Bill Text: TX HB2732 | 2013-2014 | 83rd Legislature | Introduced
NOTE: There are more recent revisions of this legislation. Read Latest Draft
Bill Title: Relating to the authorization, regulation, and function of dedicated personal insurers; creating offenses; imposing a fee.
Spectrum: Partisan Bill (Republican 1-0)
Status: (Engrossed - Dead) 2013-05-13 - Referred to State Affairs [HB2732 Detail]
Download: Texas-2013-HB2732-Introduced.html
Bill Title: Relating to the authorization, regulation, and function of dedicated personal insurers; creating offenses; imposing a fee.
Spectrum: Partisan Bill (Republican 1-0)
Status: (Engrossed - Dead) 2013-05-13 - Referred to State Affairs [HB2732 Detail]
Download: Texas-2013-HB2732-Introduced.html
83R9811 SCL-F | ||
By: Workman | H.B. No. 2732 |
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relating to the authorization, regulation, and function of | ||
dedicated personal insurers; creating offenses; imposing a fee. | ||
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) "Aggregate policy limit" means the sum of the | ||
maximum losses that may be sustained under each policy outstanding | ||
at any one time, as specified by the maximum limits in each policy. | ||
(2) "Dedicated personal insurer" means an entity | ||
authorized to insure a specific individual as provided by this | ||
chapter. | ||
(3) "Designated insurable individual" means an | ||
individual eligible to be insured by a dedicated personal insurer. | ||
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, 2013, 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. 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; | ||
(2) the entity is a trust and the designated insurable | ||
individual is the sole beneficiary of that trust; or | ||
(3) the entity is a for-profit corporation or limited | ||
liability company and the designated insurable individual is the | ||
sole owner of that entity. | ||
Sec. 889.052. CAPITAL REQUIREMENTS. (a) For each type of | ||
insurance a dedicated personal insurer is authorized to issue, the | ||
insurer shall maintain capital equal to or greater than: | ||
(1) for a health insurance policy, $100,000 except as | ||
provided by Subsection (b); | ||
(2) for a personal automobile insurance policy, the | ||
amount required by Section 601.122, Transportation Code, to | ||
establish financial responsibility; and | ||
(3) for other insurance policies, the policy's | ||
aggregate policy limit. | ||
(b) Notwithstanding Subsection (a)(1), the capital required | ||
for a health insurance policy is: | ||
(1) $10,000 if the designated insurable individual is | ||
younger than 24 years of age; or | ||
(2) $20,000 plus an additional $10,000 for each | ||
additional year beyond age 24 if the designated insurable | ||
individual is at least 24 but younger than 32 years of age. | ||
(c) Capital in the amount required by this section must be | ||
held in the form of any combination of: | ||
(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; or | ||
(4) another form of security approved by the | ||
commissioner. | ||
Sec. 889.053. EVIDENCE OF REQUIRED CAPITAL. (a) The | ||
department shall accept an account statement as evidence of the | ||
required capital if: | ||
(1) the statement is issued by a bank or broker; | ||
(2) the account is in the name of the entity presenting | ||
the evidence; | ||
(3) the statement shows holdings that: | ||
(A) have a market value at least equal to the | ||
amount required by Section 889.052; and | ||
(B) are in a form authorized by Section 889.052; | ||
(4) the deposits and securities held with the bank or | ||
broker are insured by the Federal Deposit Insurance Corporation, | ||
the Securities Investor Protection Corporation, or a similar | ||
institution acceptable to the commissioner; and | ||
(5) the evidence is presented not later than the 60th | ||
day after the statement is issued. | ||
(b) The required capital may be deposited with the | ||
comptroller through the department. The department shall issue a | ||
receipt when the deposit is made. The department shall accept a | ||
copy of the receipt described by this subsection as evidence of the | ||
required capital under Section 889.052. | ||
Sec. 889.054. 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; | ||
(3) the relationship between the applicant and the | ||
designated insurable individual as required by Section 889.051; | ||
(4) each type of insurance policy to be authorized; | ||
(5) the respective aggregate policy limit for each | ||
type of insurance policy subject to Section 889.052(a)(3); | ||
(6) a statement of the total capital required by | ||
Section 889.052; | ||
(7) evidence of the required capital as required by | ||
Section 889.053; and | ||
(8) a filing fee of $20. | ||
(b) If the commissioner determines that the application | ||
does not satisfy the requirements of Subsection (a), 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. 889.055. EXPIRATION OF CERTIFICATE. A limited | ||
certificate of authority issued under this chapter expires on the | ||
first anniversary of the date the certificate is issued or renewed. | ||
Sec. 889.056. MODIFICATION AND RENEWAL OF CERTIFICATE. (a) | ||
A dedicated personal insurer holding a limited certificate of | ||
authority may apply for a renewal or modification of the | ||
certificate by submitting an application meeting the requirements | ||
of Section 889.054 and indicating the application is a renewal or | ||
modification of the original application. | ||
(b) The department may not approve an application for | ||
renewal of a certificate filed before the 60th day before the | ||
expiration of the certificate. | ||
SUBCHAPTER C. AUTHORITY TO ISSUE INSURANCE | ||
Sec. 889.101. 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 and address of the dedicated personal | ||
insurer; | ||
(2) the name and address of the designated insurable | ||
individual; | ||
(3) the following language: "Only the designated | ||
insurable individual may be covered or insured by an insurance | ||
policy authorized by this certificate"; | ||
(4) the types of insurance policies authorized to be | ||
issued and the respective aggregate policy limits; | ||
(5) the date issued; | ||
(6) the date of expiration; and | ||
(7) any other information specified by the | ||
commissioner by rule. | ||
Sec. 889.102. AUTHORITY TO ISSUE AN INSURANCE POLICY. (a) | ||
A dedicated personal insurer holding a limited certificate of | ||
authority may issue an insurance policy, contract, certificate, or | ||
other evidence of coverage consistent with the limitations of that | ||
certificate and this chapter. | ||
(b) Only the designated insurable individual named on a | ||
limited certificate of authority may be covered or insured by a | ||
dedicated personal insurer under a policy authorized by that | ||
certificate. | ||
(c) An insurance policy issued by a dedicated personal | ||
insurer must be issued for a term that expires on or before the | ||
expiration of the dedicated personal insurer's limited certificate | ||
of authority. | ||
(d) A dedicated personal insurer may not issue an insurance | ||
policy unless the insurer satisfies the capital requirements of | ||
Section 889.052 at the time the insurance policy is issued. | ||
SUBCHAPTER D. FAILURE TO SATISFY OPERATING REQUIREMENTS | ||
Sec. 889.151. SOLVENCY REQUIREMENT. (a) A dedicated | ||
personal insurer that does not satisfy the requirements of Section | ||
889.052, not later than the 10th day after the date the insurer | ||
ceases to satisfy those requirements, shall: | ||
(1) obtain sufficient capital to meet the | ||
requirements; | ||
(2) file an application for modification that | ||
demonstrates that: | ||
(A) the dedicated personal insurer satisfies the | ||
requirements for each insurance policy to be issued or outstanding | ||
by the insurer after the modification of the limited certificate of | ||
authority; and | ||
(B) each outstanding insurance policy not | ||
authorized under the modified limited certificate of authority is | ||
canceled; or | ||
(3) surrender the insurer's limited certificate of | ||
authority to the department. | ||
(b) A dedicated personal insurer that is denied an | ||
application for modification submitted under this section shall | ||
surrender its limited certificate of authority to the department. | ||
Sec. 889.152. RELATIONSHIP REQUIREMENT. A dedicated | ||
personal insurer that does not have the relationship required by | ||
Section 889.051 with the designated insurable individual specified | ||
in the insurer's limited certificate of authority shall surrender | ||
the certificate to the department not later than the 10th day after | ||
the date the insurer ceases to satisfy the relationship | ||
requirement. | ||
Sec. 889.153. SURRENDER OF AUTHORITY. On surrender of its | ||
limited certificate of authority, the dedicated personal insurer | ||
shall: | ||
(1) notify the department of the surrender; | ||
(2) refrain from issuing an insurance policy under | ||
that certificate; and | ||
(3) cancel each outstanding insurance policy issued by | ||
the insurer that may be lawfully canceled. | ||
SUBCHAPTER E. CRIMINAL OFFENSES | ||
Sec. 889.201. FALSE STATEMENTS. (a) A person commits an | ||
offense if the person wilfully makes a false or fraudulent | ||
statement or representation in or with reference to an application | ||
for a limited certificate of authority as a dedicated personal | ||
insurer. | ||
(b) An offense under this section is a misdemeanor | ||
punishable by: | ||
(1) a fine of not more than $500; | ||
(2) confinement in jail for a term not longer than 180 | ||
days; or | ||
(3) both a fine and confinement as provided by | ||
Subdivisions (1) and (2). | ||
(c) If conduct that constitutes an offense under this | ||
section also constitutes an offense under any other law not within | ||
this chapter, the actor may be prosecuted under this section, the | ||
other law, or both. | ||
Sec. 889.202. VIOLATION OF CHAPTER. (a) Except as provided | ||
by Section 889.201, a person commits an offense if the person | ||
violates this chapter. | ||
(b) An offense under this section is a misdemeanor | ||
punishable by: | ||
(1) a fine of not more than $500; | ||
(2) confinement in jail for a term of not more than 180 | ||
days; or | ||
(3) both a fine and confinement as provided by | ||
Subdivisions (1) and (2). | ||
(c) If conduct that constitutes an offense under this | ||
section also constitutes an offense under any other law not within | ||
this chapter, the actor may be prosecuted under this section, the | ||
other law, or both. | ||
SECTION 2. This Act takes effect September 1, 2013. |