By: Lucio III (Senate Sponsor - Paxton) H.B. No. 2587
(In the Senate - Received from the House April 23, 2019;
April 24, 2019, read first time and referred to Committee on
Business & Commerce; May 20, 2019, reported favorably by the
following vote: Yeas 8, Nays 0; May 20, 2019, sent to printer.)
Click here to see the committee vote
A BILL TO BE ENTITLED
AN ACT
relating to the business of travel insurance.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Title 12, Insurance Code, is amended by adding
Chapter 3504 to read as follows:
CHAPTER 3504. TRAVEL INSURANCE
Sec. 3504.0001. DEFINITIONS. In this chapter:
(1) "Aggregator site" means a website that provides
access to information regarding insurance products from more than
one insurer, including product and insurer information, for use in
comparison shopping.
(2) "Blanket travel insurance" means a policy of
travel insurance issued to an eligible group that provides coverage
for specific classes of persons with coverage provided to each
member of the eligible group defined in the policy without a
separate charge to individual members of the eligible group.
(3) "Cancellation fee waiver" means a contractual
agreement between a supplier of travel services and the supplier's
customer to waive some or all of the nonrefundable cancellation fee
provisions of the supplier's underlying travel contract with or
without regard to the reason for the cancellation or form of
reimbursement. A cancellation fee waiver is not insurance.
(4) "Eligible group" means two or more persons who are
engaged in a common enterprise or have an economic, educational, or
social affinity or relationship, including any of the following:
(A) an entity engaged in the business of
providing travel or travel services, including a tour operator, a
lodging provider, a vacation property owner, a hotel or resort, a
travel club, a travel agency, a property manager, a cultural
exchange program, and a common carrier or the operator, owner, or
lessor of a means of transportation of passengers, including an
airline, a cruise line, a railroad, a steamship company, and a
public bus carrier, wherein with regard to any particular travel or
type of travel or travelers, all members or customers of the group
must have a common exposure to risk attendant to the travel;
(B) a college, school, or other institution of
learning covering students, teachers, employees, or volunteers;
(C) an employer covering a board of directors or
a group of employees, volunteers, contractors, dependents, or
guests;
(D) a sports team or camp or sponsor of a team or
camp covering participants, members, campers, employees,
officials, supervisors, or volunteers;
(E) a religious, charitable, recreational,
educational, or civic organization or branch of the organization
covering members, participants, or volunteers;
(F) a financial institution or financial
institution vendor or a parent holding company, trustee, or agent
or designee of a financial institution or financial institution
vendor covering persons, including account holders, credit card
holders, debtors, guarantors, or purchasers;
(G) an incorporated or unincorporated
association, including a labor union that has a common interest,
constitution, and bylaws, organized and maintained in good faith
for a purpose other than obtaining insurance for the association's
members or participants;
(H) a trust, or the trustees of a fund,
established, created, or maintained for the benefit of and covering
members, employees, or customers of one or more associations
meeting the requirements of Paragraph (G), subject to the
commissioner's approval and the state premium tax provisions of
Section 3504.0005;
(I) an entertainment production company covering
a group of participants, volunteers, audience members,
contestants, or workers;
(J) a volunteer fire department or an ambulance,
rescue, police, court, first aid, or civil defense volunteer group
or other similar volunteer group;
(K) a preschool, a daycare institution for
children or adults, or a senior citizen club;
(L) an automobile or truck rental or leasing
company covering a group of individuals who may become renters,
lessees, or passengers defined by the individual's status on the
rented or leased vehicles, in which circumstance the common
carrier, the operator, owner, or lessor of a means of
transportation, or the automobile or truck rental or leasing
company is the policyholder; or
(M) any other group with respect to which the
commissioner has determined:
(i) the members are engaged in a common
enterprise or have an economic, educational, or social affinity or
relationship; and
(ii) issuance of the policy is not contrary
to the public interest.
(5) "Fulfillment materials" means documentation sent
to the purchaser of a travel protection plan that confirms the
purchase and provides the travel protection plan's coverage and
assistance details.
(6) "Group travel insurance" means travel insurance
issued to an eligible group.
(7) "Planned trip" or "planned travel" means any
journey or travel arranged through the services of a travel agency.
(8) "Primary certificate holder," specific to Section
3504.0005, means an individual who elects and purchases travel
insurance under a group policy.
(9) "Primary policyholder," specific to Section
3504.0005, means an individual who elects and purchases individual
travel insurance.
(10) "Travel assistance services" means noninsurance
services that do not indemnify the consumer based on a fortuitous
event or result in the transfer or shifting of risk constituting the
business of insurance. Travel assistance services include security
advisories, destination information, vaccination and immunization
information services, travel reservation services, entertainment,
activity and event planning, translation assistance, emergency
messaging, international legal and medical referrals, medical case
monitoring, coordination of transportation arrangements, emergency
cash transfer assistance, medical prescription replacement
assistance, passport and travel document replacement assistance,
lost luggage assistance, concierge services, and any other service
that is furnished in connection with planned travel. Travel
assistance services are not insurance and not related to insurance.
(11) "Travel insurance" means insurance coverage for
personal risks incident to planned travel, including:
(A) interruption or cancellation of a trip or
event;
(B) loss of baggage or personal effects;
(C) damages to accommodations or rental
vehicles;
(D) sickness, accident, disability, or death
occurring during travel;
(E) emergency evacuation;
(F) repatriation of remains; or
(G) any other contractual obligations to
indemnify or pay a specified amount to the traveler on determinable
contingencies related to travel as approved by the commissioner.
Travel insurance does not include a major medical plan that
provides comprehensive medical protection for a traveler on a trip
of longer than six months, such as an individual working or residing
overseas as an expatriate, or any other insurance product that must
be sold by an agent with a specific agent's license.
(12) "Travel protection plan" means a plan that
provides one or more of the following:
(A) travel insurance;
(B) travel assistance services; and
(C) cancellation fee waivers.
Sec. 3504.0002. APPLICABILITY. (a) This chapter applies
to a travel insurance policy or certificate that:
(1) provides coverage to a resident of this state or is
sold, solicited, negotiated, or offered in this state; and
(2) is delivered or issued for delivery in this state.
(b) This chapter does not apply to a cancellation fee waiver
or travel assistance service except as expressly provided in this
chapter.
Sec. 3504.0003. CONFLICT OF LAWS. This chapter prevails to
the extent of any conflict with another provision of this code.
Sec. 3504.0004. LINE OF INSURANCE. (a) Notwithstanding
any other provision of this code, travel insurance is classified
and filed for purposes of rates and forms under an inland marine
line of insurance, except as provided by Subsection (b).
(b) Travel insurance that provides coverage for sickness,
accident, disability, or death occurring during travel,
exclusively or in conjunction with related coverage for emergency
evacuation, repatriation of remains, or incidental limited
property and casualty benefits, including baggage or trip
cancellation, may be filed by an authorized insurer under an
accident and health line of insurance or an inland marine line of
insurance.
(c) Eligibility and underwriting standards for travel
insurance may be developed and provided based on travel protection
plans designed for individual or identified marketing or
distribution channels if the standards meet underwriting standards
for an inland marine line of insurance.
Sec. 3504.0005. PREMIUM TAX. (a) A travel insurer shall
pay premium tax, as provided by Section 221.002, on travel
insurance premiums paid by any of the following:
(1) an individual primary policyholder who is a
resident of this state;
(2) a primary certificate holder who is a resident of
this state and elects and purchases coverage under a group travel
insurance policy; or
(3) subject to apportionment of premium in accordance
with Chapter 229 or other law, a blanket travel insurance
policyholder who buys a blanket travel insurance policy in this
state for members of the eligible group if:
(A) the policyholder is a resident of this state;
(B) the policyholder's principal place of
business is located in this state; or
(C) the principal place of business of an
affiliate or subsidiary of the policyholder is located in this
state.
(b) A travel insurer shall:
(1) document the state of residence or principal place
of business of the policyholder or certificate holder described by
Subsection (a); and
(2) report as premium only the amount allocable to
travel insurance and not amounts received for travel assistance
services or cancellation fee waivers.
(c) Amounts received for travel assistance services and
cancellation fee waivers, whether the travel assistance services
and cancellation waivers are offered separately or for a combined
price authorized by Section 3504.0006, are not subject to taxation
under Section 221.002(b).
Sec. 3504.0006. TRAVEL PROTECTION PLANS. A travel
protection plan composed of multiple features may be offered for a
combined price if:
(1) at the time of or before the consumer buys the
travel protection plan it is clearly disclosed to the consumer that
the plan includes travel insurance, travel assistance services, and
cancellation fee waivers, as applicable, and information and an
opportunity is provided for the consumer to obtain additional
information regarding the features and the pricing of each feature;
and
(2) the fulfillment materials:
(A) describe the travel insurance, travel
assistance services, and cancellation fee waivers in the travel
protection plan; and
(B) include the travel insurance disclosures and
the contact information for persons providing travel assistance
services and cancellation fee waivers, as applicable.
Sec. 3504.0007. SALES PRACTICES; PROHIBITED PRACTICES. (a)
Offering or selling a travel insurance policy that could never
result in payment of a claim for an insured under the policy is an
unfair trade practice under Subtitle C, Title 5.
(b) All documents provided to a consumer before the purchase
of travel insurance, including sales materials, advertising
materials, and marketing materials, must be consistent with the
travel insurance policy, including forms, endorsements, policies,
rate filings, and certificates of insurance.
(c) Before the consumer buys travel insurance and
subsequently in the fulfillment materials, the consumer must be
provided information about any preexisting condition exclusion
that is included in the travel insurance policy or certificate. The
consumer must have the opportunity to learn more about the
exclusion.
(d) The fulfillment materials and the information described
in Section 4055.154(a) must be provided to a policyholder or
certificate holder as soon as practicable after the purchase of a
travel protection plan. Unless the policyholder or certificate
holder has started a covered trip or filed a claim under the travel
insurance coverage, the policyholder or certificate holder may
cancel a policy or certificate for a full refund of the travel
protection plan price. The policyholder or certificate holder must
exercise the right to cancel a travel protection plan before:
(1) the 15th day after the date of delivery of the
travel protection plan's fulfillment materials by United States
mail or a later date specified by the plan; or
(2) the 10th day after the date of delivery of the
travel protection plan's fulfillment materials by means other than
United States mail or a later date specified by the plan.
(e) For the purposes of this section, delivery means handing
fulfillment materials to the policyholder or certificate holder or
sending fulfillment materials by United States mail or electronic
means to the policyholder or certificate holder.
(f) The company shall disclose in the policy documentation
and fulfillment materials if the travel insurance is primary or
secondary to other applicable coverage.
(g) If travel insurance is marketed directly to a consumer
through an insurer's website or by others through an aggregator
site, it is not an unfair trade practice or other violation of law
if:
(1) an accurate summary or short description of
coverage is provided on the website; and
(2) the consumer has access to the full provisions of
the policy through electronic means.
(h) A person offering, soliciting, or negotiating travel
insurance or travel protection plans on an individual or group
basis may not do so by using negative option or opt out that
requires a consumer to take an affirmative action to deselect
coverage, such as unchecking a box on an electronic form, when the
consumer purchases a trip.
(i) It is an unfair trade practice to market blanket travel
insurance coverage as free.
(j) If a consumer's destination jurisdiction requires
insurance coverage, it is not an unfair trade practice to require
that a consumer choose between the following options as a condition
of purchasing a trip or travel package:
(1) purchasing the coverage required by the
destination jurisdiction through the travel retailer or
supervising entity supplying the trip or travel package; or
(2) agreeing to obtain and provide proof of coverage
that meets the destination jurisdiction's requirements before
departure.
Sec. 3504.0008. RULEMAKING. The commissioner shall adopt
rules necessary to implement this chapter. Section 2001.0045,
Government Code, does not apply to rules adopted under this
section.
SECTION 2. Section 4055.151, Insurance Code, is amended by
amending Subdivision (1) and adding Subdivisions (1-a) and (1-c) to
read as follows:
(1) "Offer and disseminate" means to:
(A) provide general information, including the
price and a description of the coverage; and
(B) process the application and collect
premiums.
(1-a) "Planned trip" means any journey or travel
arranged through the services of a travel agency.
(1-c) "Travel administrator" means a person who,
directly or indirectly, underwrites, collects a charge,
collateral, or a premium from, or adjusts or settles a claim of a
resident of this state in connection with travel insurance. A
person is not a travel administrator if the person's only actions
that would otherwise cause the person to be considered a travel
administrator include:
(A) the person working for a travel administrator
to the extent the person's activities are subject to the
supervision and control of the travel administrator;
(B) an insurance agent selling insurance or
engaged in administrative and claims-related activities within the
scope of the agent's license;
(C) a travel retailer, registered under the
license of a supervising entity in accordance with this subchapter,
offering and disseminating travel insurance;
(D) an individual adjusting or settling claims in
the normal course of the individual's practice or employment as an
attorney and who does not collect charges or premiums in connection
with insurance coverage; or
(E) a business entity that is affiliated with a
licensed insurer acting as a travel administrator for the direct
and assumed insurance business of an affiliated insurer.
SECTION 3. Sections 4055.1515, 4055.153, and 4055.154,
Insurance Code, are amended to read as follows:
Sec. 4055.1515. TRAVEL INSURANCE SUPERVISING ENTITY AND
TRAVEL ADMINISTRATOR. (a) An insurer authorized to engage in the
business of travel insurance in this state may designate a travel
insurance supervising entity for purposes of this subchapter. The
supervising entity must be:
(1) a licensed managing general agent;
(2) a licensed third-party administrator; [or]
(3) a licensed insurance agent, including a specialty
license holder and a person described by Section 4055.002(a); or
(4) a travel administrator.
(b) Notwithstanding any other provisions of this code, a
person may not act or represent the person as a travel administrator
for travel insurance unless the person is:
(1) a licensed property and casualty insurance agent;
(2) a licensed managing general agent; or
(3) a third-party administrator engaging in the
business of insurance in this state under a certificate of
authority.
(c) A travel administrator and a travel administrator's
employees are exempt from the licensing requirements under Chapter
4101 with respect to travel insurance.
(d) An insurer is responsible for the acts of a travel
administrator administering travel insurance underwritten by the
insurer. The insurer must ensure that the travel administrator
maintains all books and records relevant to the insurer and makes
the books and records available to the department on request of the
commissioner.
Sec. 4055.153. AUTHORITY OF TRAVEL RETAILER. [(a)] A
travel retailer may offer and disseminate travel insurance as a
service to the retailer's customers on behalf of and under the
license and direction of a supervising entity only:
(1) in connection with the sale or arrangement of
transportation, accommodations, or events for travelers; and
(2) with respect to travel insurance [that includes:
[(A) accident and health insurance that provides
coverage to a traveler for accidental death or dismemberment and
for medical expenses resulting from an accident or sickness
involving the traveler that occurs during the planned trip;
[(B) insurance that provides coverage to a
traveler for expenses incurred as a result of trip cancellation or
interruption of a planned trip or event;
[(C) personal effects insurance that provides
coverage to a traveler for loss of or damage to personal effects
during the planned trip or event;
[(D) insurance that provides coverage for damage
to accommodations or rental vehicles; or
[(E) any other coverage the commissioner
approves as meaningful and appropriate in connection with the
transportation or accommodations arranged through a travel
agency].
[(b) Travel insurance does not include major medical
expense coverage for a traveler on a planned trip for six months or
more, including:
[(1) an individual working abroad;
[(2) an expatriate; and
[(3) a military service member on deployment.]
Sec. 4055.154. TRAVEL INSURANCE GENERALLY. (a) A travel
retailer, or the supervising entity, shall provide to a traveler
seeking to purchase travel insurance:
(1) a description of the material terms or the actual
terms of the insurance coverage;
(2) a description of the claims filing process;
(3) a description of the review and cancellation
process for the travel insurance policy; and
(4) the name and contact information for the insurer
and the supervising entity.
(b) Travel insurance coverage may be provided under an
individual, [policy or a] group, or blanket [master] policy as
defined by Section 3504.0001.
SECTION 4. Section 4055.155, Insurance Code, is amended by
amending Subsection (e) and adding Subsections (g-1) and (j) to
read as follows:
(e) The supervising entity must certify in a form prescribed
by the commissioner by rule that each registered travel retailer is
in compliance with 18 U.S.C. Section 1033. The grounds for
suspension or revocation and the penalties that apply to a resident
insurance agent apply to a supervising entity and travel retailer.
(g-1) The supervising entity shall pay all applicable
licensing fees required by state law with respect to travel
insurance.
(j) Any person licensed in a major line of authority, as
determined by the commissioner, as an insurance agent may sell,
solicit, and negotiate travel insurance. A property and casualty
insurance agent is not required to be appointed by an insurer to
sell, solicit, or negotiate travel insurance.
SECTION 5. Subchapter D, Chapter 4055, Insurance Code, is
amended by adding Section 4055.158 to read as follows:
Sec. 4055.158. RULEMAKING. The commissioner shall adopt
rules necessary to implement this subchapter. Section 2001.0045,
Government Code, does not apply to rules adopted under this
section.
SECTION 6. Section 221.002(b), Insurance Code, is amended
to read as follows:
(b) Except as provided by Subsection (c), in determining an
insurer's taxable premium receipts, the insurer shall include the
total gross amounts of premiums, membership fees, assessments,
dues, revenues, and any other considerations for insurance written
by the insurer in a calendar year from any kind of insurance written
by the insurer on each kind of property or risk located in this
state, including:
(1) fire insurance;
(2) ocean marine insurance;
(3) inland marine insurance;
(4) accident insurance;
(5) credit insurance;
(6) livestock insurance;
(7) fidelity insurance;
(8) guaranty insurance;
(9) surety insurance;
(10) casualty insurance;
(11) workers' compensation insurance;
(12) employers' liability insurance;
(13) crop insurance written by a farm mutual insurance
company; [and]
(14) home warranty insurance; and
(15) travel insurance.
SECTION 7. This Act takes effect September 1, 2019.
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