| 1 | 1 | | 84R7746 LED-F |
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| 2 | 2 | | By: Smithee H.B. No. 1700 |
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| 3 | 3 | | |
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| 4 | 4 | | |
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| 5 | 5 | | A BILL TO BE ENTITLED |
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| 6 | 6 | | AN ACT |
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| 7 | 7 | | relating to reinsurance, distributions, and pooling arrangements |
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| 8 | 8 | | by captive insurance companies. |
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| 9 | 9 | | BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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| 10 | 10 | | SECTION 1. The heading to Section 964.052, Insurance Code, |
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| 11 | 11 | | is amended to read as follows: |
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| 12 | 12 | | Sec. 964.052. [AUTHORITY TO PROVIDE] REINSURANCE. |
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| 13 | 13 | | SECTION 2. Section 964.052, Insurance Code, is amended by |
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| 14 | 14 | | adding Subsection (e) to read as follows: |
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| 15 | 15 | | (e) Notwithstanding Section 964.064, a captive insurance |
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| 16 | 16 | | company, with the commissioner's approval, may accept risks from |
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| 17 | 17 | | and cede risks to or take credit for reserves on risks ceded to: |
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| 18 | 18 | | (1) a captive reinsurance pool composed only of other |
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| 19 | 19 | | captive insurance companies holding a certificate of authority |
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| 20 | 20 | | under this chapter or a similar law of another jurisdiction; or |
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| 21 | 21 | | (2) an affiliated captive insurance company holding a |
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| 22 | 22 | | certificate of authority under this chapter or a similar law of |
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| 23 | 23 | | another jurisdiction. |
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| 24 | 24 | | SECTION 3. Section 964.063, Insurance Code, is amended to |
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| 25 | 25 | | read as follows: |
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| 26 | 26 | | Sec. 964.063. [NOTICE OF] DIVIDENDS. (a) A captive |
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| 27 | 27 | | insurance company shall notify the commissioner in writing when |
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| 28 | 28 | | issuing policyholder dividends. |
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| 29 | 29 | | (b) A captive insurance company, with the commissioner's |
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| 30 | 30 | | approval, may issue dividends or distributions to the holders of an |
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| 31 | 31 | | equity interest in the captive insurance company. The commissioner |
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| 32 | 32 | | shall adopt rules to implement this subsection. |
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| 33 | 33 | | SECTION 4. Subchapter B, Chapter 964, Insurance Code, is |
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| 34 | 34 | | amended by adding Section 964.072 to read as follows: |
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| 35 | 35 | | Sec. 964.072. APPROVAL OF CAPTIVE REINSURANCE POOLS. |
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| 36 | 36 | | Before determining whether to approve a captive insurance company's |
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| 37 | 37 | | participation in a captive reinsurance pool under Section 964.052, |
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| 38 | 38 | | the commissioner may: |
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| 39 | 39 | | (1) require the captive insurance company provide to |
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| 40 | 40 | | the commissioner evidence that the captive reinsurance pool: |
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| 41 | 41 | | (A) is composed only of other captive insurance |
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| 42 | 42 | | companies holding a certificate of authority under this chapter or |
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| 43 | 43 | | a similar law of another jurisdiction; and |
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| 44 | 44 | | (B) will be able to meet the pool's financial |
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| 45 | 45 | | obligations; and |
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| 46 | 46 | | (2) impose any other limitation or requirement on the |
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| 47 | 47 | | captive insurance company that is necessary and proper to provide |
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| 48 | 48 | | adequate security for the captive insurance company. |
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| 49 | 49 | | SECTION 5. This Act takes effect immediately if it receives |
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| 50 | 50 | | a vote of two-thirds of all the members elected to each house, as |
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| 51 | 51 | | provided by Section 39, Article III, Texas Constitution. If this |
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| 52 | 52 | | Act does not receive the vote necessary for immediate effect, this |
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| 53 | 53 | | Act takes effect September 1, 2015. |
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