83R9811 SCL-F
By: Workman H.B. No. 2732
A BILL TO BE ENTITLED
AN ACT
relating to the authorization, regulation, and function of
dedicated personal insurers; creating offenses; imposing a fee.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subtitle E, Title 6, Insurance Code, is amended
by adding Chapter 889 to read as follows:
CHAPTER 889. DEDICATED PERSONAL INSURERS
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 889.001. DEFINITIONS. In this chapter:
(1) "Aggregate policy limit" means the sum of the
maximum losses that may be sustained under each policy outstanding
at any one time, as specified by the maximum limits in each policy.
(2) "Dedicated personal insurer" means an entity
authorized to insure a specific individual as provided by this
chapter.
(3) "Designated insurable individual" means an
individual eligible to be insured by a dedicated personal insurer.
Sec. 889.002. LIMITED EXEMPTION FROM INSURANCE LAWS. (a)
Except as expressly provided by this code, a provision of this code,
other than this chapter, does not apply to a dedicated personal
insurer.
(b) A law enacted after January 1, 2013, does not apply to a
dedicated personal insurer unless dedicated personal insurers are
expressly designated in the law.
SUBCHAPTER B. ORGANIZATION OF DEDICATED PERSONAL INSURERS
Sec. 889.051. FORM AND RELATIONSHIP OF INSURER. To be
granted or maintain a limited certificate of authority as a
dedicated personal insurer, an entity must be related to a
designated insurable individual in the following manner:
(1) the entity and designated insurable individual are
the same natural person;
(2) the entity is a trust and the designated insurable
individual is the sole beneficiary of that trust; or
(3) the entity is a for-profit corporation or limited
liability company and the designated insurable individual is the
sole owner of that entity.
Sec. 889.052. CAPITAL REQUIREMENTS. (a) For each type of
insurance a dedicated personal insurer is authorized to issue, the
insurer shall maintain capital equal to or greater than:
(1) for a health insurance policy, $100,000 except as
provided by Subsection (b);
(2) for a personal automobile insurance policy, the
amount required by Section 601.122, Transportation Code, to
establish financial responsibility; and
(3) for other insurance policies, the policy's
aggregate policy limit.
(b) Notwithstanding Subsection (a)(1), the capital required
for a health insurance policy is:
(1) $10,000 if the designated insurable individual is
younger than 24 years of age; or
(2) $20,000 plus an additional $10,000 for each
additional year beyond age 24 if the designated insurable
individual is at least 24 but younger than 32 years of age.
(c) Capital in the amount required by this section must be
held in the form of any combination of:
(1) cash;
(2) a bond or other evidence of indebtedness of the
United States, this state, or a political subdivision of this
state;
(3) a security that is readily marketable over a
national exchange; or
(4) another form of security approved by the
commissioner.
Sec. 889.053. EVIDENCE OF REQUIRED CAPITAL. (a) The
department shall accept an account statement as evidence of the
required capital if:
(1) the statement is issued by a bank or broker;
(2) the account is in the name of the entity presenting
the evidence;
(3) the statement shows holdings that:
(A) have a market value at least equal to the
amount required by Section 889.052; and
(B) are in a form authorized by Section 889.052;
(4) the deposits and securities held with the bank or
broker are insured by the Federal Deposit Insurance Corporation,
the Securities Investor Protection Corporation, or a similar
institution acceptable to the commissioner; and
(5) the evidence is presented not later than the 60th
day after the statement is issued.
(b) The required capital may be deposited with the
comptroller through the department. The department shall issue a
receipt when the deposit is made. The department shall accept a
copy of the receipt described by this subsection as evidence of the
required capital under Section 889.052.
Sec. 889.054. APPLICATION FOR LIMITED CERTIFICATE OF
AUTHORITY. (a) An entity satisfying the requirements of this
chapter may apply to the department for a limited certificate of
authority as a dedicated personal insurer. The application must
include:
(1) the name and address of the applicant;
(2) the name, address, and date of birth of the
designated insurable individual;
(3) the relationship between the applicant and the
designated insurable individual as required by Section 889.051;
(4) each type of insurance policy to be authorized;
(5) the respective aggregate policy limit for each
type of insurance policy subject to Section 889.052(a)(3);
(6) a statement of the total capital required by
Section 889.052;
(7) evidence of the required capital as required by
Section 889.053; and
(8) a filing fee of $20.
(b) If the commissioner determines that the application
does not satisfy the requirements of Subsection (a), the
commissioner shall deny the application in writing. The denial
must include the reason for the denial.
(c) If the commissioner does not deny the application under
Subsection (b), the commissioner shall approve the application.
On approval, the department shall issue under the department's seal
a limited certificate of authority authorizing the entity as a
dedicated personal insurer.
Sec. 889.055. EXPIRATION OF CERTIFICATE. A limited
certificate of authority issued under this chapter expires on the
first anniversary of the date the certificate is issued or renewed.
Sec. 889.056. MODIFICATION AND RENEWAL OF CERTIFICATE. (a)
A dedicated personal insurer holding a limited certificate of
authority may apply for a renewal or modification of the
certificate by submitting an application meeting the requirements
of Section 889.054 and indicating the application is a renewal or
modification of the original application.
(b) The department may not approve an application for
renewal of a certificate filed before the 60th day before the
expiration of the certificate.
SUBCHAPTER C. AUTHORITY TO ISSUE INSURANCE
Sec. 889.101. LIMITED CERTIFICATE OF AUTHORITY. A limited
certificate of authority issued by the department to a dedicated
personal insurer shall state, in a format determined by the
commissioner by rule:
(1) the name and address of the dedicated personal
insurer;
(2) the name and address of the designated insurable
individual;
(3) the following language: "Only the designated
insurable individual may be covered or insured by an insurance
policy authorized by this certificate";
(4) the types of insurance policies authorized to be
issued and the respective aggregate policy limits;
(5) the date issued;
(6) the date of expiration; and
(7) any other information specified by the
commissioner by rule.
Sec. 889.102. AUTHORITY TO ISSUE AN INSURANCE POLICY. (a)
A dedicated personal insurer holding a limited certificate of
authority may issue an insurance policy, contract, certificate, or
other evidence of coverage consistent with the limitations of that
certificate and this chapter.
(b) Only the designated insurable individual named on a
limited certificate of authority may be covered or insured by a
dedicated personal insurer under a policy authorized by that
certificate.
(c) An insurance policy issued by a dedicated personal
insurer must be issued for a term that expires on or before the
expiration of the dedicated personal insurer's limited certificate
of authority.
(d) A dedicated personal insurer may not issue an insurance
policy unless the insurer satisfies the capital requirements of
Section 889.052 at the time the insurance policy is issued.
SUBCHAPTER D. FAILURE TO SATISFY OPERATING REQUIREMENTS
Sec. 889.151. SOLVENCY REQUIREMENT. (a) A dedicated
personal insurer that does not satisfy the requirements of Section
889.052, not later than the 10th day after the date the insurer
ceases to satisfy those requirements, shall:
(1) obtain sufficient capital to meet the
requirements;
(2) file an application for modification that
demonstrates that:
(A) the dedicated personal insurer satisfies the
requirements for each insurance policy to be issued or outstanding
by the insurer after the modification of the limited certificate of
authority; and
(B) each outstanding insurance policy not
authorized under the modified limited certificate of authority is
canceled; or
(3) surrender the insurer's limited certificate of
authority to the department.
(b) A dedicated personal insurer that is denied an
application for modification submitted under this section shall
surrender its limited certificate of authority to the department.
Sec. 889.152. RELATIONSHIP REQUIREMENT. A dedicated
personal insurer that does not have the relationship required by
Section 889.051 with the designated insurable individual specified
in the insurer's limited certificate of authority shall surrender
the certificate to the department not later than the 10th day after
the date the insurer ceases to satisfy the relationship
requirement.
Sec. 889.153. SURRENDER OF AUTHORITY. On surrender of its
limited certificate of authority, the dedicated personal insurer
shall:
(1) notify the department of the surrender;
(2) refrain from issuing an insurance policy under
that certificate; and
(3) cancel each outstanding insurance policy issued by
the insurer that may be lawfully canceled.
SUBCHAPTER E. CRIMINAL OFFENSES
Sec. 889.201. FALSE STATEMENTS. (a) A person commits an
offense if the person wilfully makes a false or fraudulent
statement or representation in or with reference to an application
for a limited certificate of authority as a dedicated personal
insurer.
(b) An offense under this section is a misdemeanor
punishable by:
(1) a fine of not more than $500;
(2) confinement in jail for a term not longer than 180
days; or
(3) both a fine and confinement as provided by
Subdivisions (1) and (2).
(c) If conduct that constitutes an offense under this
section also constitutes an offense under any other law not within
this chapter, the actor may be prosecuted under this section, the
other law, or both.
Sec. 889.202. VIOLATION OF CHAPTER. (a) Except as provided
by Section 889.201, a person commits an offense if the person
violates this chapter.
(b) An offense under this section is a misdemeanor
punishable by:
(1) a fine of not more than $500;
(2) confinement in jail for a term of not more than 180
days; or
(3) both a fine and confinement as provided by
Subdivisions (1) and (2).
(c) If conduct that constitutes an offense under this
section also constitutes an offense under any other law not within
this chapter, the actor may be prosecuted under this section, the
other law, or both.
SECTION 2. This Act takes effect September 1, 2013.