Texas 2013 - 83rd Regular

Texas House Bill HB2732 Compare Versions

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1	1	83R9811 SCL-F
2	2	By: Workman H.B. No. 2732
3	3
4	4
5	5	A BILL TO BE ENTITLED
6	6	AN ACT
7	7	relating to the authorization, regulation, and function of
8	8	dedicated personal insurers; creating offenses; imposing a fee.
9	9	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
10	10	SECTION 1. Subtitle E, Title 6, Insurance Code, is amended
11	11	by adding Chapter 889 to read as follows:
12	12	CHAPTER 889. DEDICATED PERSONAL INSURERS
13	13	SUBCHAPTER A. GENERAL PROVISIONS
14	14	Sec. 889.001. DEFINITIONS. In this chapter:
15	15	(1) "Aggregate policy limit" means the sum of the
16	16	maximum losses that may be sustained under each policy outstanding
17	17	at any one time, as specified by the maximum limits in each policy.
18	18	(2) "Dedicated personal insurer" means an entity
19	19	authorized to insure a specific individual as provided by this
20	20	chapter.
21	21	(3) "Designated insurable individual" means an
22	22	individual eligible to be insured by a dedicated personal insurer.
23	23	Sec. 889.002. LIMITED EXEMPTION FROM INSURANCE LAWS. (a)
24	24	Except as expressly provided by this code, a provision of this code,
25	25	other than this chapter, does not apply to a dedicated personal
26	26	insurer.
27	27	(b) A law enacted after January 1, 2013, does not apply to a
28	28	dedicated personal insurer unless dedicated personal insurers are
29	29	expressly designated in the law.
30	30	SUBCHAPTER B. ORGANIZATION OF DEDICATED PERSONAL INSURERS
31	31	Sec. 889.051. FORM AND RELATIONSHIP OF INSURER. To be
32	32	granted or maintain a limited certificate of authority as a
33	33	dedicated personal insurer, an entity must be related to a
34	34	designated insurable individual in the following manner:
35	35	(1) the entity and designated insurable individual are
36	36	the same natural person;
37	37	(2) the entity is a trust and the designated insurable
38	38	individual is the sole beneficiary of that trust; or
39	39	(3) the entity is a for-profit corporation or limited
40	40	liability company and the designated insurable individual is the
41	41	sole owner of that entity.
42	42	Sec. 889.052. CAPITAL REQUIREMENTS. (a) For each type of
43	43	insurance a dedicated personal insurer is authorized to issue, the
44	44	insurer shall maintain capital equal to or greater than:
45	45	(1) for a health insurance policy, $100,000 except as
46	46	provided by Subsection (b);
47	47	(2) for a personal automobile insurance policy, the
48	48	amount required by Section 601.122, Transportation Code, to
49	49	establish financial responsibility; and
50	50	(3) for other insurance policies, the policy's
51	51	aggregate policy limit.
52	52	(b) Notwithstanding Subsection (a)(1), the capital required
53	53	for a health insurance policy is:
54	54	(1) $10,000 if the designated insurable individual is
55	55	younger than 24 years of age; or
56	56	(2) $20,000 plus an additional $10,000 for each
57	57	additional year beyond age 24 if the designated insurable
58	58	individual is at least 24 but younger than 32 years of age.
59	59	(c) Capital in the amount required by this section must be
60	60	held in the form of any combination of:
61	61	(1) cash;
62	62	(2) a bond or other evidence of indebtedness of the
63	63	United States, this state, or a political subdivision of this
64	64	state;
65	65	(3) a security that is readily marketable over a
66	66	national exchange; or
67	67	(4) another form of security approved by the
68	68	commissioner.
69	69	Sec. 889.053. EVIDENCE OF REQUIRED CAPITAL. (a) The
70	70	department shall accept an account statement as evidence of the
71	71	required capital if:
72	72	(1) the statement is issued by a bank or broker;
73	73	(2) the account is in the name of the entity presenting
74	74	the evidence;
75	75	(3) the statement shows holdings that:
76	76	(A) have a market value at least equal to the
77	77	amount required by Section 889.052; and
78	78	(B) are in a form authorized by Section 889.052;
79	79	(4) the deposits and securities held with the bank or
80	80	broker are insured by the Federal Deposit Insurance Corporation,
81	81	the Securities Investor Protection Corporation, or a similar
82	82	institution acceptable to the commissioner; and
83	83	(5) the evidence is presented not later than the 60th
84	84	day after the statement is issued.
85	85	(b) The required capital may be deposited with the
86	86	comptroller through the department. The department shall issue a
87	87	receipt when the deposit is made. The department shall accept a
88	88	copy of the receipt described by this subsection as evidence of the
89	89	required capital under Section 889.052.
90	90	Sec. 889.054. APPLICATION FOR LIMITED CERTIFICATE OF
91	91	AUTHORITY. (a) An entity satisfying the requirements of this
92	92	chapter may apply to the department for a limited certificate of
93	93	authority as a dedicated personal insurer. The application must
94	94	include:
95	95	(1) the name and address of the applicant;
96	96	(2) the name, address, and date of birth of the
97	97	designated insurable individual;
98	98	(3) the relationship between the applicant and the
99	99	designated insurable individual as required by Section 889.051;
100	100	(4) each type of insurance policy to be authorized;
101	101	(5) the respective aggregate policy limit for each
102	102	type of insurance policy subject to Section 889.052(a)(3);
103	103	(6) a statement of the total capital required by
104	104	Section 889.052;
105	105	(7) evidence of the required capital as required by
106	106	Section 889.053; and
107	107	(8) a filing fee of $20.
108	108	(b) If the commissioner determines that the application
109	109	does not satisfy the requirements of Subsection (a), the
110	110	commissioner shall deny the application in writing. The denial
111	111	must include the reason for the denial.
112	112	(c) If the commissioner does not deny the application under
113	113	Subsection (b), the commissioner shall approve the application.
114	114	On approval, the department shall issue under the department's seal
115	115	a limited certificate of authority authorizing the entity as a
116	116	dedicated personal insurer.
117	117	Sec. 889.055. EXPIRATION OF CERTIFICATE. A limited
118	118	certificate of authority issued under this chapter expires on the
119	119	first anniversary of the date the certificate is issued or renewed.
120	120	Sec. 889.056. MODIFICATION AND RENEWAL OF CERTIFICATE. (a)
121	121	A dedicated personal insurer holding a limited certificate of
122	122	authority may apply for a renewal or modification of the
123	123	certificate by submitting an application meeting the requirements
124	124	of Section 889.054 and indicating the application is a renewal or
125	125	modification of the original application.
126	126	(b) The department may not approve an application for
127	127	renewal of a certificate filed before the 60th day before the
128	128	expiration of the certificate.
129	129	SUBCHAPTER C. AUTHORITY TO ISSUE INSURANCE
130	130	Sec. 889.101. LIMITED CERTIFICATE OF AUTHORITY. A limited
131	131	certificate of authority issued by the department to a dedicated
132	132	personal insurer shall state, in a format determined by the
133	133	commissioner by rule:
134	134	(1) the name and address of the dedicated personal
135	135	insurer;
136	136	(2) the name and address of the designated insurable
137	137	individual;
138	138	(3) the following language: "Only the designated
139	139	insurable individual may be covered or insured by an insurance
140	140	policy authorized by this certificate";
141	141	(4) the types of insurance policies authorized to be
142	142	issued and the respective aggregate policy limits;
143	143	(5) the date issued;
144	144	(6) the date of expiration; and
145	145	(7) any other information specified by the
146	146	commissioner by rule.
147	147	Sec. 889.102. AUTHORITY TO ISSUE AN INSURANCE POLICY. (a)
148	148	A dedicated personal insurer holding a limited certificate of
149	149	authority may issue an insurance policy, contract, certificate, or
150	150	other evidence of coverage consistent with the limitations of that
151	151	certificate and this chapter.
152	152	(b) Only the designated insurable individual named on a
153	153	limited certificate of authority may be covered or insured by a
154	154	dedicated personal insurer under a policy authorized by that
155	155	certificate.
156	156	(c) An insurance policy issued by a dedicated personal
157	157	insurer must be issued for a term that expires on or before the
158	158	expiration of the dedicated personal insurer's limited certificate
159	159	of authority.
160	160	(d) A dedicated personal insurer may not issue an insurance
161	161	policy unless the insurer satisfies the capital requirements of
162	162	Section 889.052 at the time the insurance policy is issued.
163	163	SUBCHAPTER D. FAILURE TO SATISFY OPERATING REQUIREMENTS
164	164	Sec. 889.151. SOLVENCY REQUIREMENT. (a) A dedicated
165	165	personal insurer that does not satisfy the requirements of Section
166	166	889.052, not later than the 10th day after the date the insurer
167	167	ceases to satisfy those requirements, shall:
168	168	(1) obtain sufficient capital to meet the
169	169	requirements;
170	170	(2) file an application for modification that
171	171	demonstrates that:
172	172	(A) the dedicated personal insurer satisfies the
173	173	requirements for each insurance policy to be issued or outstanding
174	174	by the insurer after the modification of the limited certificate of
175	175	authority; and
176	176	(B) each outstanding insurance policy not
177	177	authorized under the modified limited certificate of authority is
178	178	canceled; or
179	179	(3) surrender the insurer's limited certificate of
180	180	authority to the department.
181	181	(b) A dedicated personal insurer that is denied an
182	182	application for modification submitted under this section shall
183	183	surrender its limited certificate of authority to the department.
184	184	Sec. 889.152. RELATIONSHIP REQUIREMENT. A dedicated
185	185	personal insurer that does not have the relationship required by
186	186	Section 889.051 with the designated insurable individual specified
187	187	in the insurer's limited certificate of authority shall surrender
188	188	the certificate to the department not later than the 10th day after
189	189	the date the insurer ceases to satisfy the relationship
190	190	requirement.
191	191	Sec. 889.153. SURRENDER OF AUTHORITY. On surrender of its
192	192	limited certificate of authority, the dedicated personal insurer
193	193	shall:
194	194	(1) notify the department of the surrender;
195	195	(2) refrain from issuing an insurance policy under
196	196	that certificate; and
197	197	(3) cancel each outstanding insurance policy issued by
198	198	the insurer that may be lawfully canceled.
199	199	SUBCHAPTER E. CRIMINAL OFFENSES
200	200	Sec. 889.201. FALSE STATEMENTS. (a) A person commits an
201	201	offense if the person wilfully makes a false or fraudulent
202	202	statement or representation in or with reference to an application
203	203	for a limited certificate of authority as a dedicated personal
204	204	insurer.
205	205	(b) An offense under this section is a misdemeanor
206	206	punishable by:
207	207	(1) a fine of not more than $500;
208	208	(2) confinement in jail for a term not longer than 180
209	209	days; or
210	210	(3) both a fine and confinement as provided by
211	211	Subdivisions (1) and (2).
212	212	(c) If conduct that constitutes an offense under this
213	213	section also constitutes an offense under any other law not within
214	214	this chapter, the actor may be prosecuted under this section, the
215	215	other law, or both.
216	216	Sec. 889.202. VIOLATION OF CHAPTER. (a) Except as provided
217	217	by Section 889.201, a person commits an offense if the person
218	218	violates this chapter.
219	219	(b) An offense under this section is a misdemeanor
220	220	punishable by:
221	221	(1) a fine of not more than $500;
222	222	(2) confinement in jail for a term of not more than 180
223	223	days; or
224	224	(3) both a fine and confinement as provided by
225	225	Subdivisions (1) and (2).
226	226	(c) If conduct that constitutes an offense under this
227	227	section also constitutes an offense under any other law not within
228	228	this chapter, the actor may be prosecuted under this section, the
229	229	other law, or both.
230	230	SECTION 2. This Act takes effect September 1, 2013.