is amended to read as follows: |
|
(c) A claim may not be approved for a loss to the extent the |
|
claim is insured, bonded, or otherwise covered, protected, or |
|
reimbursed from other sources, including coverage provided by the |
|
Texas Life and[, Accident,] Health[, and Hospital Service] |
|
Insurance Guaranty Association under Chapter 463, Insurance Code. |
|
SECTION 12. Subsection (b), Section 609.113, Government |
|
Code, is amended to read as follows: |
|
(b) A plan administrator may not approve a vendor's |
|
application if the vendor is: |
|
(1) a state or national bank or savings and loan |
|
association, the deposits of which are not insured by the Federal |
|
Deposit Insurance Corporation; |
|
(2) a credit union, the deposits of which are not |
|
insured by the National Credit Union Administration Board or the |
|
Texas Share Guaranty Credit Union; or |
|
(3) an insurance company that: |
|
(A) is not a member of the Texas Life and[,
|
|
Accident,] Health[, and Hospital Service] Insurance Guaranty |
|
Association; or |
|
(B) is an impaired or insolvent insurer under |
|
Chapter 463 [Article 21.28-D], Insurance Code. |
|
SECTION 13. Subsection (b), Section 609.712, Government |
|
Code, is amended to read as follows: |
|
(b) A plan administrator may not approve a vendor's |
|
application if the vendor is: |
|
(1) a state or national bank or savings and loan |
|
association, the deposits of which are not insured by the Federal |
|
Deposit Insurance Corporation; |
|
(2) a credit union, the deposits of which are not |
|
insured by the National Credit Union Administration Board; or |
|
(3) an insurance company that: |
|
(A) is not a member of the Texas Life and[,
|
|
Accident,] Health[, and Hospital Service] Insurance Guaranty |
|
Association; or |
|
(B) is an impaired or insolvent insurer under |
|
Chapter 463 [Article 21.28-D], Insurance Code. |
|
SECTION 14. (a) Effective September 1, 2011: |
|
(1) the name of the Texas Life, Accident, Health, and |
|
Hospital Service Insurance Guaranty Association is changed to the |
|
Texas Life and Health Insurance Guaranty Association, and all |
|
powers, duties, rights, and obligations of the Texas Life, |
|
Accident, Health, and Hospital Service Insurance Guaranty |
|
Association are the powers, duties, rights, and obligations of the |
|
Texas Life and Health Insurance Guaranty Association; |
|
(2) a member of the board of directors of the Texas |
|
Life, Accident, Health, and Hospital Service Insurance Guaranty |
|
Association is a member of the board of directors of the Texas Life |
|
and Health Insurance Guaranty Association; and |
|
(3) a reference in law to the Texas Life, Accident, |
|
Health, and Hospital Service Insurance Guaranty Association is a |
|
reference to the Texas Life and Health Insurance Guaranty |
|
Association. |
|
(b) The Texas Life and Health Insurance Guaranty |
|
Association is the successor to the Texas Life, Accident, Health, |
|
and Hospital Service Insurance Guaranty Association in all |
|
respects. All personnel, equipment, data, documents, facilities, |
|
contracts, items, other property, rules, decisions, and |
|
proceedings of or involving the Texas Life, Accident, Health, and |
|
Hospital Service Insurance Guaranty Association are unaffected by |
|
the change in the name of the association. |
|
SECTION 15. (a) The change in law made by this Act to |
|
Subsection (c), Section 463.153, Insurance Code, applies to |
|
assessments authorized on or after October 1, 2008, with respect to |
|
an insurer that first became impaired or insolvent after September |
|
1, 2005; all other changes in law made by this Act apply only to an |
|
insurer that first becomes an impaired or insolvent insurer on or |
|
after the effective date of this Act. |
|
(b) Except as provided by Subsection (a) of this section, an |
|
insurer that becomes an impaired or insolvent insurer before the |
|
effective date of this Act is governed by the law as it existed |
|
immediately before that date, and that law is continued in effect |
|
for that purpose. |
|
SECTION 16. This Act takes effect September 1, 2011. |
|
|
|
|
|
|
|
|
______________________________ |
______________________________ |
|
President of the Senate |
Speaker of the House |
|
|
I hereby certify that S.B. No. 567 passed the Senate on |
|
March 24, 2011, by the following vote: Yeas 31, Nays 0. |
|
|
|
|
______________________________ |
|
Secretary of the Senate |
|
|
I hereby certify that S.B. No. 567 passed the House on |
|
April 14, 2011, by the following vote: Yeas 142, Nays 0, one |
|
present not voting. |
|
|
|
|
______________________________ |
|
Chief Clerk of the House |
|
|
|
|
|
Approved: |
|
|
|
______________________________ |
|
Date |
|
|
|
|
|
______________________________ |
|
Governor |