By: Farabee H.B. No. 4217
A BILL TO BE ENTITLED
AN ACT
Relating to the establishment of the Texas Individual Health
Insurance Association and to the efficient operation of that system
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subtitle ______, Title ______, Insurance code,
is amended by adding Chapter ______ to read as follows: CHAPTER
______ Texas Individual Health Insurance Association.
Sec. ______. DEFINITIONS
In this chapter:
(1) "Association" means the Texas Individual Health
Insurance Association.
(2) "Authorized insurer" means an insurer authorized by the
Texas Department of Insurance to write individual health coverage
under this title.
(3) "Insurance" means an insurance policy that meets the
requirements of Chapter ______, Insurance Code.
Sec. ______. NATURE AND COMPOSITION OF ASSOCIATION.
(a) The Texas Healthy Individual Insurance Association is a
nonprofit corporate body composed of all authorized insurers.
(b) Each authorized insurer must be a member of the
association as a condition of the insurer's authority to write
individual health insurance in this state
Sec. ______. GOVERNANCE OF THE ASSOCIATION:
(a) the association is administered by a governing
committee under a plan of operation.
(b) The governing committee of the Association is composed
of 12 members appointed by the Texas Commissioner of Insurance to be
selected as follows:
(1) six members who represent the interests of insurers,
elected by the association members according to a method the
members determine;
(2) four public members selected by the commissioner; and
(3) two members who are Texas health insurance agents
(c) To be eligible to serve on the governing committee as a
representative of insurers, an individual must be a full-time
employee of or contractor with an authorized insurer.
(d) An individual may not serve on the governing committee
as a public member if the individual, another individual related to
that individual within the second degree by consanguinity or
affinity, or another individual residing in the same household with
that individual:
(1) is required to be registered or licensed under this code
or another insurance law of this state;
(2) is employed by or acts as a consultant to a person
required to be registered or licensed or required to hold a
certificate of authority under this code or another insurance law
of this state;
(3) is the owner of, has a financial interest in, or
participates in the management of an organization required to be
registered or licensed or required to hold a certificate of
authority under this code or another insurance law of this state;
(4) is an officer, employer, or consultant of an association
in the field of insurance; or
(5) is required to register as a lobbyist under Chapter 305,
Government Code.
Sec. ______. IMMUNITY FROM LIABILITY
(a) The association, a member of the governing committee, or
an employee of the association is not personally liable for:
(1) an act performed in good faith within the scope of the
person's authority as determined under this chapter or the plan of
operation; or
(2) damages occasioned by the person's official act or
omission except an act or omission that is corrupt or malicious.
(b) The association shall provide counsel to defend an
action brought against a member of the governing committee or an
employee because of the person's official act or omission
regardless of whether the person has terminated service with the
association when the action is instituted.
(c) This section is cumulative of and does not affect or
modify a common law or statutory privilege of the association or it
governing committee.
Sec. ______. POWERS AND DUTIES OF ASSOCIATION
The association has the powers granted to a nonprofit
corporation under the Business Organizations Code.
Sec. ______. ASSIGNMENT OF INSURANCE; ELIGIBILITY.
(a) The association shall provide for the assignment of
insurance to an authorized insurer. Such assignment will be made to
carriers in proportion to each insurer's percentage of premium of
the individual health market for
(b) An applicant is not eligible for insurance assignment
through the association unless the applicant and the health agent
certify as part of the application to the association that the
applicant has been rejected for insurance by at least two insurers
that are authorized to engage in business in this state and that are
writing individual health insurance in this state. the last
calendar year.
(c) The assigned risk will be administered by the assigned
insurer.
(d) Assignment of risks to the members of the Association
shall be made on a guaranteed issue basis.
Sec. ______. ASSESSMENTS FOR OPERATIONS EXPENSES.
(a) The association may assess authorized insurers to
provide money to operate the association.
(b) The amount assessed against an authorized insurer must
be in proportion to the insurer's writing of automobile liability
insurance in this state.
(c) The association may bring an action to collect an
assessment against an authorized insurer that does not pay the
assessment within a reasonable time. In addition, the association
may report an authorized insurer's failure to pay the assessment to
the commissioner. The commissioner may institute a disciplinary
action against the insurer for failure to pay the assessment.
Sec. ______. PLAN OF OPERATION
(a) The Association shall be administered in compliance
with the plan of operation of the Association.
(b) The plan of operation must provide for the efficient,
economical, fair, and nondiscriminatory administration of the
association; and provide a means by which insurance may be
provided.
(c) Subject to the commissioner's approval, the governing
committee may amend the plan of operation. If the commissioner at
any time believes that any part of the plan of operation is
inconsistent with the purposes of this Chapter, the commissioner
shall notify the governing committee in writing so that the
governing committee may take corrective action.
(d) The Plan of Operation shall be effective upon approval
of the Commissioner.
(e) The Association shall be subject to the Open Meetings
Act and the Open Records Act.
Sec. ______. REINSURANCE
(a) The Association will also operate as a reinsurance
system, and insurers assigned a risk under this chapter may
reinsure such risk with the Association if notice of such
reinsurance is given to the Association within thirty days of the
assignment of the risk to the insurer.
(b) Reinsurance retention levels and premiums shall be set
by the Governing Board of the Association and shall be set in
accordance with sound actuarial science, and such matters will be
set forth in full in the plan of operation.
Sec. ______. PAYMENT OF EXCESS REINSURANCE LOSSES; PREMIUM
TAX CREDIT.
(a) Should there be a deficit for a calendar year caused by
the reinsurance losses greater than reinsurance premiums and
expenses of operation, carriers will be assessed during the
following year for this deficit in proportion to their individual
health premiums participation in the Association for the year in
which the deficit occurred in accordance with (b).
(b) The first $25 million shall be assessed against the
members of the association as stated above; the losses in excess of
$25 million shall be paid from reserve trust fund established by the
plan of operation and collected by fee on each policy assigned by
the plan and from any reinsurance program established by the
association; and any greater losses will be paid by an assessment of
the members of the association in the same proportion as set forth
in (a) above; and insurers may credit an amount paid in accordance
with this final portion of the assessment against the insurer's
premium tax. The tax credit authorized herein shall be allowed at a
rate not to exceed 20 percent per year for five or more successive
years beginning the calendar year that the assessments under this
section are paid.
Sec. ______. The Commissioner may adopt rules necessary to
implement this chapter.
SECTION 2
Effective January 1, 2010.