Texas 2019 - 86th Regular

Texas House Bill HB1251 Compare Versions

Version 1 (Old)

Version 2 (New)

Old	New		Differences
1		-	H.B. No. 1251
	1	+	By: Thompson of Harris H.B. No. 1251
	2	+	(Senate Sponsor - Creighton)
	3	+	(In the Senate - Received from the House April 23, 2019;
	4	+	April 25, 2019, read first time and referred to Committee on
	5	+	Administration; May 9, 2019, reported adversely, with favorable
	6	+	Committee Substitute by the following vote: Yeas 6, Nays 0;
	7	+	May 9, 2019, sent to printer.)
	8	+	Click here to see the committee vote
	9	+	COMMITTEE SUBSTITUTE FOR H.B. No. 1251 By: Nichols
2	10
3	11
	12	+	A BILL TO BE ENTITLED
4	13		AN ACT
5	14		relating to fraternal benefit societies in a hazardous financial
6	15		condition.
7	16		BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
8	17		SECTION 1. Section 885.311, Insurance Code, is amended by
9	18		amending Subsection (a) and adding Subsections (d) and (e) to read
10	19		as follows:
11	20		(a) A fraternal benefit society shall provide in the
12	21		fraternal benefit society's laws that if the society's reserves for
13	22		any class of the society's benefit certificates become impaired,
14	23		the society's supreme governing body or board of directors may
15	24		require the certificate holders to pay the society an equitable
16	25		proportion of the deficiency as determined by the governing body or
17	26		board. The aggregate assessment for the impaired reserves may not
18	27		exceed the total amount required to comply with Section 885.408.
19	28		(d) Not later than the 90th day before the proposed
20	29		effective date of an assessment under Subsection (a), the fraternal
21	30		benefit society shall file with the department an application for
22	31		approval of the assessment and a statement sworn to by the president
23	32		and secretary or corresponding officers of the society. The
24	33		statement must:
25	34		(1) include:
26	35		(A) the terms of the assessment, including the
27	36		proposed effective date; and
28	37		(B) a narrative statement of the financial
29	38		condition of the fraternal benefit society; and
30	39		(2) state that the assessment:
31	40		(A) received approval by a majority vote of the
32	41		supreme governing body or board of directors of the society; and
33	42		(B) complies with the requirements of this
34	43		section.
35	44		(e) After the department receives a completed application,
36	45		the commissioner may approve or disapprove the application. If the
37	46		commissioner does not approve or disapprove the application before
38	47		the 60th day after the date the department receives the completed
39	48		application, the application is considered approved. The
40	49		commissioner may impose an effective date earlier than the date
41	50		requested in the application if the earlier effective date is in the
42	51		best interests of the certificate holders.
43	52		SECTION 2. Section 885.407, Insurance Code, is amended to
44	53		read as follows:
45	54		Sec. 885.407. SOLVENCY. (a) If a fraternal benefit society
46	55		reports admissible assets greater than the society's liabilities in
47	56		an amount that authorizes the commissioner to place the society
48	57		under regulatory control and the commissioner reasonably believes
49	58		the society's hazardous financial condition will not be promptly
50	59		remedied without intervention by the department, the commissioner
51	60		may order the society to promptly seek and negotiate an agreement to
52	61		transfer in accordance with this section all benefit members,
53	62		benefit certificates, assets, and liabilities of the society to
54	63		another fraternal benefit society. A transfer under this section:
55	64		(1) may be by merger, consolidation, assumption, or
56	65		otherwise;
57	66		(2) constitutes an entire novation of each benefit
58	67		certificate transferred by the society in a hazardous financial
59	68		condition, and the receiving society is legally and contractually
60	69		responsible for each transferred certificate;
61	70		(3) must conclude before the deadline set by the
62	71		commissioner;
63	72		(4) may be approved by a vote of the majority of the
64	73		supreme governing body or board of directors of the society in a
65	74		hazardous financial condition, notwithstanding Section
66	75		885.063(a)(2)(C) or any provision of the society's laws to the
67	76		contrary; and
68	77		(5) is subject to approval by the commissioner.
69	78		(b) Not later than the seventh day before the date the
70	79		supreme governing body or board of directors of a fraternal benefit
71	80		society votes on a transfer proposed under Subsection (a), the
72	81		governing body or board shall provide the society's certificate
73	82		holders written notice of and an opportunity to comment on the
74	83		proposed transfer. If the governing body or board approves the
75	84		transfer, the governing body or board shall provide the certificate
76	85		holders' comments to the commissioner.
77	86		(c) The supreme governing body or board of directors of a
78	87		fraternal benefit society receiving benefit certificates pursuant
79	88		to a transfer under an agreement described by Subsection (a) may
80	89		suspend or modify qualifications for membership in the receiving
81	90		society to the extent necessary to permit the society to accept the
82	91		certificate holders of the society transferring certificates under
83	92		the agreement, notwithstanding any provision of the receiving
84	93		society's laws to the contrary.
85	94		(d) The commissioner may grant to a fraternal benefit
86	95		society that is not authorized to engage in the business of
87	96		insurance in this state the authority to service benefit
88	97		certificates transferred pursuant to Subsection (a) and fulfill all
89	98		obligations to the holders of the certificates. Commissioner
90	99		action under this subsection does not authorize the fraternal
91	100		benefit society to otherwise engage in the business of insurance in
92	101		this state.
93	102		(e) A transfer under Subsection (a) may be made to an
94	103		insurer that is not a fraternal benefit society if the insurer is
95	104		authorized to engage in the business of insurance in this state. A
96	105		holder of a certificate subject to a transfer as authorized by this
97	106		subsection is deemed to agree that any term in the certificate,
98	107		including a term that makes the certificate subject to the
99	108		transferring society's laws or that provides for maintenance of the
100	109		transferring society's solvency that is inconsistent with transfer
101	110		to an insurer that is not a fraternal benefit society, is void on
102	111		transfer of the certificate. The receiving insurer shall endorse
103	112		on a form approved by the commissioner each benefit certificate
104	113		received by a transfer made under this section to reflect any terms
105	114		of the certificate voided by this subsection. A certificate
106	115		holder's obligation to pay an outstanding assessment under Section
107	116		885.311 that is not released under the transfer agreement is not
108	117		released or voided by this subsection.
109	118		(f) The commissioner may request the attorney general bring
110	119		an action under Section 885.502 to terminate a fraternal benefit
111	120		society that fails to comply with an order under this section or
112	121		fails to remedy the financial condition that gave rise to the order.
113	122		(g) The powers and authority of the commissioner under this
114	123		section are cumulative and in addition to all other powers and
115	124		authority to remediate the financial condition of a fraternal
116	125		benefit society available to the commissioner. [A fraternal
117	126		benefit society is considered solvent if its admissible assets are
118	127		equal to or greater than its liabilities.]
119	128		SECTION 3. The changes in law made by this Act to Section
120	129		885.311, Insurance Code, apply only to an assessment by a fraternal
121	130		benefit society with an effective date on or after January 1, 2020.
122	131		An assessment by a fraternal benefit society with an effective date
123	132		before January 1, 2020, is governed by the law as it existed
124	133		immediately before the effective date of this Act, and that law is
125	134		continued in effect for that purpose.
126	135		SECTION 4. This Act takes effect September 1, 2019.
127		-	______________________________ ______________________________
128		-	President of the Senate Speaker of the House
129		-	I certify that H.B. No. 1251 was passed by the House on April
130		-	18, 2019, by the following vote: Yeas 138, Nays 9, 2 present, not
131		-	voting; and that the House concurred in Senate amendments to H.B.
132		-	No. 1251 on May 22, 2019, by the following vote: Yeas 119, Nays 22,
133		-	3 present, not voting.
134		-	______________________________
135		-	Chief Clerk of the House
136		-	I certify that H.B. No. 1251 was passed by the Senate, with
137		-	amendments, on May 15, 2019, by the following vote: Yeas 31, Nays
138		-	0.
139		-	______________________________
140		-	Secretary of the Senate
141		-	APPROVED: __________________
142		-	Date
143		-	__________________
144		-	Governor
	136	+	* * * * *