82R8362 TJS-F
By: Taylor of Galveston H.B. No. 2604
A BILL TO BE ENTITLED
AN ACT
relating to solvency accounts maintained by title agents for
holding unencumbered assets.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 2651.012(a)(2), Insurance Code, is
amended to read as follows:
(2) "Unencumbered assets" means:
(A) cash or cash equivalents;
(B) liquid assets that have a readily
determinable market value and that do not have any lien against
them;
(C) real estate, in excess of any encumbrances;
(D) investments, such as mutual funds,
certificates of deposit, and stocks and bonds;
(E) a surety bond, the form and content of which
shall be prescribed by the commissioner in accordance with this
code;
(F) a deposit made in accordance with Section
2651.102; [and]
(G) a letter of credit that meets the
requirements of Section 493.104(b)(2)(C); and
(H) a solvency account that meets the
requirements of Section 2651.0121.
SECTION 2. Subchapter A, Chapter 2651, Insurance Code, is
amended by adding Section 2651.0121 to read as follows:
Sec. 2651.0121. SOLVENCY ACCOUNT. (a) An agent may
maintain a solvency account to accrue and hold unencumbered assets
as provided by this section.
(b) An account under this section must be:
(1) in a financial institution in this state that is
insured by an agency of the United States;
(2) accessible only to the department, on order of the
commissioner; and
(3) audited in the same manner provided for trust
funds by Section 2651.151.
(c) Subject to Subsection (d), an account under this section
may be established by an initial deposit in an amount less than the
amount provided by Section 2651.012(c).
(d) An account established by an initial deposit of an
amount less than the amount provided by Section 2651.012(c) must be
funded with a minimum deposit in the amount that is equal to $5 for
each policy of title insurance issued by the agent. Deposits to the
account must be made at least quarterly and must be made from and
based on retained premiums collected during the calendar quarter
during which premiums were collected.
(e) Interest that accrues in an account the principal
balance of which is less than the amount provided by Section
2651.012(c) must be retained in the account. Interest that accrues
in an account the principal balance of which is greater than the
amount provided by Section 2651.012(c) may be paid to the agent
maintaining the account.
(f) The commissioner may issue an order to access funds held
in an account under this section if:
(1) the agent is an impaired agent, as defined by
Section 2602.003; or
(2) the commissioner determines that the agent must be
involuntarily liquidated as the result of license surrender or
revocation.
(g) If an agent or an agent's principal office voluntarily
ceases business, surrenders the agent's license, and liquidates the
agent's assets, the agent may apply to the department in a form
provided by the commissioner by rule for the release of the agent's
solvency account. Not later than the 60th day after the date the
department receives an application under this subsection, the
commissioner shall enter an order authorizing the financial
institution in which the solvency account is held to release all or
part of the account balance to the agent or the agent's principal
office.
(h) An account established, funded, and maintained as
provided by this section complies with the requirement for
maintenance of unencumbered assets under Section 2651.012(c),
regardless of whether the amount required by that section is fully
accrued.
SECTION 3. As soon as practicable after the effective date
of this Act, but not later than January 1, 2012, the commissioner of
insurance shall promulgate rules and forms governing the operation
of a solvency account under Section 2651.0121, Insurance Code, as
added by this Act.
SECTION 4. This Act takes effect September 1, 2011.