By: Goldman (Senate Sponsor - Zaffirini) H.B. No. 4316
(In the Senate - Received from the House May 8, 2023;
May 9, 2023, read first time and referred to Committee on Business &
Commerce; May 17, 2023, reported favorably by the following vote:
Yeas 9, Nays 0; May 17, 2023, sent to printer.)
Click here to see the committee vote
A BILL TO BE ENTITLED
AN ACT
relating to regulation of residential service contract providers,
sellers, and administrators.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subchapter A, Chapter 1304, Occupations Code, is
amended by adding Section 1304.0051 to read as follows:
Sec. 1304.0051. CONFIDENTIALITY OF CERTAIN INFORMATION.
(a) The following information submitted to or maintained by the
department under this chapter that pertains to an applicant for
registration or a seller, provider, or administrator is
confidential and not subject to disclosure under Chapter 552,
Government Code:
(1) the financial condition of the applicant, seller,
provider, or administrator;
(2) the identity or number of service contract
holders; or
(3) documents that are claimed, in a manner determined
by the department, proprietary or confidential for competitive
purposes.
(b) The department may withhold the information described
by Subsection (a) without requesting a decision from the attorney
general under Subchapter G, Chapter 552, Government Code.
SECTION 2. Section 1304.151(b), Occupations Code, is
amended to read as follows:
(b) If the provider ensures its obligations under
Subsection (a)(2), the amount maintained in the reserve account may
not be less than an amount computed by subtracting the amount of any
claims paid from the product of [equal to] 40 percent and [of] the
gross consideration the provider received from consumers from the
sale of all service contracts issued and outstanding in this state
[, minus any claims paid]. The department shall prescribe a
calculation form to be used by a provider to calculate the minimum
amount required to be maintained in the provider's reserve account
under this subsection. The executive director may review and
examine the reserve account. Except as provided by Subsections
(b-1) and (b-4), the amount of the security deposit may not be less
than $250,000. The provider must submit to the executive director
on request a copy of the provider's financial statements that must
be prepared in accordance with generally accepted accounting
principles, be without qualification as to the going concern status
of the provider, and be audited by an independent certified public
accountant. The commission by rule may require the provider to
submit additional financial reports.
SECTION 3. Section 1304.157(c), Occupations Code, is
amended to read as follows:
(c) Notwithstanding Section 1304.151(a)(1), a provider of a
residential service contract may use a reimbursement insurance
policy issued by a captive insurance company as defined by Section
964.001, Insurance Code, to insure the provider's residential
service contracts if the provider maintains a funded reserve equal
to not less than an amount computed by subtracting the amount of any
claims paid from the product of 25 percent and [of] the gross
consideration the provider received from consumers from the sale of
all the provider's service contracts issued and outstanding in this
state [, minus any claims paid]. The department shall prescribe a
calculation form to be used by a provider to calculate the minimum
amount required to be maintained in the provider's reserve account
under this subsection. A reimbursement insurance policy issued to
a residential service contract provider in accordance with this
subsection:
(1) is not subject to Section 1304.152; and
(2) is considered to satisfy the requirements of
Sections 1304.1025 and 1304.151(a)(1) for purposes of this chapter.
SECTION 4. Notwithstanding Section 4.13(b), Chapter 663
(H.B. 1560), Acts of the 87th Legislature, Regular Session, 2021, a
license issued by the Texas Real Estate Commission under former
Chapter 1303, Occupations Code, before September 1, 2021, is
continued in effect until January 1, 2024, as a provider or
administrator registration issued by the Texas Department of
Licensing and Regulation under Chapter 1304, Occupations Code.
SECTION 5. Any information designated as confidential for
competitive purposes under former Chapter 1303, Occupations Code,
by an applicant, seller, provider, or administrator before the
effective date of this Act is confidential and not subject to
disclosure under Chapter 552, Government Code. The Texas
Department of Licensing and Regulation may withhold the information
without requesting a decision from the attorney general under
Subchapter G, Chapter 552, Government Code.
SECTION 6. This Act takes effect September 1, 2023.
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