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A BILL TO BE ENTITLED
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AN ACT
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relating to the Texas Life and Health Insurance Guaranty |
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Association. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Section 463.002, Insurance Code, is amended to |
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read as follows: |
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Sec. 463.002. PURPOSE. The purpose of this chapter is to |
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protect, subject to certain limitations, a person specified by |
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Section 463.201 against failure in the performance of a contractual |
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obligation under a life, accident, [or] health, [insurance policy] |
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or annuity policy, plan, or contract with respect to which this |
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chapter provides coverage as determined under Subchapter E, because |
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of the impairment or insolvency of the member insurer that issued |
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the policy, plan, or contract. |
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SECTION 2. Section 463.003, Insurance Code, is amended by |
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amending Subdivisions (4), (7-a), and (9) and adding Subdivisions |
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(4-a), (4-b), (5-a), and (6-a) to read as follows: |
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(4) "Covered policy" or "covered contract" means a |
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policy or contract, or portion of a policy or contract, including a |
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health maintenance organization contract, with respect to which |
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this chapter provides coverage as determined under Subchapter E. |
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(4-a) "Enrollee" means an individual who is enrolled |
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in a health maintenance organization contract with respect to which |
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this chapter provides coverage as determined under Subchapter E. |
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For purposes of this chapter, an enrollee is considered to be an |
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insured. |
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(4-b) "Health benefit plan" means a hospital and |
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medical expense incurred policy or certificate, health maintenance |
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organization enrollee contract, or any other similar health |
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contract. The term does not include: |
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(A) accident-only insurance; |
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(B) credit insurance; |
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(C) dental-only insurance; |
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(D) vision-only insurance; |
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(E) Medicare supplement insurance; |
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(F) long-term care coverage or benefits, home |
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health care coverage or benefits, community-based care coverage or |
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benefits, or any combination of those coverages or benefits; |
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(G) disability income insurance; |
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(H) coverage for on-site medical clinics; or |
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(I) specified disease, hospital confinement |
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indemnity, or limited benefit health insurance coverage if the |
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types of coverage do not provide coordination of benefits and are |
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provided under separate policies or certificates. |
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(5-a) "Insurance" includes health benefit plan |
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coverage. |
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(6-a) "Insurer" includes a health maintenance |
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organization. |
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(7-a) "Owner" means the owner of a policy or contract |
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and "policyholder," "policy owner," and "contract owner" mean the |
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person who is identified as the legal owner under the terms of the |
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policy or contract or who is otherwise vested with legal title to |
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the policy or contract through a valid assignment completed in |
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accordance with the terms of the policy or contract and is properly |
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recorded as the owner on the books of the member insurer. The terms |
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"owner," "contract owner," "policyholder," and "policy owner" do |
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not include persons with a mere beneficial interest in a policy or |
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contract. |
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(9) "Premium" means an amount received on a covered |
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policy, less any premium, consideration, or deposit returned on the |
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policy, and any dividend or experience credit on the policy. The |
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term does not include: |
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(A) an amount received for a policy or contract |
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or part of a policy or contract for which coverage is not provided |
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under Section 463.202, except that assessable premiums may not be |
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reduced because of: |
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(i) an interest limitation provided by |
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Section 463.203(b)(3); or |
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(ii) a limitation provided by Section |
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463.204 with respect to a single individual, participant, |
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annuitant, or policy or contract owner; |
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(B) premiums in excess of $5 million on an |
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unallocated annuity contract not issued under a governmental |
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benefit plan established under Section 401, 403(b), or 457, |
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Internal Revenue Code of 1986; |
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(C) premiums received from the state treasury or |
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the United States treasury for insurance for which this state or the |
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United States contracts to: |
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(i) provide welfare benefits to designated |
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welfare recipients; or |
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(ii) implement: |
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(a) Title 2, Health and Safety Code; |
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(b) Title 2, Human Resources Code;[,] |
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or |
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(c) the Social Security Act (42 U.S.C. |
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Section 301 et seq.); or |
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(D) premiums in excess of $5 million with respect |
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to multiple nongroup policies of life insurance owned by one owner, |
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regardless of whether the policy owner is an individual, firm, |
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corporation, or other person and regardless of whether the persons |
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insured are officers, managers, employees, or other persons, |
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regardless of the number of policies or contracts held by the owner. |
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SECTION 3. Subchapter A, Chapter 463, Insurance Code, is |
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amended by adding Sections 463.0032 and 463.007 to read as follows: |
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Sec. 463.0032. USE OF TERMS POLICY AND CONTRACT. For |
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purposes of this chapter, "policy" and "contract" have the same |
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meaning. |
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Sec. 463.007. CONSTRUCTION OF LONG-TERM CARE RIDER. For |
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purposes of this chapter, benefits provided by a long-term care |
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rider to a life insurance policy or annuity contract are considered |
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to be the same type of benefits as the base life insurance policy or |
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annuity contract. |
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SECTION 4. Section 463.052, Insurance Code, is amended to |
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read as follows: |
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Sec. 463.052. REQUIRED PARTICIPATION IN ASSOCIATION. |
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(a) As a condition of engaging in the business of insurance in this |
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state, an insurer, including a mutual assessment company, a local |
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mutual aid association, a statewide mutual assessment company, |
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[and] a stipulated premium company, and a health maintenance |
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organization authorized to engage in business in this state, shall |
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participate as a member of the association if the insurer holds a |
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certificate of authority to engage in a kind of insurance business |
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in this state with respect to which this chapter provides coverage |
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as determined under Subchapter E. The requirement to participate |
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applies regardless of whether the insurer's certificate of |
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authority in this state is suspended, revoked, not renewed, or |
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voluntarily withdrawn. |
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(b) The following do not participate as member insurers: |
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(1) [a health maintenance organization;
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[(2)] a fraternal benefit society; |
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(2) [(3)] a mandatory state pooling plan; |
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(3) [(4)] a reciprocal or interinsurance exchange; |
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(4) [(5)] an organization which has a certificate of |
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authority or license limited to the issuance of charitable gift |
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annuities, as defined by this code or rules adopted by the |
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commissioner; and |
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(5) [(6)] an entity similar to an entity described by |
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Subdivision (1), (2), (3), or (4)[, or (5)]. |
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SECTION 5. Section 463.053, Insurance Code, is amended by |
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adding Subsection (c-1) to read as follows: |
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(c-1) The commissioner shall consider, among other things, |
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whether the directors appointed under Subsections (b) and (c) |
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fairly represent the member insurers that are health maintenance |
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organizations and life, health, and annuity insurers. |
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SECTION 6. Sections 463.059(a), (c), and (f), Insurance |
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Code, are amended to read as follows: |
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(a) Notwithstanding Chapter 551, Government Code, or any |
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other law, the board or a committee of the board may meet by |
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telephone conference call, videoconference, or other similar |
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telecommunication method [if immediate action is required and
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convening a quorum of the board or committee of the board at a
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single location is not reasonable or practical.
A board or
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committee member who is unable to attend a meeting in person and who
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is participating in a board or committee meeting by telephone
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conference call, videoconference, or other similar
|
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telecommunication method may be counted to establish a quorum and
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may vote]. The board may use telephone conference call, |
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videoconference, or other similar telecommunication method for |
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establishing a quorum, voting, or any other meeting purpose in |
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accordance with this section regardless of the subject matter |
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discussed or considered by the board at the meeting. |
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(c) The notice of a meeting authorized by this section must |
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specify [that] the location of the meeting [is the location at which
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meetings of the board and committees of the board are usually held]. |
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(f) An audio or digital recording of a meeting authorized by |
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this section must be made in accordance with the association's |
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bylaws. The recording of the open portion of the meeting must be |
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posted on the association's Internet website [made available to the
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public]. |
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SECTION 7. Section 463.101(a), Insurance Code, is amended |
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to read as follows: |
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(a) The association may: |
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(1) enter into contracts as necessary or proper to |
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carry out this chapter and the purposes of this chapter; |
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(2) sue or be sued, including taking: |
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(A) necessary or proper legal action to: |
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(i) recover an unpaid assessment under |
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Subchapter D; or |
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(ii) settle a claim or potential claim |
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against the association; or |
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(B) necessary legal action to avoid payment of an |
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improper claim; |
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(3) borrow money to effect the purposes of this |
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chapter; |
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(4) exercise, for the purposes of this chapter and to |
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the extent approved by the commissioner, the powers of a domestic |
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life, accident, or health insurance company, a health maintenance |
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organization, or a group hospital service corporation, except that |
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the association may not issue an insurance policy or annuity |
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contract other than to perform the association's obligations under |
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this chapter; |
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(5) unless prohibited by other law, implement or file |
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for an actuarially justified rate or premium increase in accordance |
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with the terms and conditions of a covered policy or contract; |
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(6) to further the association's purposes, exercise |
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the association's powers, and perform the association's duties, |
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join an organization of one or more state associations that have |
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similar purposes; |
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(7) [(6)] request information from a person seeking |
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coverage from the association in determining its obligations under |
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this chapter with respect to the person, and the person shall |
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promptly comply with the request; and |
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(8) [(7)] take any other necessary or appropriate |
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action to discharge the association's duties and obligations under |
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this chapter or to exercise the association's powers under this |
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chapter. |
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SECTION 8. Section 463.102(b), Insurance Code, is amended |
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to read as follows: |
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(b) The association may amend the plan of operation. An |
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amendment must be approved by the commissioner and takes effect on: |
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(1) the date the commissioner approves the amendment; |
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or |
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(2) the 60th [30th] day after the date the amendment is |
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submitted to the commissioner for approval, if the commissioner |
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does not approve or disapprove the amendment before the 60th [30th] |
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day. |
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SECTION 9. Section 463.109, Insurance Code, is amended to |
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read as follows: |
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Sec. 463.109. ASSOCIATION APPEARANCE BEFORE COURT; |
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INTERVENTION. (a) The association may appear before a court in |
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this state with jurisdiction over an impaired or insolvent insurer |
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concerning which the association is or may become obligated under |
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this chapter. The association's right to appear applies to: |
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(1) a proposal for reinsuring, reissuing, modifying, |
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or guaranteeing the insurer's policies or contracts; |
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(2) the determination of the insurer's policies or |
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contracts and contractual obligations; and |
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(3) any other matter germane to the association's |
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powers and duties. |
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(b) The association may appear or intervene before a court |
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in another state with jurisdiction over: |
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(1) an impaired or insolvent insurer concerning which |
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the association is or may become obligated; or |
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(2) a third party against whom the association may |
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have rights through subrogation of the insurer's policyholders or |
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enrollees. |
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SECTION 10. Sections 463.114(c), (d), and (e), Insurance |
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Code, are amended to read as follows: |
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(c) At the expiration of the 60th day after approval of the |
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document, a member [an] insurer may not deliver a policy or contract |
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with respect to which this chapter provides coverage as determined |
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under Subchapter E to a policy, [or] contract, or certificate |
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holder or enrollee before a copy of the summary document is |
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delivered to the policy, [or] contract, or certificate holder or |
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enrollee. The document must also be available on request of a |
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policy, contract, or certificate holder or enrollee |
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[policyholder]. |
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(d) The distribution, delivery, content, or interpretation |
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of a summary document does not guarantee that a policy or contract |
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or a policy, [or] contract, or certificate holder or enrollee is |
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provided coverage by this chapter if a member insurer becomes |
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impaired or insolvent. Failure to receive the document does not |
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give an insured or policy, contract, or certificate holder or |
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enrollee any rights greater than those provided by this chapter. |
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(e) An insurer or agent may not deliver a policy or contract |
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described by Section 463.202 that is excluded from the coverage |
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provided by this chapter by Section 463.203 unless the insurer or |
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agent, either before or in conjunction with delivery, gives the |
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policy, [or] contract, or certificate holder or enrollee a separate |
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written notice clearly and conspicuously disclosing that the policy |
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or contract is not covered by the association. |
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SECTION 11. Section 463.153, Insurance Code, is amended by |
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amending Subsections (b) and (c) and adding Subsection (b-1) to |
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read as follows: |
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(b) Class B assessments on [against] a member insurer for |
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each account under Section 463.105 shall be authorized and called |
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in the proportion that the premiums received on business in this |
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state by the member insurer on policies or contracts covered by each |
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account for the three most recent calendar years for which |
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information is available preceding the year in which the impaired |
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or insolvent member insurer became impaired or insolvent bear to |
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premiums received on business in this state for those calendar |
|
years by all assessed member insurers. Except for assessments |
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related to long-term care insurance as described by Subsection |
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(b-1), the [The] amount of a Class B assessment shall be allocated |
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among the separate accounts in accordance with an allocation |
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formula that may be based on: |
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(1) the premiums or reserves of the impaired or |
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insolvent insurer; or |
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(2) any other standard deemed by the board in the |
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board's sole discretion as being fair and reasonable under the |
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circumstances. |
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(b-1) The amount of a Class B assessment for long-term care |
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insurance written by an impaired or insolvent member insurer shall |
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be allocated according to a methodology included in the plan of |
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operation and approved by the commissioner. The methodology must |
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provide for 50 percent of the assessment to be allocated to accident |
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and health member insurers and 50 percent to be allocated to life |
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and annuity member insurers. This subsection does not apply to a |
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rider to a member insurer's life insurance policy or annuity |
|
contract that provides long-term care benefits. |
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(c) The total amount of assessments on a member insurer for |
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each account under Section 463.105 may not in one calendar year |
|
exceed two percent of the insurer's average annual premiums on the |
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policies covered by the account during the three calendar years |
|
preceding the year in which the impaired or insolvent member |
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insurer became an impaired or insolvent insurer. If two or more |
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assessments are authorized in a calendar year with respect to |
|
member insurers that become impaired or insolvent in different |
|
calendar years, the average annual premiums for purposes of the |
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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 |
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computed in accordance with this section. If the maximum |
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assessment and the other assets of the association do not provide in |
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a year an amount sufficient to carry out the association's |
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responsibilities, the association shall make necessary additional |
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assessments as soon as this chapter permits. |
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SECTION 12. Sections 463.154 and 463.201, Insurance Code, |
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are amended to read as follows: |
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Sec. 463.154. DEFERMENT. The association may wholly or |
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partly defer an assessment on [of] a member insurer if the |
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association believes payment of the assessment would endanger the |
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ability of the insurer to fulfill the insurer's contractual |
|
obligations. The amount of the assessment that is deferred may be |
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assessed against the other member insurers in a manner consistent |
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with this subchapter. |
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Sec. 463.201. PERSONS [INSUREDS] COVERED. (a) Subject to |
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Subsections (b) and (c), this chapter provides coverage for a |
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policy or contract described by Section 463.202 to a person who is: |
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(1) a person, other than a certificate holder under a |
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group policy or contract who is not a resident, who is a |
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beneficiary, assignee, or payee, including a health care provider |
|
who renders services covered under a health insurance policy or |
|
certificate, of a person described by Subdivision (2); |
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(2) a person who is an owner of or certificate holder |
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or enrollee under a policy or contract specified by Section |
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463.202, other than an unallocated annuity contract or structured |
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settlement annuity, and who is: |
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(A) a resident; or |
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(B) not a resident, but only under all of the |
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following conditions: |
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(i) the member insurers that issued the |
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policies or contracts are domiciled in this state; |
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(ii) the state in which the person resides |
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has an association similar to the association; and |
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(iii) the person is not eligible for |
|
coverage by an association in any other state because the insurer or |
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health maintenance organization was not licensed in the state at |
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the time specified in that state's guaranty association law; |
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(3) a person who is the owner of an unallocated annuity |
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contract issued to or in connection with: |
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(A) a benefit plan whose plan sponsor has the |
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sponsor's principal place of business in this state; or |
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(B) a government lottery, if the owner is a |
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resident; or |
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(4) a person who is the payee under a structured |
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settlement annuity, or beneficiary of the payee if the payee is |
|
deceased, if: |
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(A) the payee is a resident, regardless of where |
|
the contract owner resides; |
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(B) the payee is not a resident, the contract |
|
owner of the structured settlement annuity is a resident, and the |
|
payee is not eligible for coverage by the association in the state |
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in which the payee resides; or |
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(C) the payee and the contract owner are not |
|
residents, the insurer that issued the structured settlement |
|
annuity is domiciled in this state, the state in which the contract |
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owner resides has an association similar to the association, and |
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neither the payee or, if applicable, the payee's beneficiary, nor |
|
the contract owner is eligible for coverage by the association in |
|
the state in which the payee or contract owner resides. |
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(b) This chapter does not provide coverage to: |
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(1) a person who is a payee or the beneficiary of a |
|
payee with respect to a contract the owner of which is a resident of |
|
this state, if the payee or the payee's beneficiary is afforded any |
|
coverage by the association of another state; [or] |
|
(2) a person otherwise described by Subsection (a)(3), |
|
if any coverage is provided by the association of another state to |
|
that person; or |
|
(3) a person who acquires rights to receive payments |
|
through a structured settlement factoring transaction as defined by |
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Section 5891(c)(3)(A), Internal Revenue Code of 1986 (26 U.S.C. |
|
Section 5891(c)(3)(A)), regardless of whether the transaction |
|
occurred before, on, or after the date that section became |
|
effective. |
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(c) This chapter is intended to provide coverage to persons |
|
who are residents of this state, and in those limited circumstances |
|
as described in this chapter, to nonresidents. In order to avoid |
|
duplicate coverage, if a person who would otherwise receive |
|
coverage under this chapter is provided coverage under the laws of |
|
any other state, the person may not be provided coverage under this |
|
chapter. In determining the application of the provisions of this |
|
subsection in situations in which a person could be covered by the |
|
association of more than one state, whether as an owner, payee, |
|
enrollee, beneficiary, or assignee, this chapter shall be construed |
|
in conjunction with other state laws to result in coverage by only |
|
one association. |
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SECTION 13. Section 463.202(a), Insurance Code, is amended |
|
to read as follows: |
|
(a) Except as limited by this chapter, the coverage provided |
|
by this chapter to a person specified by Section 463.201, subject to |
|
Sections 463.201(b) and (c), applies with respect to the following |
|
policies and contracts issued by a member insurer: |
|
(1) a direct, nongroup life, health, accident, |
|
annuity, or supplemental policy or contract, including a health |
|
maintenance organization contract or certificate; |
|
(2) a certificate under a direct group policy or |
|
contract; |
|
(3) a group hospital service contract; and |
|
(4) an unallocated annuity contract. |
|
SECTION 14. Section 463.203, Insurance Code, is amended by |
|
amending Subsection (b) and adding Subsection (b-1) 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; |
|
(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), 42 U.S.C. Sections 1396-1396w-5 (Medicaid), or 42 |
|
U.S.C. Sections 1397aa-1397mm (State Children's Health Insurance |
|
Program) or a regulation adopted under those federal statutes; or |
|
(14) structured settlement annuity benefits to which a |
|
payee or beneficiary has transferred the payee's or beneficiary's |
|
rights in a structured settlement factoring transaction as defined |
|
by Section 5891(c)(3)(A), Internal Revenue Code of 1986 (26 U.S.C. |
|
Section 5891(c)(3)(A)), regardless of whether the factoring |
|
transaction occurred before, on, or after the date that section |
|
became effective. |
|
(b-1) The exclusion from coverage described by Subsection |
|
(b)(3) does not apply to any portion of a policy or contract, |
|
including a rider, that provides long-term care benefits or any |
|
other health insurance benefit. |
|
SECTION 15. 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 life insurance policies on a |
|
single life; |
|
(2) an amount in excess of: |
|
(A) $250,000 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 health benefit plans [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 income 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 health benefit plans [basic hospital, medical-surgical, major
|
|
medical], disability income, or long-term care insurance; |
|
(4) an amount in excess of $250,000 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 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 health benefit plans |
|
[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 covered person; or |
|
(B) imposed by a court. |
|
SECTION 16. Section 463.251(b), Insurance Code, is amended |
|
to read as follows: |
|
(b) With the commissioner's approval, the association may: |
|
(1) guarantee, assume, reissue, or reinsure, or cause |
|
to be guaranteed, assumed, reissued, or reinsured, one or more of |
|
the insurer's policies or contracts; |
|
(2) provide money, pledges, notes, guarantees, or |
|
other means proper to: |
|
(A) implement Subdivision (1); and |
|
(B) ensure payment of the insurer's contractual |
|
obligations until action is taken under Subdivision (1); or |
|
(3) loan money to the insurer. |
|
SECTION 17. Section 463.252(c), Insurance Code, is amended |
|
to read as follows: |
|
(c) A policy or contract owner, certificate holder, or |
|
enrollee who claims emergency or hardship may petition for |
|
substitute benefits under standards the association proposes and |
|
the commissioner approves. Substitute benefits are available only |
|
for a health claim, periodic annuity benefit payment, death |
|
benefit, supplemental benefit, or cash withdrawal. |
|
SECTION 18. Section 463.253(b), Insurance Code, is amended |
|
to read as follows: |
|
(b) The association shall provide money, pledges, |
|
guarantees, or other means reasonably necessary to discharge the |
|
insurer's duties and to: |
|
(1) guarantee, assume, reissue, or reinsure, or cause |
|
to be guaranteed, assumed, reissued, or reinsured, the insurer's |
|
policies or contracts; or |
|
(2) ensure payment of the insurer's contractual |
|
obligations. |
|
SECTION 19. Sections 463.254(b), (e), (f), (g), (h), and |
|
(i), Insurance Code, are amended to read as follows: |
|
(b) The association, in accordance with Subsections (c) and |
|
(d), as applicable, shall ensure payment of benefits identical to |
|
the benefits that would have been payable under the policy or |
|
contract of the insurer[, at premiums identical to the premiums
|
|
that would have been applicable under that policy or contract,
|
|
except for terms of conversion and renewability]. |
|
(e) The association shall diligently attempt to provide |
|
each known insured, enrollee, or group policy or contract holder |
|
[policyholder] with notice before the 30th day before the date the |
|
benefits are terminated. |
|
(f) As provided by Subsections (g)-(i), the association |
|
shall make substitute coverage available on an individual basis to: |
|
(1) each known insured or enrollee under an individual |
|
policy, or the owner if other than the insured or enrollee; and |
|
(2) each individual who: |
|
(A) was formerly insured or enrolled under a |
|
group policy or contract; and |
|
(B) is not eligible for replacement group |
|
coverage. |
|
(g) Substitute coverage is available for an individual |
|
policy under Subsection (f) only if the insured, enrollee, or owner |
|
was entitled under law or the terminated policy to continue an |
|
individual policy in force until a specified age or for a specified |
|
period during which the insurer: |
|
(1) was not entitled to unilaterally change a |
|
provision of the policy; or |
|
(2) was entitled only to change a premium by class. |
|
(h) Substitute coverage is available for a group policy or |
|
contract under Subsection (f) only if the formerly insured or |
|
enrolled individual was entitled under law or the terminated policy |
|
or contract to convert group coverage to individual coverage. |
|
(i) To provide substitute coverage under Subsection (f), |
|
the association may offer to reissue the terminated coverage or |
|
issue an alternative policy. The association shall offer the |
|
reissued or alternative policy without requiring evidence of |
|
insurability, at actuarially justified rates. The reissued or |
|
alternative policy may not provide for a waiting period or |
|
exclusion that would not have applied under the terminated |
|
policy. The association may reinsure a reissued or alternative |
|
policy. |
|
SECTION 20. Section 463.256(b), Insurance Code, is amended |
|
to read as follows: |
|
(b) The association shall set the premium according to a |
|
table of rates the association adopts. The premium: |
|
(1) must reflect: |
|
(A) the amount of insurance provided; and |
|
(B) each insured's or enrollee's age and class of |
|
risk; and |
|
(2) may not reflect any change in an insured's or |
|
enrollee's health occurring after the original policy was most |
|
recently underwritten. |
|
SECTION 21. Section 463.258, Insurance Code, is amended to |
|
read as follows: |
|
Sec. 463.258. PREMIUM FOR REISSUANCE OF TERMINATED |
|
COVERAGE. If the association reissues terminated coverage at a |
|
premium different from the terminated policy's premium, the premium |
|
must: |
|
(1) reflect the amount of insurance provided and the |
|
insured's or enrollee's age and class of risk; and |
|
(2) be approved by the commissioner or a court. |
|
SECTION 22. Section 463.260(b), Insurance Code, is amended |
|
to read as follows: |
|
(b) The association's obligations with respect to coverage |
|
under a policy of an impaired or insolvent insurer or under a |
|
reissued or alternative policy terminate on the date the coverage |
|
or policy is replaced by another similar policy by the |
|
policyholder, the contract owner, the insured, the enrollee, or the |
|
association. |
|
SECTION 23. Sections 463.261(a) and (c), Insurance Code, |
|
are amended to read as follows: |
|
(a) A person receiving a benefit under this chapter, |
|
including a payment of or on account of a contractual obligation, |
|
continuation of coverage, or provision of substitute or alternative |
|
coverage, is considered to have assigned to the association the |
|
rights under, and any cause of action relating to, the covered |
|
policy to the extent of the benefit received. The association may |
|
require a payee, policy or contract owner, beneficiary, insured, |
|
enrollee, or annuitant to assign the person's rights and cause of |
|
action to the association as a condition of receiving a right or |
|
benefit under this chapter. |
|
(c) The association has all common law rights of subrogation |
|
and any other equitable or legal remedy that would have been |
|
available to the impaired or insolvent insurer or holder, |
|
beneficiary, enrollee, or payee of a policy or contract with |
|
respect to the policy or contract. |
|
SECTION 24. Section 463.304, Insurance Code, is amended to |
|
read as follows: |
|
Sec. 463.304. DISTRIBUTION OF OWNERSHIP RIGHTS OF IMPAIRED |
|
OR INSOLVENT INSURER. In making an equitable distribution of the |
|
ownership rights of an impaired or insolvent insurer before the |
|
termination of a receivership, the court: |
|
(1) shall consider the welfare of the policyholders, |
|
contract owners, certificate holders, and enrollees of the |
|
continuing or successor insurer; and |
|
(2) may consider the contributions of the respective |
|
parties, including the association, the shareholders, [and] |
|
policyholders, contract owners, certificate holders, and enrollees |
|
of the impaired or insolvent insurer, and any other party with a |
|
bona fide interest. |
|
SECTION 25. Section 463.351(a), Insurance Code, is amended |
|
to read as follows: |
|
(a) The commissioner shall: |
|
(1) notify the insurance officials of all the other |
|
states, territories of the United States, and the District of |
|
Columbia by mail not later than the 30th day after the date the |
|
commissioner: |
|
(A) revokes or suspends a member insurer's |
|
certificate of authority; or |
|
(B) issues a formal order requiring a member |
|
insurer to: |
|
(i) restrict the insurer's premium writing; |
|
(ii) withdraw from this state; |
|
(iii) reinsure all or part of the insurer's |
|
business; |
|
(iv) obtain additional contributions to |
|
surplus; or |
|
(v) increase capital, surplus, or another |
|
account for the security of policyholders, contract owners, or |
|
creditors; |
|
(2) report to the board when the commissioner: |
|
(A) takes an action described by Subdivision (1) |
|
or receives from another insurance official a report indicating |
|
that a similar action has been taken in another state; or |
|
(B) has reasonable cause to believe from a |
|
completed or continuing examination that a member insurer may be |
|
impaired or insolvent; and |
|
(3) provide to the board the National Association of |
|
Insurance Commissioners Insurance Regulatory Information System |
|
ratios and listings of insurers not included in those ratios. |
|
SECTION 26. The changes in law made by this Act apply only |
|
to an insurer that first becomes impaired or insolvent on or after |
|
the effective date of this Act. |
|
SECTION 27. This Act takes effect September 1, 2019. |