83R372 TJS-F
By: Taylor S.B. No. 850
A BILL TO BE ENTITLED
AN ACT
relating to the residual market for workers' compensation insurance
in this state and to the operation, governance, and organization of
the Texas Mutual Insurance Company.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
ARTICLE 1. RESIDUAL MARKET FOR WORKERS' COMPENSATION INSURANCE
SECTION 1.01. WORKERS' COMPENSATION ASSIGNED RISK PROGRAM.
Subtitle E, Title 10, Insurance Code, is amended by adding Chapter
2056 to read as follows:
CHAPTER 2056. WORKERS' COMPENSATION ASSIGNED RISK PROGRAM
Sec. 2056.001. DEFINITIONS. In this chapter:
(1) "Assigned risk program" means the program
established under Section 2056.002 by which insurers provide
workers' compensation insurance to residual market employers.
(2) "Insurer" means an insurance company as defined by
Section 2053.001.
(3) "Residual market employer" means an employer that
is unable to obtain workers' compensation insurance through the
voluntary insurance market in this state.
Sec. 2056.002. ASSIGNED RISK PROGRAM; PLAN OF OPERATION.
(a) The commissioner by rule shall:
(1) establish an assigned risk program through which
residual market employers may obtain workers' compensation
insurance in this state; and
(2) approve a plan of operation for the assigned risk
program established under this section, which must:
(A) specify the eligibility criteria and
procedures for obtaining insurance through the assigned risk
program; and
(B) provide for the implementation and
administration of the assigned risk program, including reasonable
service standards, policies, forms, and contracts.
(b) The commissioner may contract with a licensed
statistical agent for workers' compensation in this state to
administer the assigned risk program.
(c) The commissioner shall require each insurer to
participate in the assigned risk program in proportion to the
insurer's voluntary market share in this state as a condition of the
insurer's authority to engage in the business of insurance in this
state.
(d) The commissioner may provide for an insurer to meet the
insurer's obligation under this section through direct policy
assignment, reinsurance, pooling, or otherwise.
Sec. 2056.003. RATES AND FUNDING. (a) The statistical
agent, if any, contracted to administer the assigned risk program
under Section 2056.002 shall file rates for review under Subchapter
B, Chapter 2053.
(b) Rates for insurance procured through the assigned risk
program must be actuarially sufficient to cover all incurred losses
and administrative expenses of the program.
ARTICLE 2. OPERATION AND ORGANIZATION OF TEXAS
MUTUAL INSURANCE COMPANY
SECTION 2.01. ARTICLES OF INCORPORATION. (a) Not later
than January 1, 2015, the board of directors of the Texas Mutual
Insurance Company shall file with the commissioner of insurance
articles of incorporation, which must state:
(1) the name of the company;
(2) the purpose of the company;
(3) the location of the company's principal or home
office; and
(4) the name and address of each member of the board of
directors.
(b) Notwithstanding any other law, the articles of
incorporation filed under this Act shall be considered restated
articles of incorporation.
SECTION 2.02. BOARD OF DIRECTORS. (a) Not later than
December 31, 2014, the Texas Mutual Insurance Company shall hold a
meeting of its policyholders to elect a board of directors to govern
the company beginning January 1, 2015.
(b) The board of directors established under Section
2054.051, Insurance Code, is abolished effective January 1, 2015.
SECTION 2.03. CONTINUATION OF CORPORATE EXISTENCE. (a) The
corporate existence of the Texas Mutual Insurance Company
continues, and all assets, liabilities, earned surplus, rights,
licenses, and permits of the company as it existed under Chapter
2054, Insurance Code, before January 1, 2015, remain in full force
and effect as the assets, liabilities, earned surplus, rights,
licenses, and permits of the company.
(b) All policies of insurance and other contracts entered
into or issued by the Texas Mutual Insurance Company before January
1, 2015, remain in full force and effect in accordance with their
respective terms.
(c) The certificate of authority issued to the Texas Mutual
Insurance Company as the company existed under Chapter 2054,
Insurance Code, before January 1, 2015, continues in effect.
(d) Effective January 1, 2015, the Texas Mutual Insurance
Company operates under Chapter 883, Insurance Code, and is neither
subject to obligations or limitations not imposed on, nor given
advantages not granted to, other mutual insurance companies
operating under Chapter 883, Insurance Code.
ARTICLE 3. CONFORMING AMENDMENTS
SECTION 3.01. REPEALER. The following laws are repealed:
(1) Section 552.0225(c), Government Code;
(2) Section 552.143(f), Government Code;
(3) Section 462.008, Insurance Code;
(4) Section 2051.153(b), Insurance Code; and
(5) Chapter 2054, Insurance Code.
SECTION 3.02. CONFORMING AMENDMENT TO LABOR CODE. Section
418.002(c), Labor Code, is amended to read as follows:
(c) The court may order a person to pay restitution to an
insurance company[, including the Texas Mutual Insurance Company,]
if the person commits an offense under this section.
SECTION 3.03. CONFORMING AMENDMENTS TO INSURANCE CODE. (a)
Section 2052.004(a), Insurance Code, is amended to read as follows:
(a) Subject to Subsections (b) and (c), this subtitle may
not be construed to prohibit an insurance company[, including the
Texas Mutual Insurance Company,] from issuing participating
policies.
(b) Section 2053.001(2), Insurance Code, is amended to read
as follows:
(2) "Insurance company" means a person authorized to
engage in the business of workers' compensation insurance in this
state. The term includes:
(A) [the Texas Mutual Insurance Company;
[(B)] a Lloyd's plan under Chapter 941; and
(B) [(C)] a reciprocal and interinsurance
exchange under Chapter 942.
(c) Section 2053.154(a), Insurance Code, is amended to read
as follows:
(a) For purposes of this section, "insurance company" means
a stock company, mutual insurance company, reciprocal or
interinsurance exchange, or Lloyd's plan authorized to engage in
the business of workers' compensation insurance in this state.
[The term includes the Texas Mutual Insurance Company.]
SECTION 3.04. EFFECTIVE DATE OF ARTICLE. This article
takes effect January 1, 2015.
ARTICLE 4. TRANSITION
SECTION 4.01. TRANSITION. (a) As soon as practicable after
the effective date of this Act, but not later than January 1, 2015,
the commissioner of insurance shall adopt rules necessary to
implement the assigned risk program required by Chapter 2056,
Insurance Code, as added by this Act.
(b) As soon as practicable after the Texas Mutual Insurance
Company files articles of incorporation with the commissioner of
insurance and elects a board of directors as required by Article 2
of this Act, the commissioner shall adopt any rules necessary to
reflect the fact that the Texas Mutual Insurance Company is a mutual
insurance company organized under and governed by Chapter 883,
Insurance Code, and other laws applicable to mutual insurance
companies in this state.
ARTICLE 5. EFFECTIVE DATE
SECTION 5.01. EFFECTIVE DATE OF ACT. Except as otherwise
provided by this Act, this Act takes effect September 1, 2013.