H.B. No. 2449
AN ACT
relating to requirements for county mutual insurance companies.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 822.205(a), Insurance Code, is amended
to read as follows:
(a) Except as provided by Section 912.308, this [This]
section applies only to an insurance company that:
(1) writes insurance only in this state; and
(2) is not required by law to have capital stock.
SECTION 2. Section 912.308(b), Insurance Code, is amended
to read as follows:
(b) Except as provided by Section 912.056, a [A] county
mutual insurance company is subject to Subchapter B, Chapter 404,
and Sections 822.203, [822.205,] 822.210, and 822.212.
SECTION 3. Section 912.056, Insurance Code, is amended by
adding Subsections (d), (e), (f), and (g) to read as follows:
(d) A company organized and operating under this chapter
that, as of September 1, 2001, and continuously thereafter,
appointed managing general agents, created districts, or organized
local chapters to manage a portion of the company's business
independent of all other business of the company may continue to
operate in that manner and may appoint and contract with one or more
managing general agents in accordance with this code only if the
company:
(1) cedes 85 percent or more of the company's direct
and assumed risks to one or more reinsurers; and
(2) has a private passenger automobile insurance
business:
(A) with a market share of not greater than five
percent; or
(B) that is predominantly nonstandard.
(e) A company described by Subsection (d) shall file, for
each managing general agent, district, or local chapter program,
the rating information required by the commissioner by rule. Each
managing general agent, district, or local chapter program shall be
treated as a separate insurer for the purposes of Chapters 544,
2251, 2253, and 2254.
(f) Notwithstanding any other provision of this code, a
company operating under Subsection (d) that cedes 85 percent or
more of the company's direct and assumed risks to one or more
nonaffiliated reinsurers shall maintain unencumbered surplus, or
guaranty fund and unencumbered surplus, equal to the greater of $2
million or five percent of the company's recoverable for
reinsurance after taking full credit against the recoverable as
otherwise permitted for:
(1) premium payable to ceding insurers, net of any
ceding commission due the company;
(2) collateral held as required by Section 493.104,
letters of credit, and security trusts that secure the collection
of the reinsurance; and
(3) reinsurance through reinsurers whose financial
strength is rated "A" or better by the A. M. Best Company,
Incorporated, or another nationally recognized statistical rating
organization acceptable to the commissioner.
(g) The commissioner by rule shall adopt a transition period
for insurance companies subject to Subsection (f) to meet the
requirements of that subsection and for the pro rata elimination of
any deficiencies in the amounts required under that subsection.
The transition period adopted under this subsection must be for a
period of not less than five years.
SECTION 4. This Act takes effect September 1, 2009.
______________________________ ______________________________
President of the Senate Speaker of the House
I certify that H.B. No. 2449 was passed by the House on April
9, 2009, by the following vote: Yeas 148, Nays 0, 1 present, not
voting.
______________________________
Chief Clerk of the House
I certify that H.B. No. 2449 was passed by the Senate on May
26, 2009, by the following vote: Yeas 31, Nays 0.
______________________________
Secretary of the Senate
APPROVED: _____________________
Date
_____________________
Governor