81R10321 PB-F
By: Hancock H.B. No. 2570
A BILL TO BE ENTITLED
AN ACT
relating to the regulation of stipulated premium insurance
companies.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Sections 884.054(a) and (c), Insurance Code, are
amended to read as follows:
(a) A proposed stipulated premium company's capital stock
must be in an amount of at least $25,000 [$15,000].
(c) To be incorporated, a stipulated premium company must
possess at the time of incorporation, in addition to its capital,
surplus in an amount of at least $12,500 [$7,500]. The amount of
the surplus is not required to be stated in the company's articles
of incorporation.
SECTION 2. Section 884.206(a), Insurance Code, is amended
to read as follows:
(a) The commissioner by rule may require a stipulated
premium company that writes or assumes life insurance, annuity
contracts, or accident and health insurance for a risk to one person
in an amount that exceeds $25,000 [$10,000] to maintain capital and
surplus in amounts that exceed the minimum amounts required by this
chapter because of:
(1) the nature and kind of risks the company
underwrites or reinsures;
(2) the premium volume of risks the company
underwrites or reinsures;
(3) the composition, quality, duration, or liquidity
of the company's investment portfolio;
(4) fluctuations in the market value of securities the
company holds; or
(5) the adequacy of the company's reserves.
SECTION 3. Section 884.303(b), Insurance Code, is amended
to read as follows:
(b) A stipulated premium company may not insure one life
under this section for more than $25,000 [$15,000], except as
provided by Section 884.304 or Subchapter I.
SECTION 4. Section 884.304, Insurance Code, is amended to
read as follows:
Sec. 884.304. LIFE INSURANCE OF MORE THAN $25,000
[$15,000]. (a) Except as provided by this section, a stipulated
premium company may not assume liability on a life insurance risk on
one life in an amount that exceeds $25,000 [$15,000].
(b) If a stipulated premium company assumes a life insurance
risk under a life insurance policy, the initial death benefit of
$25,000 [$15,000] or less may increase to an amount greater than
$25,000 [$15,000] subject to this section.
(c) For each policy year of a policy for which, after
issuance, the death benefit exceeds $25,000 [$15,000], the amount
of the increase of the death benefit at the end of that policy year
from the end of the preceding policy year may not exceed the greater
of:
(1) the amount computed using the maximum rate of
increase provided by the policy, which rate may not exceed five
percent a year, compounded annually; or
(2) the amount computed using the consumer price index
for all urban consumers for all items and for all regions of the
United States combined, as determined by the United States
Department of Labor, Bureau of Labor Statistics, on September 30 of
the year preceding the year in which the policy year ends,
compounded annually.
SECTION 5. Section 884.404(a), Insurance Code, is amended
to read as follows:
(a) A stipulated premium company that issues any insurance
coverage under this subchapter shall maintain at all times the
capital and unencumbered surplus required under Section 884.054
[when the stipulated premium company began writing the coverage].
SECTION 6. Section 4054.051, Insurance Code, is amended to
read as follows:
Sec. 4054.051. LICENSE REQUIRED. Except as provided by
Subchapter G, a person is required to hold a general life, accident,
and health license if the person acts as:
(1) an agent who represents a health maintenance
organization;
(2) an industrial life insurance agent for an insurer
that writes only weekly premium life insurance on a debit basis
under Chapter 1151;
(3) an agent who writes life, accident, and health
insurance for a life insurance company;
(4) an agent who writes only accident and health
insurance;
(5) an agent who writes fixed or variable annuity
contracts or variable life contracts;
(6) an agent who writes for a stipulated premium
company:
(A) only life insurance in excess of $25,000
[$15,000] on any one life;
(B) only accident and health insurance; or
(C) both kinds of insurance described by
Paragraphs (A) and (B);
(7) an agent who writes life, accident, and health
insurance for any type of authorized life insurance company that is
domiciled in this state, including a legal reserve life insurance
company, and who represents the company:
(A) in a foreign country or territory; and
(B) on a United States military installation or
with United States military personnel;
(8) an agent who writes life, accident, and health
insurance for a fraternal benefit society except as provided by
Section 885.352; or
(9) an agent who writes any other kind of insurance as
required by the commissioner for the protection of the insurance
consumers of this state.
SECTION 7. The heading to Subchapter E, Chapter 4054,
Insurance Code, is amended to read as follows:
SUBCHAPTER E. LIFE INSURANCE NOT
EXCEEDING $25,000 [$15,000]
SECTION 8. Section 4054.201(a), Insurance Code, is amended
to read as follows:
(a) The department shall issue a license to an individual
applicant to act as an agent who writes only life insurance policies
in an amount that does not exceed $25,000 [$15,000] on any one life
on receipt of certification from a stipulated premium company, a
statewide mutual assessment company, a local mutual aid
association, or a local mutual burial association, that the
applicant has:
(1) completed a course of study and instruction in
compliance with this subchapter; and
(2) passed without aid a written examination
administered by the insurer.
SECTION 9. Section 4054.206, Insurance Code, is amended to
read as follows:
Sec. 4054.206. LIMIT ON AGENT'S AUTHORITY. An insurance
agent licensed under this subchapter may not write any coverage or
combination of coverages with an initial guaranteed death benefit
that exceeds $25,000 [$15,000] on any life.
SECTION 10. Sections 4054.301(a) and (d), Insurance Code,
are amended to read as follows:
(a) Except as provided by Subsection (b), a person is
required to hold a life agent license if the person does not hold a
general life, accident, and health license under Subchapter B and
the person acts as:
(1) an agent who writes insurance coverage on human
lives, including endowment benefits and annuities, benefits in the
event of death or dismemberment by accident, and benefits for
disability income;
(2) an industrial life insurance agent for an insurer
that writes only weekly premium life insurance on a debit basis
under Chapter 1151;
(3) an agent who writes fixed or variable annuity
contracts or variable life contracts;
(4) an agent who writes for a stipulated premium
company only life insurance in excess of $25,000 [$15,000] on any
one life; or
(5) an agent who writes any other kind of insurance as
required by the commissioner for the protection of the insurance
consumers of this state.
(d) A person who holds a license to write life insurance not
exceeding $25,000 [$15,000] under Subchapter E and who engages in
the business of insurance only within the scope of that license is
not required to hold a life agent license. A person who holds a
life agent license may write the insurance described by that
subchapter.
SECTION 11. A stipulated premium company shall increase its
capital stock and surplus as required under Chapter 884, Insurance
Code, as amended by this Act, not later than March 1, 2010, or
another date prescribed by rule by the commissioner of insurance in
connection with a reasonable schedule of intermediate increases
adopted by the commissioner to provide for a phase-in of the changes
in law made by this Act.
SECTION 12. This Act applies only to an insurance policy
delivered, issued for delivery, or renewed on or after January 1,
2010. A policy delivered, issued for delivery, or renewed before
January 1, 2010, 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 13. This Act takes effect September 1, 2009.