By: Carona S.B. No. 1006
(In the Senate - Filed March 1, 2013; March 12, 2013, read
first time and referred to Committee on Business and Commerce;
March 20, 2013, reported favorably by the following vote: Yeas 9,
Nays 0; March 20, 2013, sent to printer.)
A BILL TO BE ENTITLED
AN ACT
relating to requirements regarding certain shareholder and
policyholder dividends.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 403.001, Insurance Code, is amended to
read as follows:
Sec. 403.001. LIMITATION ON DIVIDENDS. An insurer
organized under the laws of this state, including a life, health,
fire, marine, or inland marine insurance company, may not pay a
shareholder dividend except from surplus profits arising from the
insurer's business.
SECTION 2. Subsections (a), (b), and (c), Section 1806.056,
Insurance Code, are amended to read as follows:
(a) This subchapter does not prohibit an insurer[, on
approval by the commissioner,] from distributing to policyholders
who are on active duty in the United States Armed Forces any
estimated profits resulting from service by those policyholders in
a foreign country in a combat theater of operations after January 1,
1990.
(b) An insurer that elects to make distributions under this
section must:
(1) file a written application describing
[description of] the insurer's distribution [program] with the
commissioner for approval of a policyholder dividend amount that
exceeds 10 percent of surplus; or [and]
(2) notify the commissioner in writing of each
distribution of a policyholder dividend amount that is not greater
than 10 percent of surplus [made under the program].
(c) If the commissioner does not act on the application
[insurer's distribution program] on or before the fifth business
day after the date the commissioner receives the application
[insurer's description of the program], the distribution [program]
is considered approved.
SECTION 3. Section 1806.057, Insurance Code, is amended to
read as follows:
Sec. 1806.057. PROFIT SHARING WITH MEMBERS OF CERTAIN
ASSOCIATIONS AUTHORIZED. (a) Section 1806.054 does not prohibit
an insurer[, on approval by the commissioner,] from sharing profits
with policyholders who are part of a group program established by a
nonprofit business association and who participate in the group
program because of membership in the association.
(b) An insurer that elects to make distributions under this
section must:
(1) file a written application describing
[description of] the insurer's distribution [program] with the
commissioner for approval of a policyholder dividend amount that
exceeds 10 percent of surplus; or [and]
(2) notify the commissioner in writing of each
distribution of a policyholder dividend amount that is not greater
than 10 percent of surplus [made under the program].
(c) If the commissioner does not act on the application
[insurer's distribution program] on or before the fifth business
day after the date the commissioner receives the application
[insurer's description of the program], the distribution [program]
is considered approved.
SECTION 4. Section 1806.058, Insurance Code, is amended by
amending Subsection (b) and adding Subsection (c) to read as
follows:
(b) An insurer must obtain commissioner approval before
distributing a policyholder dividend if the dividend amount exceeds
10 percent of surplus [A distribution of profits or dividends to
insureds may not take effect or be paid until the commissioner
approves the distribution]. The commissioner may not approve a
distribution of profits or dividends until the insurer has
[provided] adequate reserves. The reserves must be computed on the
same basis for all classes of insurers operating under this
subchapter, Subtitle C, and Subchapter A, Chapter 5.
(c) The insurer must notify the commissioner in writing of
each distribution if the insurer's policyholder dividend amount is
not greater than 10 percent of surplus.
SECTION 5. Section 1806.105, Insurance Code, is amended by
amending Subsection (c) and adding Subsection (d) to read as
follows:
(c) A distribution of profits or dividends to an insured may
not take effect or be distributed until:
(1) the insurer has adequate reserves [are provided],
as computed on the same basis for all classes of insurers to which
this subchapter applies; and
(2) if the policyholder dividend amount exceeds 10
percent of surplus, the commissioner approves the distribution.
(d) The insurer must notify the commissioner in writing of
each distribution if the insurer's policyholder dividend amount is
not greater than 10 percent of surplus.
SECTION 6. Section 1806.106, Insurance Code, is amended to
read as follows:
Sec. 1806.106. PROFIT SHARING WITH CERTAIN ASSOCIATIONS
AUTHORIZED. (a) This subchapter does not prohibit an insurer[, on
approval by the commissioner,] from sharing profits with
policyholders who are part of a group program established by a
nonprofit business association and who participate in the group
program because of membership in the association.
(b) An insurer that elects to make distributions under this
section must:
(1) file a written application describing
[description of] the insurer's distribution [program] with the
commissioner for approval of a policyholder dividend amount that
exceeds 10 percent of surplus; or [and]
(2) notify the commissioner in writing of each
distribution of a policyholder dividend amount that is not greater
than 10 percent of surplus [made under the program].
(c) If the commissioner does not act on the application
[insurer's distribution program] on or before the fifth business
day after the date the commissioner receives the application
[insurer's description of the program], the distribution [program]
is considered approved.
SECTION 7. Section 2052.004, Insurance Code, is amended by
amending Subsections (b) and (c) and adding Subsection (d) to read
as follows:
(b) A policyholder dividend under a workers' compensation
insurance policy:
(1) must be [does not take effect until] approved by
the department if the insurer's policyholder dividend amount
exceeds 10 percent of surplus; and
(2) may not be approved by the department until the
insurance company has [provides] adequate reserves.
(c) For purposes of Subsection (b), reserves must be
computed on the same basis for all classes of insurance companies
operating under this subtitle and Section 2051.002 [Article 5.66].
(d) An insurer must notify the department in writing of a
distribution if the insurer's policyholder dividend amount is not
greater than 10 percent of surplus.
SECTION 8. This Act takes effect immediately if it receives
a vote of two-thirds of all the members elected to each house, as
provided by Section 39, Article III, Texas Constitution. If this
Act does not receive the vote necessary for immediate effect, this
Act takes effect September 1, 2013.
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