81R35095 E
By: Hegar S.B. No. 1007
Substitute the following for S.B. No. 1007:
By: Isett C.S.S.B. No. 1007
A BILL TO BE ENTITLED
AN ACT
relating to the continuation and operation of the Texas Department
of Insurance and the operation of certain insurance programs;
imposing administrative penalties.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
ARTICLE 1. GENERAL PROVISIONS
SECTION 1.001. Section 31.002, Insurance Code, is amended
to read as follows:
Sec. 31.002. DUTIES OF DEPARTMENT. In addition to the other
duties required of the Texas Department of Insurance, the
department shall:
(1) regulate the business of insurance in this state;
(2) administer the workers' compensation system of
this state as provided by Title 5, Labor Code; [and]
(3) ensure that this code and other laws regarding
insurance and insurance companies are executed;
(4) protect and ensure the fair treatment of
consumers; and
(5) ensure fair competition in the insurance industry
in order to foster a competitive market.
SECTION 1.002. Section 31.004(a), Insurance Code, is
amended to read as follows:
(a) The Texas Department of Insurance is subject to Chapter
325, Government Code (Texas Sunset Act). Unless continued in
existence as provided by that chapter, the department is abolished
September 1, 2021 [2009].
SECTION 1.003. Section 33.004, Insurance Code, is amended
to read as follows:
Sec. 33.004. TRADE ASSOCIATIONS. (a) In this section,
"Texas trade association" means a cooperative and voluntarily
joined statewide association of business or professional
competitors in this state designed to assist its members and its
industry or profession in dealing with mutual business or
professional problems and in promoting their common interest.
(b) A person may not be the commissioner and may not be a
department employee employed in a "bona fide executive,
administrative, or professional capacity," as that phrase is used
for purposes of establishing an exemption to the overtime
provisions of the federal Fair Labor Standards Act of 1938 (29
U.S.C. Section 201 et seq.), if:
(1) the person is an officer, employee, or paid
consultant of a Texas trade association in the field of insurance;
or
(2) the person's spouse is an officer, manager, or paid
consultant of a Texas trade association in the field of insurance.
(c) A person may not be the commissioner or act as the
general counsel to the commissioner or the department if the person
is required to register as a lobbyist under Chapter 305, Government
Code, because of the person's activities for compensation on behalf
of a profession related to the operation of the department [A person
who is an officer, employee, or paid consultant of a trade
association in the field of insurance may not be:
[(1) the commissioner; or
[(2) an employee of the department who is exempt from
the state's position classification plan or is compensated at or
above the amount prescribed by the General Appropriations Act for
step 1, salary group A17, of the position classification salary
schedule].
[(b) A person who is the spouse of an officer, manager, or
paid consultant of a trade association in the field of insurance may
not be:
[(1) the commissioner; or
[(2) an employee of the department who is exempt from
the state's position classification plan or is compensated at or
above the amount prescribed by the General Appropriations Act for
step 1, salary group A17, of the position classification salary
schedule.
[(c) In this section, "trade association" means a
nonprofit, cooperative, and voluntarily joined association of
business or professional competitors designed to assist its members
and its industry or profession in dealing with mutual business or
professional problems and in promoting their common interest.]
SECTION 1.004. Section 521.003, Insurance Code, is amended
to read as follows:
Sec. 521.003. COMPLAINTS [NOTIFICATION OF COMPLAINT
STATUS]. (a) The department shall maintain a system to promptly
and efficiently act on complaints filed with the department. The
department shall maintain information about parties to the
complaint, the subject matter of the complaint, a summary of the
results of the review or investigation of the complaint, and its
disposition.
(b) The department shall make information available
describing its procedures for complaint investigation and
resolution.
(c) The department shall periodically notify the complaint
parties of the status of the complaint until final disposition. [If
a written complaint is filed with the department, the department,
at least quarterly and until final disposition of the complaint,
shall notify each party to the complaint of the complaint's status
unless the notice would jeopardize an undercover investigation.]
SECTION 1.005. Subchapter B, Chapter 36, Insurance Code, is
amended by adding Sections 36.110 and 36.111 to read as follows:
Sec. 36.110. USE OF TECHNOLOGY. The commissioner shall
implement a policy requiring the department to use appropriate
technological solutions to improve the department's ability to
perform its functions. The policy must ensure that the public is
able to interact with the department on the Internet.
Sec. 36.111. NEGOTIATED RULEMAKING AND ALTERNATIVE DISPUTE
RESOLUTION POLICY. (a) The commissioner shall develop and
implement a policy to encourage the use of:
(1) negotiated rulemaking procedures under Chapter
2008, Government Code, for the adoption of department rules; and
(2) appropriate alternative dispute resolution
procedures under Chapter 2009, Government Code, to assist in the
resolution of internal and external disputes under the department's
jurisdiction.
(b) The department's procedures relating to alternative
dispute resolution must conform, to the extent possible, to any
model guidelines issued by the State Office of Administrative
Hearings for the use of alternative dispute resolution by state
agencies.
(c) The commissioner shall designate a trained person to:
(1) coordinate the implementation of the policy
adopted under Subsection (a);
(2) serve as a resource for any training needed to
implement the procedures for negotiated rulemaking or alternative
dispute resolution; and
(3) collect data concerning the effectiveness of those
procedures, as implemented by the department.
SECTION 1.006. Sections 33.005 and 521.004, Insurance Code,
are repealed.
ARTICLE 2. CERTAIN ADVISORY BOARDS, COMMITTEES, AND COUNCILS AND
RELATED TECHNICAL CORRECTIONS
SECTION 2.001. Chapter 32, Insurance Code, is amended by
adding Subchapter E to read as follows:
SUBCHAPTER E. RULES REGARDING USE OF ADVISORY COMMITTEES
Sec. 32.151. RULEMAKING AUTHORITY. (a) The commissioner
shall adopt rules, in compliance with Section 39.003 of this code
and Chapter 2110, Government Code, regarding the purpose,
structure, and use of advisory committees by the commissioner, the
state fire marshal, or department staff, including rules governing
an advisory committee's:
(1) purpose, role, responsibility, and goals;
(2) size and quorum requirements;
(3) qualifications for membership, including
experience requirements and geographic representation;
(4) appointment procedures;
(5) terms of service;
(6) training requirements; and
(7) duration.
(b) An advisory committee must be structured and used to
advise the commissioner, the state fire marshal, or department
staff. An advisory committee may not be responsible for rulemaking
or policymaking.
Sec. 32.152. PERIODIC EVALUATION. The commissioner shall
by rule establish a process by which the department shall
periodically evaluate an advisory committee to ensure its continued
necessity. The department may retain or develop committees as
appropriate to meet changing needs.
Sec. 32.153. COMPLIANCE WITH OPEN MEETINGS ACT. A
department advisory committee must comply with Chapter 551,
Government Code.
SECTION 2.002. Section 843.441, Insurance Code, is
transferred to Subchapter L, Chapter 843, Insurance Code,
renumbered as Section 843.410, Insurance Code, and amended to read
as follows:
Sec. 843.410 [843.441]. ASSESSMENTS. (a) To provide funds
for the administrative expenses of the commissioner regarding
rehabilitation, liquidation, supervision, conservatorship, or
seizure [conservation] of a [an impaired] health maintenance
organization in this state that is placed in supervision or
conservatorship under Chapter 441 or in a delinquency proceeding
under Chapter 443 and is found by the commissioner to have
insufficient funds to pay the total amount of health care claims and
the administrative [, including] expenses incurred by the
commissioner regarding the rehabilitation, liquidation,
supervision, conservatorship, or seizure, the commissioner [acting
as receiver or by a special deputy receiver, the committee, at the
commissioner's direction,] shall assess each health maintenance
organization in the proportion that the gross premiums of the
health maintenance organization that were written in this state
during the preceding calendar year bear to the aggregate gross
premiums that were written in this state by all health maintenance
organizations, as found [provided to the committee by the
commissioner] after review of annual statements and other reports
the commissioner considers necessary.
(b) [(c)] The commissioner may abate or defer an assessment
in whole or in part if, in the opinion of the commissioner, payment
of the assessment would endanger the ability of a health
maintenance organization to fulfill its contractual obligations.
If an assessment is abated or deferred in whole or in part, the
amount of the abatement or deferral may be assessed against the
remaining health maintenance organizations in a manner consistent
with the calculations made by the commissioner under Subsection (a)
[basis for assessments provided by the approved plan of operation].
(c) [(d)] The total of all assessments on a health
maintenance organization may not exceed one-fourth of one percent
of the health maintenance organization's gross premiums in any one
calendar year.
(d) [(e)] Notwithstanding any other provision of this
subchapter, funds derived from an assessment made under this
section may not be used for more than 180 consecutive days for the
expenses of administering the affairs of a [an impaired] health
maintenance organization the surplus of which is impaired and that
is [while] in supervision [, rehabilitation,] or conservatorship
[conservation for more than 150 days]. The commissioner
[committee] may extend the period during which the commissioner
[it] makes assessments for the administrative expenses [of an
impaired health maintenance organization as it considers
appropriate].
SECTION 2.003. Section 1660.004, Insurance Code, is amended
to read as follows:
Sec. 1660.004. GENERAL RULEMAKING. The commissioner may
adopt rules as necessary to implement this chapter[, including
rules requiring the implementation and provision of the technology
recommended by the advisory committee].
SECTION 2.004. Section 1660.102(b), Insurance Code, is
amended to read as follows:
(b) The commissioner may consider [the] recommendations [of
the advisory committee] or any other information provided in
response to a department-issued request for information relating to
electronic data exchange, including identification card programs,
before adopting rules regarding:
(1) information to be included on the identification
cards;
(2) technology to be used to implement the
identification card pilot program; and
(3) confidentiality and accuracy of the information
required to be included on the identification cards.
SECTION 2.005. Section 2154.052(a), Occupations Code, is
amended to read as follows:
(a) The commissioner:
(1) shall administer this chapter through the state
fire marshal; and
(2) may issue rules to administer this chapter [in
compliance with Section 2154.054].
SECTION 2.006. Section 4001.009(a), Insurance Code, is
amended to read as follows:
(a) As referenced in Section 4001.003(9), a reference to an
agent in the following laws includes a subagent without regard to
whether a subagent is specifically mentioned:
(1) Chapters 281, 402, 421-423, 441, 444, 461-463,
[523,] 541-556, 558, 559, 702, 703, 705, 821, 823-825, 827, 828,
844, 963, 1108, 1205-1209, 1211, 1213, 1214 [1211-1214], 1352,
1353, 1357, 1358, 1360-1363, 1369, 1453-1455, 1503, 1550, 1801,
1803, 2151-2154, 2201-2203, 2205-2213, 3501, 3502, 4007, 4102, and
4201-4203;
(2) Chapter 403, excluding Section 403.002;
(3) Subchapter A, Chapter 491;
(4) Subchapter C, Chapter 521;
(5) Subchapter A, Chapter 557;
(6) Subchapter B, Chapter 805;
(7) Subchapters D, E, and F, Chapter 982;
(8) Subchapter D, Chapter 1103;
(9) Subchapters B, C, D, and E, Chapter 1204,
excluding Sections 1204.153 and 1204.154;
(10) Subchapter B, Chapter 1366;
(11) Subchapters B, C, and D, Chapter 1367, excluding
Section 1367.053(c);
(12) Subchapters A, C, D, E, F, H, and I, Chapter 1451;
(13) Subchapter B, Chapter 1452;
(14) Sections 551.004, 841.303, 982.001, 982.002,
982.004, 982.052, 982.102, 982.103, 982.104, 982.106, 982.107,
982.108, 982.110, 982.111, 982.112, and 1802.001; and
(15) Chapter 107, Occupations Code.
SECTION 2.007. Section 4102.005, Insurance Code, is amended
to read as follows:
Sec. 4102.005. CODE OF ETHICS. The commissioner[, with
guidance from the public insurance adjusters examination advisory
committee,] by rule shall adopt:
(1) a code of ethics for public insurance adjusters
that fosters the education of public insurance adjusters concerning
the ethical, legal, and business principles that should govern
their conduct;
(2) recommendations regarding the solicitation of the
adjustment of losses by public insurance adjusters; and
(3) any other principles of conduct or procedures that
the commissioner considers necessary and reasonable.
SECTION 2.008. The following laws are repealed:
(1) Chapter 523, Insurance Code;
(2) Sections 524.004, 1660.002(2), 1660.101(c),
4002.004, 4004.002, 4101.006, 4102.059, and 4201.003(c) and (d),
Insurance Code;
(3) Sections 843.435, 843.436, 843.437, 843.438,
843.439, and 843.440, Insurance Code;
(4) Subchapter B, Chapter 1660, Insurance Code;
(5) Subchapter G, Chapter 2210, Insurance Code;
(6) Subchapter C, Chapter 6001, Insurance Code;
(7) Subchapter C, Chapter 6002, Insurance Code;
(8) Subchapter C, Chapter 6003, Insurance Code;
(9) Chapter 1212, Insurance Code;
(10) the heading to Subchapter M, Chapter 843,
Insurance Code; and
(11) Sections 2154.054 and 2154.055(c), Occupations
Code.
SECTION 2.009. (a) The following boards, committees,
councils, and task forces are abolished on the effective date of
this Act:
(1) the advisory council on continuing education for
insurance agents;
(2) the fire detection and alarm devices advisory
council;
(3) the fire extinguisher advisory council;
(4) the fire protection advisory council;
(5) the fireworks advisory council;
(6) the health maintenance organization solvency
surveillance committee;
(7) the insurance adjusters examination advisory
board;
(8) the technical advisory committee on claims
processing;
(9) the technical advisory committee on electronic
data exchange;
(10) the health coverage public awareness and
education program task force;
(11) the executive committee of the residential
property insurance market assistance program; and
(12) the windstorm building code advisory committee on
specifications and maintenance.
(b) All powers, duties, obligations, rights, contracts,
funds, records, and real or personal property of a board,
committee, council, or task force listed under Subsection (a) of
this section shall be transferred to the Texas Department of
Insurance not later than February 28, 2010.
SECTION 2.010. The changes in law made by this Act by
repealing Sections 523.003 and 843.439, Insurance Code, apply only
to a cause of action that accrues on or after the effective date of
this Act. A cause of action that accrues before the effective date
of this Act is governed by the law in effect immediately before that
date, and that law is continued in effect for that purpose.
ARTICLE 3. REGULATION OF PREFERRED PROVIDER ORGANIZATIONS
SECTION 3.001. Subtitle D, Title 8, Insurance Code, is
amended by adding Chapter 1302 to read as follows:
CHAPTER 1302. REGULATION OF INDEPENDENT PREFERRED PROVIDER
ORGANIZATIONS
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 1302.001. DEFINITIONS. In this chapter:
(1) "Person" means an individual, corporation,
association, or other legal entity.
(2) "Preferred provider organization" means an
insurer, third-party administrator, or other person that contracts
with physicians or health care providers regarding reimbursements
to be accepted prospectively by the physicians and health care
providers in providing health care services to enrollees of benefit
plans contractually entitled to benefit from the reimbursement
agreements.
Sec. 1302.002. APPLICABILITY. (a) This chapter does not
apply to a self-funded health benefit plan exempt from regulation
by this state as an employee welfare benefit plan under the Employee
Retirement Income Security Act of 1974 (29 U.S.C. Section 1001 et
seq.).
(b) Except as specifically provided by this chapter, a
reference in Chapter 1301 to a duty imposed under Chapter 1301 on a
preferred provider organization contracting with a preferred
provider benefit plan applies to a preferred provider organization
that contracts with a preferred provider benefit plan under a
certificate of authority issued under Subchapter B but that is not
an insurer or third-party administrator under this code.
Sec. 1302.003. RULES. The commissioner shall adopt rules
as necessary to implement this chapter.
Sec. 1302.004. COMPLAINTS. The department shall track and
analyze complaints made against preferred provider organizations
regulated under this chapter.
[Sections 1302.005-1302.050 reserved for expansion]
SUBCHAPTER B. REGULATION OF PREFERRED PROVIDER ORGANIZATIONS
Sec. 1302.051. CERTIFICATE OF AUTHORITY REQUIRED;
EXCEPTION. (a) Except as provided by Subsection (b), a person may
not organize or operate as a preferred provider organization in
this state, or sell or offer to sell or solicit offers to purchase
or receive consideration in conjunction with a preferred provider
benefit plan, without holding a certificate of authority under this
chapter.
(b) An insurer that holds a certificate of authority to
engage in the business of insurance in this state or is otherwise
authorized under this code to engage in the business of insurance in
this state is not required to obtain an additional certificate of
authority under this subchapter to operate a proprietary preferred
provider organization.
Sec. 1302.052. USE OF CERTAIN TERMS. A person may not use
the term "preferred provider organization" or "PPO" in the course
of operation unless the person:
(1) complies with this chapter and rules adopted by
the commissioner under this chapter; and
(2) holds a certificate of authority under this
chapter.
Sec. 1302.053. DURATION OF CERTIFICATE OF AUTHORITY. A
certificate of authority issued under this chapter continues in
effect:
(1) while the certificate holder meets the
requirements of this chapter and rules adopted under this chapter;
or
(2) until the commissioner suspends or revokes the
certificate or the commissioner terminates the certificate at the
request of the certificate holder.
[Sections 1302.054-1302.100 reserved for expansion]
SUBCHAPTER C. APPLICATION; ISSUANCE OF CERTIFICATE
Sec. 1302.101. APPLICATION. (a) A person may apply to the
department for and obtain a certificate of authority to organize
and operate a preferred provider organization.
(b) An application for a certificate of authority must:
(1) be on a form prescribed by rules adopted by the
commissioner; and
(2) be verified by the applicant or an officer or other
authorized representative of the applicant.
Sec. 1302.102. CONTENTS OF APPLICATION. (a) An
application for a certificate of authority must include:
(1) a copy of the applicant's basic organizational
document, if any, such as the articles of incorporation, articles
of association, partnership agreement, trust agreement, or other
applicable documents;
(2) all amendments to the applicant's basic
organizational document; and
(3) a copy of the bylaws, rules and regulations, or
similar documents, if any, regulating the conduct of the
applicant's internal affairs.
(b) An application for a certificate of authority must
include a list of the names, addresses, and official positions of
the persons responsible for the conduct of the applicant's affairs,
including:
(1) each member of the board of directors, board of
trustees, executive committee, or other governing body or
committee;
(2) the principal officer, if the applicant is a
corporation; and
(3) each partner or member, if the applicant is a
partnership or association.
(c) An application for a certificate of authority must
include a template of any contract made or to be made between the
applicant and any physician or health care provider.
(d) The commissioner may adopt rules under which a preferred
provider organization is required to update the information
submitted in an application for a certificate of authority.
Sec. 1302.103. APPLICATION FEE. (a) An applicant for a
certificate of authority under this chapter shall pay to the
department a filing fee not to exceed $1,000 for processing an
original application for a certificate of authority for a preferred
provider organization.
(b) The commissioner shall deposit a fee collected under
this section to the credit of the Texas Department of Insurance
operating account.
Sec. 1302.104. REQUIREMENTS FOR APPROVAL OF APPLICATION.
The commissioner shall approve an application for a certificate of
authority to engage in business in this state as a preferred
provider organization on payment of the application fee prescribed
by Section 1302.103 and if the commissioner is satisfied that:
(1) granting the application would not violate a
federal or state law;
(2) the applicant has not attempted to obtain the
certificate of authority through fraud or bad faith;
(3) the applicant has complied with this chapter and
rules adopted by the commissioner under this chapter; and
(4) the name under which the applicant will engage in
business in this state is not so similar to that of another
preferred provider organization that it is likely to mislead the
public.
Sec. 1302.105. DENIAL OF APPLICATION. (a) If the
commissioner is unable to approve an application for a certificate
of authority under this chapter, the commissioner shall:
(1) provide the applicant with written notice
specifying each deficiency in the application; and
(2) offer the applicant the opportunity for a hearing
to address each reason and circumstance for possible denial of the
application.
(b) The commissioner must provide an opportunity for a
hearing before the commissioner finally denies an application.
(c) At the hearing, the applicant has the burden to produce
sufficient competent evidence on which the commissioner can make
the determinations required by Section 1302.104.
[Sections 1302.106-1302.150 reserved for expansion]
SUBCHAPTER D. ENFORCEMENT
Sec. 1302.151. GROUNDS FOR DENIAL, SUSPENSION, OR
REVOCATION OF CERTIFICATE OF AUTHORITY. The denial, suspension, or
revocation of a certificate of authority under this chapter to act
as a preferred provider organization is subject to:
(1) Subchapter C, Chapter 4005; and
(2) Chapter 82.
SECTION 3.002. Not later than November 1, 2009, the
commissioner of insurance shall adopt rules as necessary to
implement Chapter 1302, Insurance Code, as added by this Act.
SECTION 3.003. (a) Except as provided by Subsections (b)
and (c) of this section, a preferred provider organization that is
operating before the effective date of this Act and that has not
previously submitted an application for a certificate of authority
under the Insurance Code must apply for a certificate of authority
under Chapter 1302, Insurance Code, as added by this Act, not later
than the 60th day after the effective date of this Act.
(b) A preferred provider organization operating in this
state that, as of August 31, 2009, holds a certificate of authority
as an insurer under Chapter 801, Insurance Code, or a certificate of
authority as a third-party administrator under Chapter 4151,
Insurance Code, is not required to obtain a certificate of
authority under Chapter 1302, Insurance Code, as added by this Act.
(c) A preferred provider organization in this state that has
not applied for or does not hold, as of the effective date of this
Act, a certificate of authority under Chapter 801 or 4151,
Insurance Code, and that applies for a certificate of authority
under Chapter 1302, Insurance Code, as added by this Act, may
continue to operate, if the applicant otherwise complies with
applicable law, until the commissioner of insurance acts on the
application.
ARTICLE 4. RATE REGULATION
SECTION 4.001. Section 2251.101, Insurance Code, is amended
to read as follows:
Sec. 2251.101. RATE FILINGS AND SUPPORTING INFORMATION.
(a) Except as provided by Subchapter D, for risks written in this
state, each insurer shall file with the commissioner all rates,
applicable rating manuals, supplementary rating information, and
additional information as required by the commissioner. An insurer
may use a rate filed under this subchapter on and after the date the
rate is filed.
(b) The commissioner by rule shall:
(1) determine the information required to be included
in the filing, including:
(A) [(1)] categories of supporting information
and supplementary rating information;
(B) [(2)] statistics or other information to
support the rates to be used by the insurer, including information
necessary to evidence that the computation of the rate does not
include disallowed expenses; and
(C) [(3)] information concerning policy fees,
service fees, and other fees that are charged or collected by the
insurer under Section 550.001 or 4005.003; and
(2) prescribe the process through which the department
requests supplementary rating information and supporting
information under this section, including:
(A) the number of times the department may make a
request for information; and
(B) the types of information the department may
request when reviewing a rate filing.
SECTION 4.002. Section 2251.103, Insurance Code, is amended
to read as follows:
Sec. 2251.103. COMMISSIONER ACTION CONCERNING [DISAPPROVAL
OF RATE IN] RATE FILING NOT YET IN EFFECT; HEARING AND ANALYSIS.
(a) Not later than the earlier of the date the rate takes effect or
the 30th day after the date a rate is filed with the department
under Section 2251.101, the [The] commissioner shall disapprove
the [a] rate if the commissioner determines that the rate [filing
made under this chapter] does not comply with the requirements of
this chapter [meet the standards established under Subchapter B].
(b) Except as provided by Subsection (c), if a rate has not
been disapproved by the commissioner before the expiration of the
30-day period described by Subsection (a), the rate is not
considered disapproved under this section.
(c) For good cause, the commissioner may, on the expiration
of the 30-day period described by Subsection (a), extend the period
for disapproval of a rate for one additional 30-day period. The
commissioner and the insurer may not by agreement extend the 30-day
period described by Subsection (a) or this subsection.
(d) If the commissioner disapproves a rate under this
section [filing], the commissioner shall issue an order specifying
in what respects the rate [filing] fails to meet the requirements of
this chapter.
(e) An insurer that files a rate that is disapproved under
this section [(c) The filer] is entitled to a hearing on written
request made to the commissioner not later than the 30th day after
the date the order disapproving the rate [filing] takes effect.
(f) The department shall track, compile, and routinely
analyze the factors that contribute to the disapproval of rates
under this section.
SECTION 4.003. Subchapter C, Chapter 2251, Insurance Code,
is amended by adding Section 2251.1031 to read as follows:
Sec. 2251.1031. REQUESTS FOR ADDITIONAL INFORMATION. (a)
If the department determines that the information filed by an
insurer under this subchapter or Subchapter D is incomplete or
otherwise deficient, the department may request additional
information from the insurer.
(b) If the department requests additional information from
the insurer during the 30-day period described by Section
2251.103(a) or 2251.153(a) or under a second 30-day period
described by Section 2251.103(c) or 2251.153(c), as applicable, the
time between the date the department submits the request to the
insurer and the date the department receives the information
requested is not included in the computation of the first 30-day
period or the second 30-day period, as applicable.
(c) For purposes of this section, the date of the
department's submission of a request for additional information is
the earlier of:
(1) the date of the department's electronic mailing or
documented telephone call relating to the request for additional
information; or
(2) the postmarked date on the department's letter
relating to the request for additional information.
(d) The department shall track, compile, and routinely
analyze the volume and content of requests for additional
information made under this section to ensure that all requests for
additional information are fair and reasonable.
SECTION 4.004. The heading to Section 2251.104, Insurance
Code, is amended to read as follows:
Sec. 2251.104. COMMISSIONER DISAPPROVAL OF RATE IN EFFECT;
HEARING.
SECTION 4.005. Section 2251.107, Insurance Code, is amended
to read as follows:
Sec. 2251.107. PUBLIC [INSPECTION OF] INFORMATION. (a)
Each filing made, and any supporting information filed, under this
chapter is open to public inspection as of the date of the filing.
(b) Each year the department shall make available to the
public information concerning the department's general process and
methodology for rate review under this chapter, including factors
that contribute to the disapproval of a rate. Information provided
under this subsection must be general in nature and may not reveal
proprietary or trade secret information of any insurer.
SECTION 4.006. Section 2251.151, Insurance Code, is amended
by adding Subsections (c-1) and (f) and amending Subsection (e) to
read as follows:
(c-1) If the commissioner requires an insurer to file the
insurer's rates under this section, the commissioner shall
periodically assess whether the conditions described by Subsection
(a) continue to exist. If the commissioner determines that the
conditions no longer exist, the commissioner shall issue an order
excusing the insurer from filing the insurer's rates under this
section.
(e) If the commissioner requires an insurer to file the
insurer's rates under this section, the commissioner shall issue an
order specifying the commissioner's reasons for requiring the rate
filing and explaining any steps the insurer must take and any
conditions the insurer must meet in order to be excused from filing
the insurer's rates under this section. An affected insurer is
entitled to a hearing on written request made to the commissioner
not later than the 30th day after the date the order is issued.
(f) The commissioner by rule shall define:
(1) the financial conditions and rating practices that
may subject an insurer to this section under Subsection (a)(1); and
(2) the process by which the commissioner determines
that a statewide insurance emergency exists under Subsection
(a)(2).
SECTION 4.007. Section 2251.156, Insurance Code, is amended
to read as follows:
Sec. 2251.156. RATE FILING DISAPPROVAL BY COMMISSIONER;
HEARING. (a) If the commissioner disapproves a rate filing under
Section 2251.153(a)(2), the commissioner shall issue an order
disapproving the filing in accordance with Section 2251.103(d)
[2251.103(b)].
(b) An insurer whose rate filing is disapproved is entitled
to a hearing in accordance with Section 2251.103(e) [2251.103(c)].
(c) The department shall track precedents related to
disapprovals of rates under this subchapter to ensure uniform
application of rate standards by the department.
SECTION 4.008. Sections 2251.252(a) and (b), Insurance
Code, are amended to read as follows:
(a) Except as provided by Subsections (b) and (c), an
insurer is exempt from the rate filing and approval requirements of
this chapter if the insurer, during the calendar year preceding the
date filing is otherwise required under this chapter, issued
residential property insurance policies in this state that
accounted for less than four [two] percent of the total amount of
premiums collected by insurers for residential property insurance
policies issued in this state, more than 50 percent of which cover
property:
(1) valued at less than $100,000; and
(2) located in an area designated by the commissioner
as underserved for residential property insurance under Chapter
2004.
(b) If an insurer described by Subsection (a) is a member of
an affiliated insurance group, this subchapter applies to the
insurer only if the total aggregate premium collected by the group
accounts for less than four [two] percent of the total amount of
premiums collected by insurers for residential property insurance
policies issued in this state.
SECTION 4.009. Section 2251.154, Insurance Code, is
repealed.
SECTION 4.010. Section 2251.103, Insurance Code, as amended
by this Act, and Section 2251.1031, Insurance Code, as added by this
Act, apply only to a rate filing made on or after the effective date
of this Act. A rate filing made before the effective date of this
Act is governed by the law in effect at the time the filing was made,
and that law is continued in effect for that purpose.
SECTION 4.011. Section 2251.151(c-1), Insurance Code, as
added by this Act, applies to an insurer that is required to file
the insurer's rates for approval under Section 2251.151, Insurance
Code, on or after the effective date of this Act, regardless of when
the order requiring the insurer to file the insurer's rates for
approval under that section is first issued.
SECTION 4.012. Section 2251.151(e), Insurance Code, as
amended by this Act, applies only to an order issued by the
commissioner of insurance on or after the effective date of this
Act. An order of the commissioner issued before the effective date
of this Act is governed by the law in effect on the date the order
was issued, and that law is continued in effect for that purpose.
ARTICLE 5. STATE FIRE MARSHAL'S OFFICE
SECTION 5.001. Section 417.008, Government Code, is amended
by adding Subsection (f) to read as follows:
(f) The commissioner by rule shall prescribe a reasonable
fee for an inspection performed by the state fire marshal that may
be charged to a property owner or occupant who requests the
inspection, as the commissioner considers appropriate. In
prescribing the fee, the commissioner shall consider the overall
cost to the state fire marshal to perform the inspections,
including the approximate amount of time the staff of the state fire
marshal needs to perform an inspection, travel costs, and other
expenses.
SECTION 5.002. Section 417.0081, Government Code, is
amended to read as follows:
Sec. 417.0081. INSPECTION OF CERTAIN STATE-OWNED OR
STATE-LEASED BUILDINGS. (a) The state fire marshal, at the
commissioner's direction, shall periodically inspect public
buildings under the charge and control of the Texas Facilities
[General Services] Commission and buildings leased for the use of a
state agency by the Texas Facilities Commission.
(b) For the purpose of determining a schedule for conducting
inspections under this section, the commissioner by rule shall
adopt guidelines for assigning potential fire safety risk to
state-owned and state-leased buildings. Rules adopted under this
subsection must provide for the inspection of each state-owned and
state-leased building to which this section applies, regardless of
how low the potential fire safety risk of the building may be.
(c) On or before January 1 of each year, the state fire
marshal shall report to the governor, lieutenant governor, speaker
of the house of representatives, and appropriate standing
committees of the legislature regarding the state fire marshal's
findings in conducting inspections under this section.
SECTION 5.003. Section 417.0082, Government Code, is
amended to read as follows:
Sec. 417.0082. PROTECTION OF CERTAIN STATE-OWNED OR
STATE-LEASED BUILDINGS AGAINST FIRE HAZARDS. (a) The state fire
marshal, under the direction of the commissioner, shall take any
action necessary to protect a public building under the charge and
control of the Texas Facilities [Building and Procurement]
Commission, and the building's occupants, and the occupants of a
building leased for the use of a state agency by the Texas
Facilities Commission, against an existing or threatened fire
hazard. The state fire marshal and the Texas Facilities [Building
and Procurement] Commission shall include the State Office of Risk
Management in all communication concerning fire hazards.
(b) The commissioner, the Texas Facilities [Building and
Procurement] Commission, and the risk management board shall make
and each adopt by rule a memorandum of understanding that
coordinates the agency's duties under this section.
SECTION 5.004. Section 417.010, Government Code, is amended
to read as follows:
Sec. 417.010. DISCIPLINARY AND ENFORCEMENT ACTIONS;
ADMINISTRATIVE PENALTIES [ALTERNATE REMEDIES]. (a) This section
applies to each person and firm licensed, registered, or otherwise
regulated by the department through the state fire marshal,
including:
(1) a person regulated under Title 20, Insurance Code;
and
(2) a person licensed under Chapter 2154, Occupations
Code.
(b) The commissioner by rule shall delegate to the state
fire marshal the authority to take disciplinary and enforcement
actions, including the imposition of administrative penalties in
accordance with this section on a person regulated under a law
listed under Subsection (a) who violates that law or a rule or order
adopted under that law. In the rules adopted under this subsection,
the commissioner shall:
(1) specify which types of disciplinary and
enforcement actions are delegated to the state fire marshal; and
(2) outline the process through which the state fire
marshal may, subject to Subsection (e), impose administrative
penalties or take other disciplinary and enforcement actions.
(c) The commissioner by rule shall adopt a schedule of
administrative penalties for violations subject to a penalty under
this section to ensure that the amount of an administrative penalty
imposed is appropriate to the violation. The department shall
provide the administrative penalty schedule to the public on
request. The amount of an administrative penalty imposed under
this section must be based on:
(1) the seriousness of the violation, including:
(A) the nature, circumstances, extent, and
gravity of the violation; and
(B) the hazard or potential hazard created to the
health, safety, or economic welfare of the public;
(2) the economic harm to the public interest or public
confidence caused by the violation;
(3) the history of previous violations;
(4) the amount necessary to deter a future violation;
(5) efforts to correct the violation;
(6) whether the violation was intentional; and
(7) any other matter that justice may require.
(d) In [The state fire marshal, in] the enforcement of a law
that is enforced by or through the state fire marshal, the state
fire marshal may, in lieu of cancelling, revoking, or suspending a
license or certificate of registration, impose on the holder of the
license or certificate of registration an order directing the
holder to do one or more of the following:
(1) cease and desist from a specified activity;
(2) pay an administrative penalty imposed under this
section [remit to the commissioner within a specified time a
monetary forfeiture not to exceed $10,000 for each violation of an
applicable law or rule]; or [and]
(3) make restitution to a person harmed by the holder's
violation of an applicable law or rule.
(e) The state fire marshal shall impose an administrative
penalty under this section in the manner prescribed for imposition
of an administrative penalty under Subchapter B, Chapter 84,
Insurance Code. The state fire marshal may impose an
administrative penalty under this section without referring the
violation to the department for commissioner action.
(f) An affected person may dispute the imposition of the
penalty or the amount of the penalty imposed in the manner
prescribed by Subchapter C, Chapter 84, Insurance Code. Failure to
pay an administrative penalty imposed under this section is subject
to enforcement by the department.
ARTICLE 6. TITLE INSURANCE
SECTION 6.001. Section 2602.107, Insurance Code, is amended
by adding Subsection (d) to read as follows:
(d) The association shall pay, from the guaranty fee
account, fees and reasonable and necessary expenses that the
department incurs in an examination of a title agent or direct
operation under Subchapter H, Chapter 2651.
SECTION 6.002. Chapter 2651, Insurance Code, is amended by
adding Subchapter H to read as follows:
SUBCHAPTER H. EXAMINATION OF TITLE INSURANCE AGENTS AND DIRECT
OPERATIONS
Sec. 2651.351. EXAMINATION OF TITLE INSURANCE AGENTS AND
DIRECT OPERATIONS. (a) The department shall examine each title
insurance agent and direct operation licensed in this state as
provided by this subchapter.
(b) The department shall:
(1) examine the title insurance agent's or direct
operation's:
(A) financial condition;
(B) trust, escrow, and operating accounts;
(C) ability to meet its liabilities; and
(D) compliance with the laws of this state and
rules adopted by the commissioner that affect the business conduct
of the title insurance agent or direct operation; and
(2) verify the data reported for rate promulgation.
(c) The department shall conduct the examination at the
principal office of the title insurance agent or direct operation,
but may access any other offices or business locations of the title
insurance agent or direct operation for purposes of conducting the
examination. The department may conduct the examination alone or
with representatives of the insurance supervising departments of
other states.
(d) Subject to Subsection (e), the department shall examine
a title insurance agent or direct operation as frequently as the
department considers necessary. At a minimum, the department shall
examine a title insurance agent or direct operation not less
frequently than once every three years.
(e) The commissioner shall adopt rules governing the
frequency of examinations of a title insurance agent or direct
operation licensed for less than three years.
Sec. 2651.352. EXAMINATION PERIOD. Unless the department
requests that an examination cover a longer period, the examination
must cover the period beginning on the last day covered by the most
recent examination and ending on December 31 of the year preceding
the year in which the examination is being conducted.
Sec. 2651.353. POWERS RELATED TO EXAMINATION. The
department or the examiner appointed by the department:
(1) has free access, and may require the title
insurance agent or direct operation to provide free access, to all
books and papers of the title insurance agent or direct operation
that relate to the business and affairs of the title insurance agent
or direct operation; and
(2) has the authority to summon and examine under
oath, if necessary, an officer, agent, or employee of the title
insurance agent or direct operation or any other person in relation
to the affairs and condition of the title insurance agent or direct
operation.
Sec. 2651.354. EFFECT OF SUBCHAPTER ON AUTHORITY TO USE
INFORMATION. (a) This subchapter does not limit the department's
authority to:
(1) use a final or preliminary examination report, the
work papers of an examiner, title insurance agent, or direct
operation, or other documents, or any other information discovered
or developed during an examination in connection with a legal or
regulatory action; or
(2) release a final or preliminary examination report,
the work papers of an examiner, title insurance agent, or direct
operation, or other documents, or any other information discovered
or developed during an examination, to a law enforcement agency, an
attorney regulatory authority, or an agency of this state, another
state, or the United States if the disclosure is necessary or proper
for the enforcement of the laws of this state, another state, or the
United States, as determined by the commissioner.
(b) A release by the commissioner under Subsection (a) of a
final or preliminary examination report, the work papers of an
examiner, title insurance agent, or direct operation, or other
documents, or any other information discovered or developed during
an examination, does not make the report, work papers, documents,
or information public information under Chapter 552, Government
Code.
Sec. 2651.355. CONFIDENTIALITY OF REPORTS AND RELATED
INFORMATION. (a) A final or preliminary examination report and any
information obtained during an examination are confidential and are
not subject to disclosure under Chapter 552, Government Code.
(b) Subsection (a) applies if the examined title insurance
agent or direct operation is under supervision or conservatorship.
(c) Subsection (a) does not apply to an examination
conducted in connection with a liquidation or receivership under
this code or another insurance law of this state.
Sec. 2651.356. DISCIPLINARY ACTION FOR FAILURE TO COMPLY
WITH SUBCHAPTER. A title insurance agent or direct operation is
subject to disciplinary action under Chapter 82 for failure or
refusal to comply with:
(1) this subchapter or a rule adopted under this
subchapter; or
(2) a request by the department or an appointed
examiner to be examined or to provide information requested as part
of an examination.
SECTION 6.003. Section 2703.153(c), Insurance Code, is
amended to read as follows:
(c) Not less frequently than once every five years, the
commissioner shall evaluate the information required under this
section to determine whether the department needs additional or
different information or no longer needs certain information to
promulgate rates. If the department requires a title insurance
company or title insurance agent to include new or different
information in the statistical report, that information may be
considered by the commissioner in fixing premium rates if the
information collected is reasonably credible for the purposes for
which the information is to be used.
SECTION 6.004. Sections 2602.103(b), (c), and (d),
Insurance Code, are repealed.
ARTICLE 7. TEXAS WINDSTORM INSURANCE ASSOCIATION
SECTION 7.001. Sections 2210.254(a), (c), and (d),
Insurance Code, are amended to read as follows:
(a) For purposes of this chapter, a "qualified inspector"
includes:
(1) a person determined by the department to be
qualified because of training or experience to perform building
inspections;
(2) a licensed professional engineer who meets the
requirements specified by commissioner rule for contracting
[appointment] to conduct windstorm inspections; and
(3) an inspector who:
(A) is certified by the International Code
Council, the Building Officials and Code Administrators
International, Inc., the International Conference of Building
Officials, or the Southern Building Code Congress International,
Inc.;
(B) has certifications as a buildings inspector
and coastal construction inspector; and
(C) complies with other requirements specified
by commissioner rule.
(c) Before performing building inspections, a qualified
inspector must enter into a contract with [be approved and
appointed or employed by] the department.
(d) The department may charge a reasonable fee for [the
filing of applications by and] determining the qualifications of
persons eligible to contract [for appointment] as qualified
inspectors.
SECTION 7.002. Section 2210.255, Insurance Code, is amended
to read as follows:
Sec. 2210.255. CONTRACT WITH [APPOINTMENT OF] LICENSED
ENGINEER AS INSPECTOR. (a) On request of an engineer licensed by
the Texas Board of Professional Engineers, the department may enter
into a contract with [commissioner shall appoint] the engineer
under which the engineer serves as an inspector under this
subchapter. The department may enter into a contract under this
subsection only on receipt of information satisfactory to the
department [not later than the 10th day after the date the engineer
delivers to the commissioner information demonstrating] that the
engineer is qualified to perform windstorm inspections under this
subchapter.
(b) The commissioner shall adopt rules establishing the
information to be considered in contracting with [appointing]
engineers under this section.
SECTION 7.003. Subchapter F, Chapter 2210, Insurance Code,
is amended by adding Sections 2210.2551-2210.2554 to read as
follows:
Sec. 2210.2551. PROCEDURES REGARDING CONTRACTING WITH
INSPECTORS. The department shall develop procedures for
contracting with, and oversight of, inspectors selected under
Sections 2210.254 and 2210.255, including procedures relating to
the grounds for the suspension, modification, or revocation of a
contract under this subchapter entered into with an inspector.
Sec. 2210.2552. INSPECTOR LIST. The department shall
compile a list of qualified inspectors who contract with the
department to perform building inspections.
Sec. 2210.2553. OVERSIGHT OF INSPECTORS. The department
shall develop an oversight process that includes regular
reinspections by the department to ensure that contracted
inspectors perform duties under this subchapter appropriately.
Sec. 2210.2554. REPORT OF POSSIBLE VIOLATIONS. The
department shall report possible licensing violations by an
inspector selected under Sections 2210.254 and 2210.255 to perform
inspections under this subchapter to the Texas Board of
Professional Engineers.
SECTION 7.004. Section 2210.256, Insurance Code, is
repealed.
ARTICLE 8. ELECTRONIC TRANSACTIONS
SECTION 8.001. Subtitle A, Title 2, Insurance Code, is
amended by adding Chapter 35 to read as follows:
CHAPTER 35. ELECTRONIC TRANSACTIONS
Sec. 35.001. DEFINITIONS. In this chapter:
(1) "Conduct business" includes engaging in or
transacting any business in which a regulated entity is authorized
to engage or is authorized to transact under the law of this state.
(2) "Regulated entity" means each insurer or other
organization regulated by the department, including:
(A) a domestic or foreign, stock or mutual, life,
health, or accident insurance company;
(B) a domestic or foreign, stock or mutual, fire
or casualty insurance company;
(C) a Mexican casualty company;
(D) a domestic or foreign Lloyd's plan;
(E) a domestic or foreign reciprocal or
interinsurance exchange;
(F) a domestic or foreign fraternal benefit
society;
(G) a domestic or foreign title insurance
company;
(H) an attorney's title insurance company;
(I) a stipulated premium company;
(J) a nonprofit legal service corporation;
(K) a health maintenance organization;
(L) a statewide mutual assessment company;
(M) a local mutual aid association;
(N) a local mutual burial association;
(O) an association exempt under Section 887.102;
(P) a nonprofit hospital, medical, or dental
service corporation, including a company subject to Chapter 842;
(Q) a county mutual insurance company; and
(R) a farm mutual insurance company.
Sec. 35.002. CONSTRUCTION WITH OTHER LAW. (a)
Notwithstanding any other provision of this code, a regulated
entity may conduct business electronically in accordance with this
chapter and the rules adopted under Section 35.004.
(b) To the extent of any conflict between another provision
of this code and a provision of this chapter, the provision of this
chapter controls.
Sec. 35.003. ELECTRONIC TRANSACTIONS AUTHORIZED. A
regulated entity may conduct business electronically to the same
extent that the entity is authorized to conduct business otherwise
if before the conduct of business each party to the business agrees
to conduct the business electronically.
Sec. 35.004. RULES. (a) The commissioner shall adopt rules
necessary to implement and enforce this chapter.
(b) The rules adopted by the commissioner under this section
must include rules that establish minimum standards with which a
regulated entity must comply in the entity's electronic conduct of
business with other regulated entities and consumers.
SECTION 8.002. Chapter 35, Insurance Code, as added by this
Act, applies only to business conducted on or after the effective
date of this Act. Business conducted before the effective date of
this Act is governed by the law in effect on the date the business
was conducted, and that law is continued in effect for that purpose.
ARTICLE 9. DATA COLLECTION
SECTION 9.001. Chapter 38, Insurance Code, is amended by
adding Subchapter I to read as follows:
SUBCHAPTER I. DATA COLLECTION RELATING TO CERTAIN PERSONAL LINES
OF INSURANCE
Sec. 38.401. APPLICABILITY OF SUBCHAPTER. This subchapter
applies only to an insurer who writes personal automobile insurance
or residential property insurance in this state.
Sec. 38.402. FILING OF CERTAIN CLAIMS INFORMATION. (a) The
commissioner shall require each insurer described by Section 38.401
to file with the commissioner aggregate personal automobile
insurance and residential property insurance claims information
for the period covered by the filing, including the number of
claims:
(1) filed during the reporting period;
(2) pending on the last day of the reporting period,
including pending litigation;
(3) closed with payment during the reporting period;
(4) closed without payment during the reporting
period; and
(5) carrying over from the reporting period
immediately preceding the current reporting period.
(b) An insurer described by Section 38.401 must file the
information described by Subsection (a) on an annual basis. The
information filed must be broken down by quarter.
Sec. 38.403. PUBLIC INFORMATION. (a) The department shall
post the data contained in claims information filings under Section
38.402 on the department's Internet website. The commissioner by
rule may establish a procedure for posting data under this
subsection that includes a description of the data that must be
posted and the manner in which the data must be posted.
(b) Information provided under this section must be
aggregate data by line of insurance for each insurer and may not
reveal proprietary or trade secret information of any insurer.
Sec. 38.404. RULES. The commissioner may adopt rules
necessary to implement this subchapter.
ARTICLE 10. TRANSITION; EFFECTIVE DATE
SECTION 10.001. Except as otherwise provided by this Act,
this Act applies only to an insurance policy, contract, or evidence
of coverage that is delivered, issued for delivery, or renewed on or
after January 1, 2010. A policy, contract, or evidence of coverage
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 10.002. This Act takes effect September 1, 2009.