81R11238 AJA-F
By: Eiland H.B. No. 2451
A BILL TO BE ENTITLED
AN ACT
relating to insurance premium finance agreements regulated by the
Texas Department of Insurance.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 651.001(5), Insurance Code, is amended
to read as follows:
(5) "Insurer" means an entity organized or authorized
to engage in the business of insurance under this code as a capital
stock insurance company, title insurance company, reciprocal or
interinsurance exchange, Lloyd's plan, fraternal benefit society,
mutual or mutual assessment company of any kind, statewide mutual
assessment company, local mutual aid association, burial
association, county or farm mutual insurance company, fidelity,
guaranty, or surety company, [or] trust company, or eligible
surplus lines insurer. The term includes:
(A) the Texas Windstorm Insurance Association;
(B) the Texas Automobile Insurance Plan
Association; and
(C) the Texas Medical Liability Insurance
Underwriting Association.
SECTION 2. Section 651.151(b), Insurance Code, is amended
to read as follows:
(b) A premium finance agreement must be dated and signed by
the insured. [An agreement may be signed on behalf of the insured
by the insured's agent if:
[(1) the agreement contains policies for other than
personal, family, or household purposes; and
[(2) the premiums for the policies exceed $1,000.]
SECTION 3. Section 651.155, Insurance Code, is amended to
read as follows:
Sec. 651.155. RESPONSIBILITIES OF INSURANCE AGENT AND
INSURANCE PREMIUM FINANCE COMPANY. (a) Each insurance premium
finance company is responsible for the acts of its officers,
directors, employees, and contracted insurance agents.
(b) An insurance premium finance company must have a written
contract with each [An] insurance agent that requires the agent, at
a minimum, to [shall]:
(1) prepare a premium finance agreement; [and]
(2) deliver to the insured each disclosure statement
required by law; and
(3) timely remit or forward insurance premiums to the
insurance premium finance company or appropriate insurer.
SECTION 4. Section 651.161, Insurance Code, is amended by
adding Subsection (g) to read as follows:
(g) The insurance premium finance company may not cancel an
insurance contract if the insurance agent failed to timely remit or
forward insurance premiums to the insurance premium finance company
or appropriate insurer.
SECTION 5. Section 651.162, Insurance Code, is amended by
amending Subsections (c), (d), (f), and (g), and by adding
Subsection (h) to read as follows:
(c) The insurer may not deduct from the unearned premiums
returned to the insurance premium finance company the amount of any
unearned commission due from the agent writing the insurance [if
the insurer notifies the agent to return the unearned commission to
the insurance premium finance company. If the agent does not return
the unearned commission to the insurance premium finance company
before the 91st day after the cancellation date, the insurer shall
remit the unearned commission to the insurance premium finance
company before the 121st day after the cancellation date].
(d) Notwithstanding Subsection (c) [Subsections (a)-(c)],
an agent is liable for the return of unearned commissions on an
insurance contract written through the Texas Windstorm Insurance
Association, the Texas Automobile Insurance Plan Association, or
the Texas Medical Liability Insurance Underwriting Association. An
agent placing business through one of those plans shall return the
unearned commissions to the insurance premium finance company
before the 61st day after the date the agent is notified of the
cancellation.
(f) If the insurance premium finance company failed to
comply with Section 651.165, the insurer shall determine, not later
than the 30th day after the cancellation date, whether it has a[,
including the Texas Windstorm Insurance Association, the Texas
Automobile Insurance Plan Association, and the Texas Medical
Liability Insurance Underwriting Association, may comply with its]
legal duty to return the unearned premiums due under the insurance
contract to an [the] insurance premium finance company before [by]
returning those unearned premiums to the producing agent. If the
producing agent does not return unearned premiums to the insurance
premium finance company before the 91st day after the cancellation
date, the insurer remains liable and shall remit, on demand, the
unearned premiums to the insurance premium finance company not
later than the 60th day after the date of the demand.
(g) If the crediting of return premiums and commissions to
the account of an insured results in a surplus over the amount due
from the insured, the insurance premium finance company shall
refund the excess to the insured. If the amount of the excess is
less than $5 [$1], the insured is not entitled to a refund.
(h) The insurance premium finance company may not hold the
insured liable for any amount covered by the unearned premium or
unearned commission returned, or to be returned, by the insurer.
SECTION 6. The heading to Section 651.165, Insurance Code,
is amended to read as follows:
Sec. 651.165. REQUIRED NOTICE OF CERTAIN PREMIUM FINANCE
AGREEMENTS AND PREMIUM FINANCE FUNDS.
SECTION 7. Section 651.165, Insurance Code, is amended by
amending Subsections (a) and (b) and by adding Subsection (d) to
read as follows:
(a) An insurance premium finance company that enters into a
premium finance agreement that includes an assignment or power of
attorney shall notify the insurer [or the Texas Windstorm Insurance
Association, the Texas Automobile Insurance Plan Association, or
the Texas Medical Liability Insurance Underwriting Association]
whose premiums are being financed:
(1) of the existence of the agreement; and
(2) of the information required under Section
651.151(c) [to whom the premium payment has been made].
(b) An insurance premium finance company shall [notify and]
fund all premiums to the insurer [a county mutual insurance
company] unless the insurance premium finance company is authorized
in writing by the insurer [county mutual insurance company] to
[notify or] fund an insurance agent or managing general agent.
(d) If the insurer authorizes the insurance premium finance
company to fund premiums to an insurance agent or managing general
agent, the insurer is liable for the insurance premium if the
insurance agent does not timely remit or forward the insurance
premium to the insurance premium finance company or appropriate
insurer.
SECTION 8. Section 651.162(e), Insurance Code, is repealed.
SECTION 9. The changes in law made by this Act apply only to
an insurance premium finance agreement entered into on or after the
effective date of this Act. An insurance premium finance agreement
that is entered into before the effective date of this Act is
governed by the law in effect on the date the insurance premium
finance agreement was entered, 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, 2009.