Texas 2013 - 83rd Regular

Texas Senate Bill SB1006 Compare Versions

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1	1	By: Carona S.B. No. 1006
2	2	(Sheets)
3	3
4	4
5	5	A BILL TO BE ENTITLED
6	6	AN ACT
7	7	relating to requirements regarding certain shareholder and
8	8	policyholder dividends.
9	9	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
10	10	SECTION 1. Section 403.001, Insurance Code, is amended to
11	11	read as follows:
12	12	Sec. 403.001. LIMITATION ON DIVIDENDS. An insurer
13	13	organized under the laws of this state, including a life, health,
14	14	fire, marine, or inland marine insurance company, may not pay a
15	15	shareholder dividend except from surplus profits arising from the
16	16	insurer's business.
17	17	SECTION 2. Subsections (a), (b), and (c), Section 1806.056,
18	18	Insurance Code, are amended to read as follows:
19	19	(a) This subchapter does not prohibit an insurer[, on
20	20	approval by the commissioner,] from distributing to policyholders
21	21	who are on active duty in the United States Armed Forces any
22	22	estimated profits resulting from service by those policyholders in
23	23	a foreign country in a combat theater of operations after January 1,
24	24	1990.
25	25	(b) An insurer that elects to make distributions under this
26	26	section must:
27	27	(1) file a written application describing
28	28	[description of] the insurer's distribution [program] with the
29	29	commissioner for approval of a policyholder dividend amount that
30	30	exceeds 10 percent of surplus; or [and]
31	31	(2) notify the commissioner in writing of each
32	32	distribution of a policyholder dividend amount that is not greater
33	33	than 10 percent of surplus [made under the program].
34	34	(c) If the commissioner does not act on the application
35	35	[insurer's distribution program] on or before the fifth business
36	36	day after the date the commissioner receives the application
37	37	[insurer's description of the program], the distribution [program]
38	38	is considered approved.
39	39	SECTION 3. Section 1806.057, Insurance Code, is amended to
40	40	read as follows:
41	41	Sec. 1806.057. PROFIT SHARING WITH MEMBERS OF CERTAIN
42	42	ASSOCIATIONS AUTHORIZED. (a) Section 1806.054 does not prohibit
43	43	an insurer[, on approval by the commissioner,] from sharing profits
44	44	with policyholders who are part of a group program established by a
45	45	nonprofit business association and who participate in the group
46	46	program because of membership in the association.
47	47	(b) An insurer that elects to make distributions under this
48	48	section must:
49	49	(1) file a written application describing
50	50	[description of] the insurer's distribution [program] with the
51	51	commissioner for approval of a policyholder dividend amount that
52	52	exceeds 10 percent of surplus; or [and]
53	53	(2) notify the commissioner in writing of each
54	54	distribution of a policyholder dividend amount that is not greater
55	55	than 10 percent of surplus [made under the program].
56	56	(c) If the commissioner does not act on the application
57	57	[insurer's distribution program] on or before the fifth business
58	58	day after the date the commissioner receives the application
59	59	[insurer's description of the program], the distribution [program]
60	60	is considered approved.
61	61	SECTION 4. Section 1806.058, Insurance Code, is amended by
62	62	amending Subsection (b) and adding Subsection (c) to read as
63	63	follows:
64	64	(b) An insurer must obtain commissioner approval before
65	65	distributing a policyholder dividend if the dividend amount exceeds
66	66	10 percent of surplus [A distribution of profits or dividends to
67	67	insureds may not take effect or be paid until the commissioner
68	68	approves the distribution]. The commissioner may not approve a
69	69	distribution of profits or dividends until the insurer has
70	70	[provided] adequate reserves. The reserves must be computed on the
71	71	same basis for all classes of insurers operating under this
72	72	subchapter, Subtitle C, and Subchapter A, Chapter 5.
73	73	(c) The insurer must notify the commissioner in writing of
74	74	each distribution if the insurer's policyholder dividend amount is
75	75	not greater than 10 percent of surplus.
76	76	SECTION 5. Section 1806.105, Insurance Code, is amended by
77	77	amending Subsection (c) and adding Subsection (d) to read as
78	78	follows:
79	79	(c) A distribution of profits or dividends to an insured may
80	80	not take effect or be distributed until:
81	81	(1) the insurer has adequate reserves [are provided],
82	82	as computed on the same basis for all classes of insurers to which
83	83	this subchapter applies; and
84	84	(2) if the policyholder dividend amount exceeds 10
85	85	percent of surplus, the commissioner approves the distribution.
86	86	(d) The insurer must notify the commissioner in writing of
87	87	each distribution if the insurer's policyholder dividend amount is
88	88	not greater than 10 percent of surplus.
89	89	SECTION 6. Section 1806.106, Insurance Code, is amended to
90	90	read as follows:
91	91	Sec. 1806.106. PROFIT SHARING WITH CERTAIN ASSOCIATIONS
92	92	AUTHORIZED. (a) This subchapter does not prohibit an insurer[, on
93	93	approval by the commissioner,] from sharing profits with
94	94	policyholders who are part of a group program established by a
95	95	nonprofit business association and who participate in the group
96	96	program because of membership in the association.
97	97	(b) An insurer that elects to make distributions under this
98	98	section must:
99	99	(1) file a written application describing
100	100	[description of] the insurer's distribution [program] with the
101	101	commissioner for approval of a policyholder dividend amount that
102	102	exceeds 10 percent of surplus; or [and]
103	103	(2) notify the commissioner in writing of each
104	104	distribution of a policyholder dividend amount that is not greater
105	105	than 10 percent of surplus [made under the program].
106	106	(c) If the commissioner does not act on the application
107	107	[insurer's distribution program] on or before the fifth business
108	108	day after the date the commissioner receives the application
109	109	[insurer's description of the program], the distribution [program]
110	110	is considered approved.
111	111	SECTION 7. Section 2052.004, Insurance Code, is amended by
112	112	amending Subsections (b) and (c) and adding Subsection (d) to read
113	113	as follows:
114	114	(b) A policyholder dividend under a workers' compensation
115	115	insurance policy:
116	116	(1) must be [does not take effect until] approved by
117	117	the department if the insurer's policyholder dividend amount
118	118	exceeds 10 percent of surplus; and
119	119	(2) may not be approved by the department until the
120	120	insurance company has [provides] adequate reserves.
121	121	(c) For purposes of Subsection (b), reserves must be
122	122	computed on the same basis for all classes of insurance companies
123	123	operating under this subtitle and Section 2051.002 [Article 5.66].
124	124	(d) An insurer must notify the department in writing of a
125	125	distribution if the insurer's policyholder dividend amount is not
126	126	greater than 10 percent of surplus.
127	127	SECTION 8. This Act takes effect immediately if it receives
128	128	a vote of two-thirds of all the members elected to each house, as
129	129	provided by Section 39, Article III, Texas Constitution. If this
130	130	Act does not receive the vote necessary for immediate effect, this
131	131	Act takes effect September 1, 2013.