Bill Text: TX HB1157 | 2011-2012 | 82nd Legislature | Comm Sub
Bill Title: Relating to the Texas Life, Accident, Health, and Hospital Service Insurance Guaranty Association.
Spectrum: Partisan Bill (Republican 2-0)
Status: (Introduced - Dead) 2011-04-14 - Laid on the table subject to call [HB1157 Detail]
Download: Texas-2011-HB1157-Comm_Sub.html
82R7003 PMO-F | ||
By: Hancock, Torres | H.B. No. 1157 |
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relating to the Texas Life, Accident, Health, and Hospital Service | ||
Insurance Guaranty Association. | ||
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: | ||
SECTION 1. The heading to Chapter 463, Insurance Code, is | ||
amended to read as follows: | ||
CHAPTER 463. TEXAS LIFE AND[ |
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SECTION 2. Section 463.001, Insurance Code, is amended to | ||
read as follows: | ||
Sec. 463.001. SHORT TITLE. This chapter may be cited as the | ||
Texas Life and [ |
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Insurance Guaranty Association Act. | ||
SECTION 3. Section 463.003(1), Insurance Code, is amended | ||
to read as follows: | ||
(1) "Association" means the Texas Life and [ |
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Association. | ||
SECTION 4. Section 463.051(a), Insurance Code, is amended | ||
to read as follows: | ||
(a) The Texas Life and [ |
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existing to pay benefits and continue coverage as provided by this | ||
chapter. | ||
SECTION 5. Subchapter B, Chapter 463, Insurance Code, is | ||
amended by adding Section 463.059 to read as follows: | ||
Sec. 463.059. MEETINGS BY TELEPHONE AND VIDEOCONFERENCE. | ||
(a) Notwithstanding Chapter 551, Government Code, or any other | ||
law, the board or a committee of the board may meet by telephone | ||
conference call, videoconference, or other similar | ||
telecommunication method if immediate action is required and | ||
convening a quorum of the board or committee of the board at a | ||
single location is not reasonable or practical. A board or | ||
committee member who is unable to attend a meeting in person and who | ||
is participating in a board or committee meeting by telephone | ||
conference call, videoconference, or other similar | ||
telecommunication method may be counted to establish a quorum and | ||
may vote. | ||
(b) A meeting authorized by this section is subject to the | ||
notice requirements that apply to other meetings. | ||
(c) The notice of a meeting authorized by this section must | ||
specify that the location of the meeting is the location at which | ||
meetings of the board and committees of the board are usually held. | ||
(d) Each part of a meeting authorized by this section that | ||
must be open to the public must be audible to the public at the | ||
location specified by Subsection (c). | ||
(e) Two-way audio communication must be available during | ||
the entire meeting between all members of the board or committee | ||
attending a meeting authorized by this section and if the two-way | ||
audio communication is disrupted so that a quorum of the board or | ||
committee is no longer participating in the meeting, the meeting | ||
may not continue until the two-way audio communication is | ||
reestablished. | ||
(f) An audio or digital recording of a meeting authorized by | ||
this section must be made in accordance with the association's | ||
bylaws. The recording of the open portion of the meeting must be | ||
made available to the public. | ||
(g) A vote during a meeting authorized by this section must | ||
be taken in such a manner that the vote of each member is audible and | ||
may be verified as the vote of the member. | ||
SECTION 6. Section 463.153(c), Insurance Code, is amended | ||
to read as follows: | ||
(c) The total amount of assessments on a member insurer for | ||
each account under Section 463.105 may not in one calendar year | ||
exceed two percent of the insurer's average annual premiums on the | ||
policies covered by the account during the three calendar years | ||
preceding the year in which the insurer became an impaired or | ||
insolvent insurer. If two or more assessments are authorized in a | ||
calendar year with respect to insurers that become impaired or | ||
insolvent in different calendar years, the average annual premiums | ||
for purposes of the aggregate assessment percentage limitation | ||
described by this subsection shall be equal to the higher of the | ||
three-year average annual premiums for the applicable subaccount or | ||
account as computed in accordance with this section. If the | ||
maximum assessment and the other assets of the association do not | ||
provide in a year an amount sufficient to carry out the | ||
association's responsibilities, the association shall make | ||
necessary additional assessments as soon as this chapter permits. | ||
SECTION 7. Section 463.203(b), Insurance Code, is amended | ||
to read as follows: | ||
(b) This chapter does not provide coverage for: | ||
(1) any part of a policy or contract not guaranteed by | ||
the insurer or under which the risk is borne by the policy or | ||
contract owner; | ||
(2) a policy or contract of reinsurance, unless an | ||
assumption certificate has been issued; | ||
(3) any part of a policy or contract to the extent that | ||
the rate of interest on which that part is based: | ||
(A) as averaged over the period of four years | ||
before the date the member insurer becomes impaired or insolvent | ||
under this chapter, whichever is earlier, exceeds a rate of | ||
interest determined by subtracting two percentage points from | ||
Moody's Corporate Bond Yield Average averaged for the same | ||
four-year period or for a lesser period if the policy or contract | ||
was issued less than four years before the date the member insurer | ||
becomes impaired or insolvent under this chapter, whichever is | ||
earlier; and | ||
(B) on and after the date the member insurer | ||
becomes impaired or insolvent under this chapter, whichever is | ||
earlier, exceeds the rate of interest determined by subtracting | ||
three percentage points from Moody's Corporate Bond Yield Average | ||
as most recently available; | ||
(4) a portion of a policy or contract issued to a plan | ||
or program of an employer, association, similar entity, or other | ||
person to provide life, health, or annuity benefits to the entity's | ||
employees, members, or others, to the extent that the plan or | ||
program is self-funded or uninsured, including benefits payable by | ||
an employer, association, or similar entity under: | ||
(A) a multiple employer welfare arrangement as | ||
defined by Section 3, Employee Retirement Income Security Act of | ||
1974 (29 U.S.C. Section 1002); | ||
(B) a minimum premium group insurance plan; | ||
(C) a stop-loss group insurance plan; or | ||
(D) an administrative services-only contract; | ||
(5) any part of a policy or contract to the extent that | ||
the part provides dividends, experience rating credits, or voting | ||
rights, or provides that fees or allowances be paid to any person, | ||
including the policy or contract owner, in connection with the | ||
service to or administration of the policy or contract; | ||
(6) a policy or contract issued in this state by a | ||
member insurer at a time the insurer was not authorized to issue the | ||
policy or contract in this state; | ||
(7) an unallocated annuity contract issued to or in | ||
connection with a benefit plan protected under the federal Pension | ||
Benefit Guaranty Corporation, regardless of whether the Pension | ||
Benefit Guaranty Corporation has not yet become liable to make any | ||
payments with respect to the benefit plan; | ||
(8) any part of an unallocated annuity contract that | ||
is not issued to or in connection with a specific employee, a | ||
benefit plan for a union or association of individuals, or a | ||
governmental lottery; | ||
(9) any part of a financial guarantee, funding | ||
agreement, or guaranteed investment contract that: | ||
(A) does not contain a mortality guarantee; and | ||
(B) is not issued to or in connection with a | ||
specific employee, a benefit plan, or a governmental lottery; | ||
(10) a part of a policy or contract to the extent that | ||
the assessments required by Subchapter D with respect to the policy | ||
or contract are preempted by federal or state law; | ||
(11) a contractual agreement that established the | ||
member insurer's obligations to provide a book value accounting | ||
guaranty for defined contribution benefit plan participants by | ||
reference to a portfolio of assets that is owned by the benefit plan | ||
or the plan's trustee in a case in which neither the benefit plan | ||
sponsor nor its trustee is an affiliate of the member insurer; [ |
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(12) a part of a policy or contract to the extent the | ||
policy or contract provides for interest or other changes in value | ||
that are to be determined by the use of an index or external | ||
reference stated in the policy or contract, but that have not been | ||
credited to the policy or contract, or as to which the policy or | ||
contract owner's rights are subject to forfeiture, as of the date | ||
the member insurer becomes an impaired or insolvent insurer under | ||
this chapter, whichever date is earlier, subject to Subsection (c); | ||
or | ||
(13) a policy or contract providing a hospital, | ||
medical, prescription drug, or other health care benefit under 42 | ||
U.S.C. Sections 1395w-21 et seq. and 1395w-101 et seq. (Medicare | ||
Parts C and D) or a regulation adopted under those federal statutes. | ||
SECTION 8. Section 463.204, Insurance Code, is amended to | ||
read as follows: | ||
Sec. 463.204. OBLIGATIONS EXCLUDED. A contractual | ||
obligation does not include: | ||
(1) death benefits in an amount in excess of $300,000 | ||
or a net cash surrender or net cash withdrawal value in an amount in | ||
excess of $100,000 under one or more policies on a single life; | ||
(2) an amount in excess of: | ||
(A) $250,000 [ |
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under one or more annuity contracts issued with respect to a single | ||
life under individual annuity policies or group annuity policies; | ||
or | ||
(B) $5 million in unallocated annuity contract | ||
benefits with respect to a single contract owner regardless of the | ||
number of those contracts; | ||
(3) an amount in excess of the following amounts, | ||
including any net cash surrender or cash withdrawal values, under | ||
one or more accident, health, accident and health, or long-term | ||
care insurance policies on a single life: | ||
(A) $500,000 for basic hospital, | ||
medical-surgical, or major medical insurance, as those terms are | ||
defined by this code or rules adopted by the commissioner; | ||
(B) $300,000 for disability and long-term care | ||
insurance, as those terms are defined by this code or rules adopted | ||
by the commissioner; or | ||
(C) $200,000 for coverages that are not defined | ||
as basic hospital, medical-surgical, major medical, disability, or | ||
long-term care insurance; | ||
(4) an amount in excess of $250,000 [ |
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present value annuity benefits, in the aggregate, including any net | ||
cash surrender and net cash withdrawal values, with respect to each | ||
individual participating in a governmental retirement benefit plan | ||
established under Section 401, 403(b), or 457, Internal Revenue | ||
Code of 1986 (26 U.S.C. Sections 401, 403(b), and 457), covered by | ||
an unallocated annuity contract or the beneficiary or beneficiaries | ||
of the individual if the individual is deceased; | ||
(5) an amount in excess of $250,000 [ |
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present value annuity benefits, in the aggregate, including any net | ||
cash surrender and net cash withdrawal values, with respect to each | ||
payee of a structured settlement annuity or the beneficiary or | ||
beneficiaries of the payee if the payee is deceased; | ||
(6) aggregate benefits in an amount in excess of | ||
$300,000 with respect to a single life, except with respect to: | ||
(A) benefits paid under basic hospital, | ||
medical-surgical, or major medical insurance policies, described | ||
by Subdivision (3)(A), in which case the aggregate benefits are | ||
$500,000; and | ||
(B) benefits paid to one owner of multiple | ||
nongroup policies of life insurance, whether the policy owner is an | ||
individual, firm, corporation, or other person, and whether the | ||
persons insured are officers, managers, employees, or other | ||
persons, in which case the maximum benefits are $5 million | ||
regardless of the number of policies and contracts held by the | ||
owner; | ||
(7) an amount in excess of $5 million in benefits, with | ||
respect to either one plan sponsor whose plans own directly or in | ||
trust one or more unallocated annuity contracts not included in | ||
Subdivision (4) irrespective of the number of contracts with | ||
respect to the contract owner or plan sponsor or one contract owner | ||
provided coverage under Section 463.201(a)(3)(B), except that, if | ||
one or more unallocated annuity contracts are covered contracts | ||
under this chapter and are owned by a trust or other entity for the | ||
benefit of two or more plan sponsors, coverage shall be afforded by | ||
the association if the largest interest in the trust or entity | ||
owning the contract or contracts is held by a plan sponsor whose | ||
principal place of business is in this state, and in no event shall | ||
the association be obligated to cover more than $5 million in | ||
benefits with respect to all these unallocated contracts; | ||
(8) any contractual obligations of the insolvent or | ||
impaired insurer under a covered policy or contract that do not | ||
materially affect the economic value of economic benefits of the | ||
covered policy or contract; or | ||
(9) punitive, exemplary, extracontractual, or bad | ||
faith damages, regardless of whether the damages are: | ||
(A) agreed to or assumed by an insurer or | ||
insured; or | ||
(B) imposed by a court. | ||
SECTION 9. Section 463.263(b), Insurance Code, is amended | ||
to read as follows: | ||
(b) The association is entitled to retain a portion of any | ||
amount paid to the association under this section equal to the | ||
percentage determined by dividing the aggregate amount of policy | ||
owners' claims related to that insolvency for which the association | ||
has provided statutory benefits by the aggregate amount of all | ||
policy owners' claims in this state related to that insolvency and | ||
shall remit to the domiciliary receiver the amount paid to the | ||
association less the amount [ |
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SECTION 10. Subchapter F, Chapter 463, Insurance Code, is | ||
amended by adding Section 463.264 to read as follows: | ||
Sec. 463.264. REINSURANCE. (a) The association may elect | ||
to succeed to the rights of an insolvent insurer under a contract of | ||
reinsurance to which the insolvent insurer is a party to the extent: | ||
(1) of the contractual obligations of the covered | ||
policies for which the association may become obligated; and | ||
(2) that the reinsurance contract provides coverage | ||
for losses occurring after the association is obligated to provide | ||
coverage. | ||
(b) As a condition to making an election under Subsection | ||
(a), the association shall pay all unpaid premiums due under the | ||
reinsurance contract to which Subsection (a) refers for coverage | ||
relating to a period before and after the date the association is | ||
obligated to provide coverage. | ||
SECTION 11. Section 154.359(c), Finance Code, is amended to | ||
read as follows: | ||
(c) A claim may not be approved for a loss to the extent the | ||
claim is insured, bonded, or otherwise covered, protected, or | ||
reimbursed from other sources, including coverage provided by the | ||
Texas Life and [ |
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Insurance Guaranty Association under Chapter 463, Insurance Code. | ||
SECTION 12. Section 609.113(b), Government Code, is amended | ||
to read as follows: | ||
(b) A plan administrator may not approve a vendor's | ||
application if the vendor is: | ||
(1) a state or national bank or savings and loan | ||
association, the deposits of which are not insured by the Federal | ||
Deposit Insurance Corporation; | ||
(2) a credit union, the deposits of which are not | ||
insured by the National Credit Union Administration Board or the | ||
Texas Share Guaranty Credit Union; or | ||
(3) an insurance company that: | ||
(A) is not a member of the Texas Life and [ |
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Association; or | ||
(B) is an impaired or insolvent insurer under | ||
Chapter 463 [ |
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SECTION 13. Section 609.712(b), Government Code, is amended | ||
to read as follows: | ||
(b) A plan administrator may not approve a vendor's | ||
application if the vendor is: | ||
(1) a state or national bank or savings and loan | ||
association, the deposits of which are not insured by the Federal | ||
Deposit Insurance Corporation; | ||
(2) a credit union, the deposits of which are not | ||
insured by the National Credit Union Administration Board; or | ||
(3) an insurance company that: | ||
(A) is not a member of the Texas Life and [ |
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Association; or | ||
(B) is an impaired or insolvent insurer under | ||
Chapter 463 [ |
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SECTION 14. (a) Effective September 1, 2011: | ||
(1) the name of the Texas Life, Accident, Health, and | ||
Hospital Service Insurance Guaranty Association is changed to the | ||
Texas Life and Health Insurance Guaranty Association, and all | ||
powers, duties, rights, and obligations of the Texas Life, | ||
Accident, Health, and Hospital Service Insurance Guaranty | ||
Association are the powers, duties, rights, and obligations of the | ||
Texas Life and Health Insurance Guaranty Association; | ||
(2) a member of the board of directors of the Texas | ||
Life, Accident, Health, and Hospital Service Insurance Guaranty | ||
Association is a member of the board of directors of the Texas Life | ||
and Health Insurance Guaranty Association; and | ||
(3) a reference in law to the Texas Life, Accident, | ||
Health, and Hospital Service Insurance Guaranty Association is a | ||
reference to the Texas Life and Health Insurance Guaranty | ||
Association. | ||
(b) The Texas Life and Health Insurance Guaranty | ||
Association is the successor to the Texas Life, Accident, Health, | ||
and Hospital Service Insurance Guaranty Association in all | ||
respects. All personnel, equipment, data, documents, facilities, | ||
contracts, items, other property, rules, decisions, and | ||
proceedings of or involving the Texas Life, Accident, Health, and | ||
Hospital Service Insurance Guaranty Association are unaffected by | ||
the change in the name of the association. | ||
SECTION 15. (a) The change in law made by this Act to | ||
Section 463.153(c), Insurance Code, applies to assessments | ||
authorized on or after October 1, 2008, with respect to an insurer | ||
that first became impaired or insolvent after September 1, 2005; | ||
all other changes in law made by this Act apply only to an insurer | ||
that first becomes an impaired or insolvent insurer on or after the | ||
effective date of this Act. | ||
(b) Except as provided by Subsection (a) of this section, an | ||
insurer that becomes an impaired or insolvent insurer before the | ||
effective date of this Act is governed by the law as it existed | ||
immediately before that date, and that law is continued in effect | ||
for that purpose. | ||
SECTION 16. This Act takes effect September 1, 2011. |