88R13696 RDS-F

By: Hughes S.B. No. 2272

A BILL TO BE ENTITLED

AN ACT

relating to the operation of the Texas Property and Casualty Insurance Guaranty Association.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Section 462.007(b), Insurance Code, is amended to read as follows:

(b) Except as provided by Subchapter F, this chapter does not apply to:

(1) life, annuity, health, or disability insurance;

(2) mortgage guaranty, financial guaranty, or other kinds of insurance offering protection against investment risks;

(3) a fidelity or surety bond, or any other bonding obligation;

(4) credit insurance, guaranteed asset protection insurance protecting a lender's or borrower's interest if the amount owed on an asset exceeds the asset's value, vendors' single-interest insurance, collateral protection insurance, or similar insurance protecting a creditor's interest arising out of a creditor-debtor transaction;

(5) insurance of warranties or service contracts;

(6) title insurance;

(7) ocean marine insurance;

(8) a transaction or combination of transactions between a person, including an affiliate of the person, and an insurer, including an affiliate of the insurer, that involves the transfer of investment or credit risk unaccompanied by the transfer of insurance risk, including transactions, except for workers' compensation insurance, involving captive insurers, policies in which deductible or self-insured retention is substantially equal in amount to the limit of the liability under the policy, and transactions in which the insured retains a substantial portion of the risk; or

(9) insurance provided by or guaranteed by government.

SECTION 2. Section 462.054, Insurance Code, is amended to read as follows:

Sec. 462.054. ELIGIBILITY TO SERVE AS INDUSTRY REPRESENTATIVE. To be eligible to serve as an insurance industry board member, an individual must be an officer or a full-time employee of a member insurer.

SECTION 3. Section 462.056, Insurance Code, is amended to read as follows:

Sec. 462.056. REIMBURSEMENT OF BOARD MEMBERS; COMPENSATION TO PUBLIC REPRESENTATIVES. (a) A board member may be reimbursed from the assets of the association for expenses the board member incurs as a board member.

(b) A board member who is a public representative may receive compensation in an amount not to exceed $250 for each day the public representative attends a regular or special meeting of the board.

SECTION 4. Section 462.059, Insurance Code, is amended to read as follows:

Sec. 462.059. MEETING BY TELEPHONE CONFERENCE CALL OR VIDEOCONFERENCE. (a) Notwithstanding Chapter 551, Government Code, or any other law, the board may hold a [an open] meeting by telephone conference call, videoconference, or other similar telecommunication method. The board may use any method authorized by this subsection to establish a quorum, vote, or conduct any other meeting purpose in accordance with this section regardless of the subject matter discussed or considered by the board at the meeting. [A meeting held by telephone conference call:

[(1) must be audible to the public at the location specified in the notice described by Subsection (c); and

[(2) must allow two-way audio communication during the entire meeting between the members of the board attending a meeting authorized by this section.

[(a-1) If the two-way audio communication required under Subsection (a) is disrupted during a meeting so that a quorum of the board is no longer able to participate, the meeting may not continue until the two-way audio communication is reestablished.]

(b) A [The] meeting authorized by this section is subject to the notice requirements that apply to other meetings of the board of directors.

(c) The notice of a [the] meeting authorized by this section must specify the location of the meeting.

(d) Each [, and each] part of a [the] meeting that is required to be open to the public must be audible to the public at the [that] location specified by Subsection (c).

(e) Two-way audio communication must be available during the entire meeting between all members of the board attending a meeting authorized by this section. If the two-way audio communication is disrupted so that a quorum of the board is no longer participating in the meeting, the meeting may not continue until the two-way audio communication is reestablished.

(f) The association must make an audio recording of the meeting, if held by telephone conference call, or a digital recording of the meeting, if held by videoconference or other similar telecommunication method. The recording of the open portion of the meeting must be posted publicly to the association's Internet website.

SECTION 5. Section 462.105, Insurance Code, is amended to read as follows:

Sec. 462.105. ACCOUNTS. For purposes of administration and assessment, the association shall maintain the following accounts [is divided into]:

(1) the workers' compensation insurance account;

(2) the automobile insurance account; [and]

(3) the account for all other lines of insurance to which this chapter applies; and

(4) the administrative account.

SECTION 6. Section 462.106, Insurance Code, is amended to read as follows:

Sec. 462.106. ADMINISTRATION OF ACCOUNTS [ADMINISTRATIVE EXPENSES]. (a) The association shall [may] use money in the administrative account to pay administrative costs and other general overhead expenses of the association.

(b) The association may transfer income from investment of the association's money to the administrative account.

(c) The association shall use money from the corresponding line of insurance business account described by Section 462.105 to pay any covered claims for that line of insurance and related claims adjustment expenses charged by a third party for that line of insurance.

(d) The board may authorize borrowing between accounts if:

(1) the indebted account is obligated to pay interest at a rate that will reasonably compensate the lending account for any lost earnings; and

(2) the indebted account is reasonably expected to have sufficient money to repay the lending account, with interest, before the lending account needs the money to pay obligations for which the lending account is used. [On notification by the association of the amount of any additional money needed for the administrative account, the association shall assess member insurers in the manner provided by Sections 462.159-462.168 for that money. The commissioner shall consider the net direct written premiums collected in this state for all lines of business covered by this chapter. An assessment for administrative expenses incurred by a supervisor or conservator appointed by the commissioner or a court-appointed receiver for a nonmember of the association or unauthorized insurer operating in this state may not exceed $1 million each calendar year.]

SECTION 7. Section 462.163, Insurance Code, is amended to read as follows:

Sec. 462.163. PAYMENT OF ASSESSMENT; INTEREST. An insurer shall pay the amount of an assessment under Section 462.160 or 462.162(b) to the association not later than the 30th day after the date the association gives notice of the assessment. Interest accrues on an unpaid amount at a rate of 10 percent a year beginning on the date the payment is due.

SECTION 8. Section 462.057, Insurance Code, is repealed.

SECTION 9. Section 462.163, Insurance Code, as amended by this Act, applies only to an assessment that becomes due on or after the effective date of this Act. An assessment that becomes due before the effective date of this Act is governed by the law as it existed immediately before the effective date of this Act, and that law is continued in effect for that purpose.

SECTION 10. This Act takes effect immediately if it receives a vote of two-thirds of all the members elected to each house, as provided by Section 39, Article III, Texas Constitution. If this Act does not receive the vote necessary for immediate effect, this Act takes effect September 1, 2023.