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A BILL TO BE ENTITLED
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AN ACT
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relating to the operation of the Texas Property and Casualty |
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Insurance Guaranty Association. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Section 462.004(5), Insurance Code, is amended |
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to read as follows: |
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(5) "Impaired insurer" means a member insurer that is |
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subject to a final, nonappealable order of liquidation that |
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includes a finding of insolvency issued by a court of competent |
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jurisdiction in this state or in the insurer's state of domicile[:
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[(A) placed in:
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[(i)
temporary or permanent receivership or
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liquidation under a court order, including a court order of another
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state, based on a finding of insolvency; or
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[(ii)
conservatorship after the
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commissioner determines that the insurer is insolvent; and
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[(B)
designated by the commissioner as an
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impaired insurer]. |
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SECTION 2. Section 462.055(b), Insurance Code, is amended |
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to read as follows: |
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(b) The remaining board members, by majority vote, shall |
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fill a vacancy on the board for the unexpired term of a director who |
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serves as an insurance industry board member, subject to the |
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commissioner's approval. The commissioner shall appoint a director |
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to fill a vacancy on the board for the unexpired term of a director |
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who serves as a public representative. |
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SECTION 3. Section 462.059, Insurance Code, is amended by |
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amending Subsections (a), (b), and (c) and adding Subsection (a-1) |
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to read as follows: |
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(a) Notwithstanding Chapter 551, Government Code, the board |
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may hold an open meeting by telephone conference call [if immediate
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action is required and convening of a quorum of the board at a
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single location is not reasonable or practical]. A meeting held by |
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telephone conference call: |
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(1) must be audible to the public at the location |
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specified in the notice described by Subsection (c); and |
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(2) must allow two-way audio communication during the |
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entire meeting between the members of the board attending a meeting |
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authorized by this section. |
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(a-1) If the two-way audio communication required under |
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Subsection (a) is disrupted during a meeting so that a quorum of the |
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board is no longer able to participate, the meeting may not continue |
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until the two-way audio communication is reestablished. |
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(b) The meeting is subject to the notice requirements that |
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apply to other meetings of the board of directors. |
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(c) The notice of the meeting must specify [as] the location |
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of the meeting [the location at which meetings of the board are
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usually held], and each part of the meeting that is required to be |
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open to the public must be audible to the public at that location. |
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The association must make an audio recording of the meeting. The |
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recording of the open portion of the meeting must be posted publicly |
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to the association's Internet website [and must be tape recorded.
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The tape recording shall be made available to the public]. |
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SECTION 4. Section 462.207, Insurance Code, is amended by |
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amending Subsection (b) and adding Subsection (c) to read as |
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follows: |
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(b) An impaired insurer's insured is not liable, and the |
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reinsurer, insurer, self-insurer, insurance pool, or underwriting |
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association is not entitled to sue or continue a suit against the |
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insured, for a subrogation recovery, reinsurance recovery, |
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contribution, indemnification, or any other claim asserted |
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directly or indirectly by a reinsurer, insurer, self-insurer, |
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insurance pool, or underwriting association to the extent of the |
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applicable liability limits of the insurance policy written and |
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issued to the insured by the insolvent insurer. |
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(c) The association is entitled to recover the |
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association's costs, expenses, and reasonable attorney's fees |
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incurred in defending the association or an impaired insurer's |
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insured against a claim brought in violation of this subsection by a |
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reinsurer, insurer, self-insurer, insurance pool, or underwriting |
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association, on that entity's own behalf or on behalf of the |
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entity's insured, after the date on which the entity is provided |
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notice by the association or otherwise of the provisions of this |
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section applicable to the entity's suit. |
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SECTION 5. Sections 462.212(d), (e), and (f), Insurance |
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Code, are amended to read as follows: |
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(d) In an instance described by Subsection (c), the |
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association is entitled to assert a claim in the bankruptcy or |
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receivership proceeding to recover the amount of any covered claim |
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and costs of defense paid on behalf of the insured. A court shall |
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award the association the association's costs, expenses, and |
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reasonable attorney's fees incurred in seeking recovery under this |
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section. |
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(e) The association may establish procedures for requesting |
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financial information from an insured [or claimant] on a |
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confidential basis for the purpose of applying sections concerning |
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the net worth of insureds [first-party and third-party claimants], |
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subject to any information requested under this subsection being |
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shared with any other association similar to the association and |
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with the liquidator for the impaired insurer on the same |
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confidential basis. If the insured [or claimant] refuses to |
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provide the requested financial information, the [association
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requests an auditor's certification of that information, and the
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auditor's certification is available but not provided, the] |
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association may deem the net worth of the insured [or claimant] to |
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be in excess of $50 million at the relevant time. |
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(f) In any lawsuit contesting the applicability of Section |
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462.308 or this section when the insured [or claimant] has declined |
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to provide financial information requested by the association |
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[under the procedure provided in the plan of operation under
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Section 462.103], the insured [or claimant] bears the burden of |
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proof concerning its net worth at the relevant time and shall pay[.
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If the insured or claimant fails to prove that its net worth at the
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relevant time was less than the applicable amount, the court shall
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award] the association the association's [its full] costs, |
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expenses, and reasonable attorney's fees incurred in attempting to |
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obtain the insured's financial information [in contesting the
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claim]. |
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SECTION 6. Section 462.303, Insurance Code, is amended by |
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amending Subsection (b) and adding Subsection (c) to read as |
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follows: |
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(b) A judgment, settlement, or release described by |
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Subsection (a) is not evidence of liability or of damages in |
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connection with a claim brought against the association, an |
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impaired insurer's insured, or another party under this chapter. |
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(c) The association is entitled to recover the |
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association's costs, expenses, and reasonable attorney's fees |
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incurred in contesting a claim based on a judgment, settlement, or |
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release described by Subsection (a) on the association's behalf or |
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on behalf of an impaired insurer's insured after the date on which |
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the party asserting the claim is provided notice by the association |
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or otherwise of the provisions of this section applicable to the |
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judgment, settlement, or release. |
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SECTION 7. Sections 462.304(a) and (c), Insurance Code, are |
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amended to read as follows: |
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(a) The association shall handle claims through: |
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(1) the association's employees or contract claims |
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adjusters; or |
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(2) subject to the approval of the commissioner, |
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[through] one or more insurers [or other persons] designated[,
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subject to the approval of the commissioner,] as a servicing |
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facility under a servicing agreement or loss portfolio transfer |
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agreement [facilities]. |
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(c) The association shall[:
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[(1)] reimburse a servicing facility for[:
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[(A)] obligations of the association paid by the |
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facility[;] and |
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[(B)] expenses incurred by the facility in |
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handling claims for the association. The association shall |
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reimburse a servicing facility under this subsection in a manner |
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that is consistent with the applicable servicing agreement or loss |
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portfolio agreement[; and
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[(2)
pay the other expenses of the association
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authorized by this chapter]. |
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SECTION 8. Section 462.307, Insurance Code, is amended by |
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amending Subsection (d) and adding Subsection (f) to read as |
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follows: |
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(d) Except as provided by Section 462.308 or 462.212, the |
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association does not have a cause of action against the impaired |
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insurer's insured for money the association has paid, other than a |
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cause of action that the impaired insurer would have had if the |
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money had been paid by the impaired insurer. |
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(f) To the extent the association has a right to recover |
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proceeds from the sale of salvage property related to a covered |
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claim, the association's right to recover the proceeds may not be |
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reduced in the amount of any pre-impairment costs, fees, or |
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expenses related to the salvage property that are not part of a |
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covered claim under Subchapter E. A person or entity in possession |
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of salvage property subject to the association's right of recovery |
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may not seek recovery from the association for any pre-impairment |
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costs, fees, or expenses related to the salvage property that are |
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not a covered claim under Subchapter E. |
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SECTION 9. Section 462.308, Insurance Code, is amended by |
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amending Subsection (a) and adding Subsection (d) to read as |
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follows: |
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(a) The association is entitled to recover: |
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(1) the amount of a covered claim and the cost of |
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defense paid on behalf of a person: |
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(A) who is an affiliate of the impaired insurer; |
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and |
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(B) whose liability obligations to other persons |
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are satisfied wholly or partly by payment made under this chapter; |
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and |
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(2) the amount of a covered claim for workers' |
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compensation insurance benefits and the costs of administration and |
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defense of the claim paid under this chapter from an insured |
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employer or any successor entity to the insured employer under |
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state, federal, or international law whose net worth on December 31 |
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of the year preceding the date the insurer becomes an impaired |
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insurer exceeds $50 million. |
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(d) A court shall award the association the association's |
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costs, expenses, and reasonable attorney's fees incurred in seeking |
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recovery under this section. |
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SECTION 10. Except as provided by this section, the changes |
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in law made by this Act apply only with respect to a property and |
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casualty insurance company that is designated as an impaired |
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insurer on or after the effective date of this Act. The law as it |
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existed immediately before the effective date of this Act applies |
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with respect to a property and casualty insurance company that is |
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designated as an impaired insurer before the effective date of this |
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Act, and that law is continued in effect for that purpose. |
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SECTION 11. This Act takes effect September 1, 2019. |