Bill Text: TX HB2243 | 2015-2016 | 84th Legislature | Introduced
Bill Title: Relating to the authorization, regulation, and function of dedicated personal insurers; requiring a certificate of authority; imposing fees.
Sponsorship: Partisan Bill (Republican 1)
Status: (Introduced - Dead) 2015-03-13 - Referred to Insurance [HB2243 Detail]
Download: Texas-2015-HB2243-Introduced.html
| 84R6990 SCL-F | ||
| By: Workman | H.B. No. 2243 | |
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| relating to the authorization, regulation, and function of | ||
| dedicated personal insurers; requiring a certificate of authority; | ||
| imposing fees. | ||
| BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: | ||
| SECTION 1. Subtitle E, Title 6, Insurance Code, is amended | ||
| by adding Chapter 889 to read as follows: | ||
| CHAPTER 889. DEDICATED PERSONAL INSURERS | ||
| SUBCHAPTER A. GENERAL PROVISIONS | ||
| Sec. 889.001. DEFINITIONS. In this chapter: | ||
| (1) "Adjusted gross income" has the meaning assigned | ||
| by 26 U.S.C. Section 62. | ||
| (2) "Dedicated personal insurer" means an entity | ||
| authorized to issue an insurance policy to a designated insurable | ||
| individual under Section 889.152. | ||
| (3) "Designated insurable individual" means an | ||
| individual with whom a dedicated personal insurer has the | ||
| relationship required by Section 889.051. | ||
| (4) "Medical care" has the meaning assigned by 26 | ||
| U.S.C. Section 213. | ||
| (5) "Medically related unemployment" means | ||
| unemployment while an individual has a medical condition that | ||
| substantially interferes with the individual's ability to work. | ||
| (6) "Qualified dependent" means a dependent that is a | ||
| qualified child as defined by 26 U.S.C. Section 152(c). | ||
| Sec. 889.002. LIMITED EXEMPTION FROM INSURANCE LAWS. (a) | ||
| Except as expressly provided by this code, a provision of this code, | ||
| other than this chapter, does not apply to a dedicated personal | ||
| insurer. | ||
| (b) A law enacted after January 1, 2015, does not apply to a | ||
| dedicated personal insurer unless dedicated personal insurers are | ||
| expressly designated in the law. | ||
| SUBCHAPTER B. ORGANIZATION OF DEDICATED PERSONAL INSURERS | ||
| Sec. 889.051. FORM AND RELATIONSHIP OF INSURER; USE OF | ||
| INSURANCE-RELATED TERMS PROHIBITED. (a) To be granted or maintain | ||
| a limited certificate of authority as a dedicated personal insurer, | ||
| an entity must be related to a designated insurable individual in | ||
| the following manner: | ||
| (1) the entity and designated insurable individual are | ||
| the same natural person; or | ||
| (2) the entity is a for-profit corporation or limited | ||
| liability company and the designated insurable individual is the | ||
| sole owner of that entity. | ||
| (b) Notwithstanding Section 2.003, Business Organizations | ||
| Code, an entity may operate as a dedicated personal insurer under | ||
| this chapter. | ||
| (c) An entity formed for the purpose of operating as a | ||
| dedicated personal insurer may not use in its name, contracts, or | ||
| literature the word "insurance" or any other words that are | ||
| descriptive of the insurance, casualty, or surety business. | ||
| Sec. 889.052. APPLICATION FOR LIMITED CERTIFICATE OF | ||
| AUTHORITY. (a) An entity satisfying the requirements of this | ||
| chapter may apply to the department for a limited certificate of | ||
| authority as a dedicated personal insurer. The application must | ||
| include: | ||
| (1) the name and address of the applicant; | ||
| (2) the name, address, and date of birth of the | ||
| designated insurable individual; and | ||
| (3) the application fee required by Section 889.205. | ||
| (b) If the commissioner determines that the application | ||
| does not satisfy the requirements of this subchapter, the | ||
| commissioner shall deny the application in writing. The denial | ||
| must include the reason for the denial. | ||
| (c) If the commissioner does not deny the application under | ||
| Subsection (b), the commissioner shall approve the application. | ||
| On approval, the department shall issue under the department's seal | ||
| a limited certificate of authority authorizing the entity as a | ||
| dedicated personal insurer. | ||
| Sec. 889.053. TRANSFER OF CERTIFICATES PROHIBITED. A | ||
| limited certificate of authority issued under this chapter may not | ||
| be transferred or sold. | ||
| SUBCHAPTER C. MANAGEMENT OF FUNDS | ||
| Sec. 889.101. DEPOSIT REQUIREMENTS. (a) For each calendar | ||
| quarter in which a dedicated personal insurer holds a limited | ||
| certificate of authority issued under this chapter, the dedicated | ||
| personal insurer shall deposit funds to the credit of the insurer in | ||
| accordance with this section. | ||
| (b) A quarterly deposit under this section must be | ||
| one-fourth of the aggregate amount of: | ||
| (1) at least eight percent of the designated insurable | ||
| individual's adjusted gross income for the preceding calendar year; | ||
| and | ||
| (2) if applicable, at least eight percent of each | ||
| designated insurable individual's spouse's adjusted gross income | ||
| for the preceding calendar year. | ||
| (c) Notwithstanding Subsection (a), a dedicated personal | ||
| insurer is not required to make a deposit under this section if the | ||
| total balance of funds deposited in all accounts to the credit of | ||
| the insurer is at least $60,000. | ||
| (d) Funds required by this section must be held in: | ||
| (1) cash; | ||
| (2) a bond or other evidence of indebtedness of the | ||
| United States, this state, or a political subdivision of this | ||
| state; | ||
| (3) a security that is readily marketable over a | ||
| national exchange; | ||
| (4) another form of security approved by the | ||
| commissioner; or | ||
| (5) a combination of the forms described by | ||
| Subdivisions (1), (2), (3), and (4). | ||
| (e) The dedicated personal insurer's deposit account or | ||
| accounts must be with a bank or broker that is insured by the | ||
| Federal Deposit Insurance Corporation, the Securities Investor | ||
| Protection Corporation, or a similar institution approved by the | ||
| commissioner. | ||
| (f) A dedicated personal insurer shall deposit funds | ||
| according to Subsection (a) not later than: | ||
| (1) for the initial deposit, the 30th day after the | ||
| date the limited certificate of authority is issued under this | ||
| chapter; or | ||
| (2) the 30th day after the last day of the calendar | ||
| quarter for which the deposit is required by this section. | ||
| Sec. 889.102. AUTHORIZED EXPENDITURES. (a) Funds required | ||
| to be in a dedicated personal insurer's deposit account under | ||
| Section 889.101 may only be disbursed for: | ||
| (1) medical care expenses of an individual covered by | ||
| a policy issued by the insurer; | ||
| (2) reinsurance or stop-loss insurance premiums; | ||
| (3) maintenance fees required by Section 889.205; or | ||
| (4) expenses incurred by the designated insurable | ||
| individual during a period of medically related unemployment. | ||
| (b) Nothing in this section may be construed to restrict | ||
| payments or transfers made by a dedicated personal insurer using | ||
| funds in excess of the funds required to be in the insurer's deposit | ||
| account under Section 889.101(b). | ||
| SUBCHAPTER D. AUTHORITY TO ISSUE INSURANCE | ||
| Sec. 889.151. LIMITED CERTIFICATE OF AUTHORITY. A limited | ||
| certificate of authority issued by the department to a dedicated | ||
| personal insurer shall state in a format determined by the | ||
| commissioner by rule: | ||
| (1) the name of the designated insurable individual; | ||
| (2) the following language: "Only the designated | ||
| insurable individual, the individual's spouse, and the individual's | ||
| qualified dependents may be covered or insured by an insurance | ||
| policy authorized by this certificate"; and | ||
| (3) any other information required by the commissioner | ||
| by rule. | ||
| Sec. 889.152. AUTHORITY TO ISSUE AN INSURANCE POLICY; | ||
| REINSURANCE AUTHORIZED. (a) A dedicated personal insurer holding | ||
| a limited certificate of authority issued under this chapter may | ||
| issue a health insurance policy only to the designated insurable | ||
| individual, consistent with the limitations of that certificate and | ||
| this chapter. | ||
| (b) Only the designated insurable individual named on a | ||
| limited certificate of authority issued under this chapter, the | ||
| individual's spouse, and the individual's qualified dependents may | ||
| be covered or insured by a dedicated personal insurer under a policy | ||
| authorized by that certificate. | ||
| (c) A dedicated personal insurer may obtain reinsurance for | ||
| a risk that the insurer is authorized to insure. | ||
| Sec. 889.153. PROHIBITED ACTS. (a) A dedicated personal | ||
| insurer may not take, receive, facilitate, or process an insurance | ||
| application. | ||
| (b) A dedicated personal insurer may not charge a premium. | ||
| Nothing in this subsection may be construed to prohibit a | ||
| designated insurable individual from providing capital to the | ||
| insurer. | ||
| Sec. 889.154. EXCLUSION FROM GUARANTY FUND. A dedicated | ||
| personal insurer is not a member insurer required to participate in | ||
| the Texas Life and Health Insurance Guaranty Association and a | ||
| policy issued by a dedicated personal insurer is not a covered | ||
| policy for purposes of Chapter 463. | ||
| SUBCHAPTER E. ENFORCEMENT AND FUNDING | ||
| Sec. 889.201. ANNUAL REPORT OF FUNDS. (a) A dedicated | ||
| personal insurer shall file an annual report with the department | ||
| that includes: | ||
| (1) a statement or return showing the designated | ||
| insurable individual's adjusted gross income and the adjusted gross | ||
| income of each spouse covered during any part of the year by a | ||
| policy issued by the insurer; | ||
| (2) an account statement issued by a bank or broker | ||
| demonstrating compliance with Section 889.101; and | ||
| (3) a statement of disbursements made under Section | ||
| 889.102. | ||
| (b) A dedicated personal insurer shall file the maintenance | ||
| fee required by Section 889.205 with the report required by this | ||
| section. | ||
| (c) A dedicated personal insurer shall file the report | ||
| required by this section not later than March 31 following a year in | ||
| which the insurer holds a limited certificate of authority issued | ||
| under this chapter during any part of that year. | ||
| Sec. 889.202. AUDIT OF OPERATIONS; REVOCATION OF LIMITED | ||
| CERTIFICATE OF AUTHORITY. (a) The department shall audit the | ||
| operations of a dedicated personal insurer according to this | ||
| section. | ||
| (b) The department shall conduct a random audit of dedicated | ||
| personal insurers, and the department shall ensure that the | ||
| probability that a particular insurer is audited under this | ||
| subsection during a year is not more than 1 in 100. | ||
| (c) If the department determines there is a reasonable | ||
| suspicion that a dedicated personal insurer is not in compliance | ||
| with this chapter, the department may conduct an audit of the | ||
| insurer. | ||
| (d) A dedicated personal insurer shall comply with the audit | ||
| and provide the department information and records necessary to | ||
| conduct the audit. | ||
| (e) If an audit results in a finding that a dedicated | ||
| personal insurer is not substantially in compliance with this | ||
| chapter, the department shall revoke the insurer's limited | ||
| certificate of authority issued under this chapter. | ||
| Sec. 889.203. SURRENDER OF LIMITED CERTIFICATE OF | ||
| AUTHORITY. (a) A dedicated personal insurer that does not have a | ||
| relationship required by Section 889.051 with the designated | ||
| insurable individual specified in the insurer's limited | ||
| certificate of authority issued under this chapter shall surrender | ||
| the certificate to the department. | ||
| (b) A dedicated personal insurer that does not satisfy the | ||
| requirements of Subchapter C shall surrender the insurer's limited | ||
| certificate of authority issued under this chapter to the | ||
| department. | ||
| (c) A dedicated personal insurer may voluntarily surrender | ||
| the insurer's limited certificate of authority issued under this | ||
| chapter to the department. | ||
| Sec. 889.204. CONSEQUENCES OF CERTIFICATE REVOCATION OR | ||
| SURRENDER. (a) On surrender or revocation of a dedicated personal | ||
| insurer's limited certificate of authority issued under this | ||
| chapter, the insurer shall terminate each outstanding insurance | ||
| policy issued by the insurer. | ||
| (b) The department may not issue a limited certificate of | ||
| authority under this chapter for a period of: | ||
| (1) one year after the surrender of a certificate | ||
| listing the same designated insurable individual; and | ||
| (2) five years after the revocation of a certificate | ||
| listing the same designated insurable individual. | ||
| Sec. 889.205. FUNDING FOR ADMINISTRATION OF CHAPTER. (a) | ||
| The department shall collect: | ||
| (1) a nonrefundable application fee from an entity | ||
| applying for a limited certificate of authority under this chapter; | ||
| and | ||
| (2) a maintenance fee from a designated personal | ||
| insurer submitting a report under Section 889.201. | ||
| (b) The department shall deposit the fees collected under | ||
| this section to the credit of the Texas Department of Insurance | ||
| operating account. | ||
| (c) The department shall set each fee collected under this | ||
| section in an amount reasonable and necessary to implement this | ||
| chapter, not to exceed $90. The department may use any portion of | ||
| the fee to enforce this chapter. | ||
| SUBCHAPTER F. PRIVACY | ||
| Sec. 889.251. PRIVACY. (a) Except as provided by | ||
| Subsection (b), the department may not disclose: | ||
| (1) personal identifying information of a designated | ||
| insurable individual, the individual's spouse, and the individual's | ||
| qualified dependents; or | ||
| (2) identifying and financial information of an | ||
| applicant for a limited certificate of authority issued under this | ||
| chapter. | ||
| (b) The department may disclose information described by | ||
| Subsection (a) if the individual or entity requesting the | ||
| information demonstrates in the manner prescribed by the | ||
| commissioner that: | ||
| (1) the designated insurable individual or dedicated | ||
| personal insurer that is the subject of the information request has | ||
| provided written consent for the disclosure to the requestor; or | ||
| (2) the use of the information will be strictly | ||
| limited to the performance of a governmental agency's or court's | ||
| functions by that agency or court or a private individual or entity | ||
| acting on behalf of the agency or court. | ||
| SECTION 2. This Act takes effect September 1, 2015. | ||
