81R10171 PB-F
By: Thompson H.B. No. 1761
A BILL TO BE ENTITLED
AN ACT
relating to the reserve requirements for credit life and credit
accident and health insurance.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 425.058(l), Insurance Code, is amended
to read as follows:
(l)(1) Notwithstanding any other law, the minimum reserve
requirements applicable to a policy issued under Chapter 1153
before January 1, 2009, are met if, in the aggregate, the reserves
are maintained at 100 percent of the 1980 Commissioner's Standard
Ordinary Mortality Table, with interest that does not exceed 5.5
percent. This subsection expires September 1, 2013.
(2) The minimum reserve requirements applicable to a
credit life policy issued under Chapter 1153 on or after January 1,
2009, shall be based on minimum reserve standards established by
the commissioner by rule. In adopting rules under this section, the
commissioner shall adopt rules based on:
(A) the 2001 CSO Male Composite Ultimate
Mortality Table for male and female insureds; or
(B) the most recent CSO Mortality Table approved
by the National Association of Insurance Commissioners for use on
credit life policy reserves.
(3) The minimum reserve requirements applicable to a
single premium credit disability contract issued under Chapter 1153
on or after January 1, 2009, shall be based on minimum reserve
standards established by the commissioner by rule. In adopting
rules under this section, the commissioner shall adopt rules based
on:
(A) the 1985 Commissioners Individual Disability
Table A (85CIDA); or
(B) the most recent Commissioner's Disability
Table approved by the National Association of Insurance
Commissioners for use on credit disability policy reserves.
(4) For all credit insurance contracts, if the net
premium refund liability exceeds the aggregate recorded contract
reserve, the insurer shall establish an additional reserve
liability that is equal to the excess of the net refund liability
over the contract reserve recorded. The net refund liability may
include consideration of commission, premium tax, and other
expenses recoverable.
(5) Computation of reserves for policies and contracts
described by this subsection shall be computed annually from each
applicable table using data from the preceding year. Reserve
calculations shall be reported by each insurer as part of the
insurer's annual statement required to be filed on March 1 of each
year.
(6) In addition to the rules required to be adopted
under this subsection, the commissioner may adopt other rules to
implement this subsection.
SECTION 2. (a) The change in law made by this Act applies to
all credit life and credit accident and health insurance policies
issued on or after January 1, 2009.
(b) The commissioner of insurance shall adopt rules as
required to implement Section 425.058(l), Insurance Code, as
amended by this Act, not later than the 60th day after the effective
date of this Act.
(c) The initial reserve calculations under Section
425.058(l), Insurance Code, as amended by this Act, must be
reported in the annual statement required to be filed on March 1,
2010.
SECTION 3. 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, 2009.