| |
| |
|
|
A BILL TO BE ENTITLED
|
|
|
AN ACT
|
|
|
relating to the authorization, regulation, and function of |
|
|
dedicated personal insurers; creating offenses; imposing a fee. |
|
|
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
|
|
SECTION 1. Subtitle E, Title 6, Insurance Code, is amended |
|
|
by adding Chapter 889 to read as follows: |
|
|
CHAPTER 889. DEDICATED PERSONAL INSURERS |
|
|
SUBCHAPTER A. GENERAL PROVISIONS |
|
|
Sec. 889.001. DEFINITIONS. In this chapter: |
|
|
(1) "Aggregate policy limit" means the sum of the |
|
|
maximum losses that may be sustained under each policy outstanding |
|
|
at any one time, as specified by the maximum limits in each policy. |
|
|
(2) "Dedicated personal insurer" means an entity |
|
|
authorized to insure a specific individual as provided by this |
|
|
chapter. |
|
|
(3) "Designated insurable individual" means an |
|
|
individual eligible to be insured by a dedicated personal insurer. |
|
|
Sec. 889.002. LIMITED EXEMPTION FROM INSURANCE LAWS. (a) |
|
|
Except as expressly provided by this code, a provision of this code, |
|
|
other than this chapter, does not apply to a dedicated personal |
|
|
insurer. |
|
|
(b) A law enacted after January 1, 2013, does not apply to a |
|
|
dedicated personal insurer unless dedicated personal insurers are |
|
|
expressly designated in the law. |
|
|
SUBCHAPTER B. ORGANIZATION OF DEDICATED PERSONAL INSURERS |
|
|
Sec. 889.051. FORM AND RELATIONSHIP OF INSURER. To be |
|
|
granted or maintain a limited certificate of authority as a |
|
|
dedicated personal insurer, an entity must be related to a |
|
|
designated insurable individual in the following manner: |
|
|
(1) the entity and designated insurable individual are |
|
|
the same natural person; |
|
|
(2) the entity is a trust and the designated insurable |
|
|
individual is the sole beneficiary of that trust; or |
|
|
(3) the entity is a for-profit corporation or limited |
|
|
liability company and the designated insurable individual is the |
|
|
sole owner of that entity. |
|
|
Sec. 889.052. CAPITAL REQUIREMENTS. (a) For each type of |
|
|
insurance a dedicated personal insurer is authorized to issue, the |
|
|
insurer shall maintain capital equal to or greater than: |
|
|
(1) for a health insurance policy, $100,000 except as |
|
|
provided by Subsection (b); |
|
|
(2) for a personal automobile insurance policy, the |
|
|
amount required by Section 601.122, Transportation Code, to |
|
|
establish financial responsibility; and |
|
|
(3) for other insurance policies, the policy's |
|
|
aggregate policy limit. |
|
|
(b) Notwithstanding Subsection (a)(1), the capital required |
|
|
for a health insurance policy is: |
|
|
(1) $10,000 if the designated insurable individual is |
|
|
younger than 24 years of age; or |
|
|
(2) $20,000 plus an additional $10,000 for each |
|
|
additional year beyond age 24 if the designated insurable |
|
|
individual is at least 24 but younger than 32 years of age. |
|
|
(c) Capital in the amount required by this section must be |
|
|
held in the form of any combination of: |
|
|
(1) cash; |
|
|
(2) a bond or other evidence of indebtedness of the |
|
|
United States, this state, or a political subdivision of this |
|
|
state; |
|
|
(3) a security that is readily marketable over a |
|
|
national exchange; or |
|
|
(4) another form of security approved by the |
|
|
commissioner. |
|
|
Sec. 889.053. EVIDENCE OF REQUIRED CAPITAL. (a) The |
|
|
department shall accept an account statement as evidence of the |
|
|
required capital if: |
|
|
(1) the statement is issued by a bank or broker; |
|
|
(2) the account is in the name of the entity presenting |
|
|
the evidence; |
|
|
(3) the statement shows holdings that: |
|
|
(A) have a market value at least equal to the |
|
|
amount required by Section 889.052; and |
|
|
(B) are in a form authorized by Section 889.052; |
|
|
(4) the deposits and securities held with the bank or |
|
|
broker are insured by the Federal Deposit Insurance Corporation, |
|
|
the Securities Investor Protection Corporation, or a similar |
|
|
institution acceptable to the commissioner; and |
|
|
(5) the evidence is presented not later than the 60th |
|
|
day after the statement is issued. |
|
|
(b) The required capital may be deposited with the |
|
|
comptroller through the department. The department shall issue a |
|
|
receipt when the deposit is made. The department shall accept a |
|
|
copy of the receipt described by this subsection as evidence of the |
|
|
required capital under Section 889.052. |
|
|
Sec. 889.054. APPLICATION FOR LIMITED CERTIFICATE OF |
|
|
AUTHORITY. (a) An entity satisfying the requirements of this |
|
|
chapter may apply to the department for a limited certificate of |
|
|
authority as a dedicated personal insurer. The application must |
|
|
include: |
|
|
(1) the name and address of the applicant; |
|
|
(2) the name, address, and date of birth of the |
|
|
designated insurable individual; |
|
|
(3) the relationship between the applicant and the |
|
|
designated insurable individual as required by Section 889.051; |
|
|
(4) each type of insurance policy to be authorized; |
|
|
(5) the respective aggregate policy limit for each |
|
|
type of insurance policy subject to Section 889.052(a)(3); |
|
|
(6) a statement of the total capital required by |
|
|
Section 889.052; |
|
|
(7) evidence of the required capital as required by |
|
|
Section 889.053; and |
|
|
(8) a filing fee of $20. |
|
|
(b) If the commissioner determines that the application |
|
|
does not satisfy the requirements of Subsection (a), the |
|
|
commissioner shall deny the application in writing. The denial |
|
|
must include the reason for the denial. |
|
|
(c) If the commissioner does not deny the application under |
|
|
Subsection (b), the commissioner shall approve the application. |
|
|
On approval, the department shall issue under the department's seal |
|
|
a limited certificate of authority authorizing the entity as a |
|
|
dedicated personal insurer. |
|
|
Sec. 889.055. EXPIRATION OF CERTIFICATE. A limited |
|
|
certificate of authority issued under this chapter expires on the |
|
|
first anniversary of the date the certificate is issued or renewed. |
|
|
Sec. 889.056. MODIFICATION AND RENEWAL OF CERTIFICATE. (a) |
|
|
A dedicated personal insurer holding a limited certificate of |
|
|
authority may apply for a renewal or modification of the |
|
|
certificate by submitting an application meeting the requirements |
|
|
of Section 889.054 and indicating the application is a renewal or |
|
|
modification of the original application. |
|
|
(b) The department may not approve an application for |
|
|
renewal of a certificate filed before the 60th day before the |
|
|
expiration of the certificate. |
|
|
SUBCHAPTER C. AUTHORITY TO ISSUE INSURANCE |
|
|
Sec. 889.101. LIMITED CERTIFICATE OF AUTHORITY. A limited |
|
|
certificate of authority issued by the department to a dedicated |
|
|
personal insurer shall state, in a format determined by the |
|
|
commissioner by rule: |
|
|
(1) the name and address of the dedicated personal |
|
|
insurer; |
|
|
(2) the name and address of the designated insurable |
|
|
individual; |
|
|
(3) the following language: "Only the designated |
|
|
insurable individual may be covered or insured by an insurance |
|
|
policy authorized by this certificate"; |
|
|
(4) the types of insurance policies authorized to be |
|
|
issued and the respective aggregate policy limits; |
|
|
(5) the date issued; |
|
|
(6) the date of expiration; and |
|
|
(7) any other information specified by the |
|
|
commissioner by rule. |
|
|
Sec. 889.102. AUTHORITY TO ISSUE AN INSURANCE POLICY. (a) |
|
|
A dedicated personal insurer holding a limited certificate of |
|
|
authority may issue an insurance policy, contract, certificate, or |
|
|
other evidence of coverage consistent with the limitations of that |
|
|
certificate and this chapter. |
|
|
(b) Only the designated insurable individual named on a |
|
|
limited certificate of authority may be covered or insured by a |
|
|
dedicated personal insurer under a policy authorized by that |
|
|
certificate. |
|
|
(c) An insurance policy issued by a dedicated personal |
|
|
insurer must be issued for a term that expires on or before the |
|
|
expiration of the dedicated personal insurer's limited certificate |
|
|
of authority. |
|
|
(d) A dedicated personal insurer may not issue an insurance |
|
|
policy unless the insurer satisfies the capital requirements of |
|
|
Section 889.052 at the time the insurance policy is issued. |
|
|
SUBCHAPTER D. FAILURE TO SATISFY OPERATING REQUIREMENTS |
|
|
Sec. 889.151. SOLVENCY REQUIREMENT. (a) A dedicated |
|
|
personal insurer that does not satisfy the requirements of Section |
|
|
889.052, not later than the 10th day after the date the insurer |
|
|
ceases to satisfy those requirements, shall: |
|
|
(1) obtain sufficient capital to meet the |
|
|
requirements; |
|
|
(2) file an application for modification that |
|
|
demonstrates that: |
|
|
(A) the dedicated personal insurer satisfies the |
|
|
requirements for each insurance policy to be issued or outstanding |
|
|
by the insurer after the modification of the limited certificate of |
|
|
authority; and |
|
|
(B) each outstanding insurance policy not |
|
|
authorized under the modified limited certificate of authority is |
|
|
canceled; or |
|
|
(3) surrender the insurer's limited certificate of |
|
|
authority to the department. |
|
|
(b) A dedicated personal insurer that is denied an |
|
|
application for modification submitted under this section shall |
|
|
surrender its limited certificate of authority to the department. |
|
|
Sec. 889.152. RELATIONSHIP REQUIREMENT. A dedicated |
|
|
personal insurer that does not have the relationship required by |
|
|
Section 889.051 with the designated insurable individual specified |
|
|
in the insurer's limited certificate of authority shall surrender |
|
|
the certificate to the department not later than the 10th day after |
|
|
the date the insurer ceases to satisfy the relationship |
|
|
requirement. |
|
|
Sec. 889.153. SURRENDER OF AUTHORITY. On surrender of its |
|
|
limited certificate of authority, the dedicated personal insurer |
|
|
shall: |
|
|
(1) notify the department of the surrender; |
|
|
(2) refrain from issuing an insurance policy under |
|
|
that certificate; and |
|
|
(3) cancel each outstanding insurance policy issued by |
|
|
the insurer that may be lawfully canceled. |
|
|
SUBCHAPTER E. CRIMINAL OFFENSES |
|
|
Sec. 889.201. FALSE STATEMENTS. (a) A person commits an |
|
|
offense if the person wilfully makes a false or fraudulent |
|
|
statement or representation in or with reference to an application |
|
|
for a limited certificate of authority as a dedicated personal |
|
|
insurer. |
|
|
(b) An offense under this section is a misdemeanor |
|
|
punishable by: |
|
|
(1) a fine of not more than $500; |
|
|
(2) confinement in jail for a term not longer than 180 |
|
|
days; or |
|
|
(3) both a fine and confinement as provided by |
|
|
Subdivisions (1) and (2). |
|
|
(c) If conduct that constitutes an offense under this |
|
|
section also constitutes an offense under any other law not within |
|
|
this chapter, the actor may be prosecuted under this section, the |
|
|
other law, or both. |
|
|
Sec. 889.202. VIOLATION OF CHAPTER. (a) Except as provided |
|
|
by Section 889.201, a person commits an offense if the person |
|
|
violates this chapter. |
|
|
(b) An offense under this section is a misdemeanor |
|
|
punishable by: |
|
|
(1) a fine of not more than $500; |
|
|
(2) confinement in jail for a term of not more than 180 |
|
|
days; or |
|
|
(3) both a fine and confinement as provided by |
|
|
Subdivisions (1) and (2). |
|
|
(c) If conduct that constitutes an offense under this |
|
|
section also constitutes an offense under any other law not within |
|
|
this chapter, the actor may be prosecuted under this section, the |
|
|
other law, or both. |
|
|
SECTION 2. This Act takes effect September 1, 2013. |