CHAPTER 1805. JOINT UNDERWRITING AND ADVISORY ORGANIZATIONS
INSURANCE CODE
TITLE 10. PROPERTY AND CASUALTY INSURANCE
SUBTITLE A. GENERAL PROVISIONS
CHAPTER 1805. JOINT UNDERWRITING AND ADVISORY ORGANIZATIONS
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 1805.001. APPLICABILITY OF CHAPTER. This chapter applies
to the kinds of insurance and insurers subject to:
(1) Section 403.002;
(2) Section 941.003 with respect to the application of a law
described by Section 941.003(b)(1) or (c);
(3) Section 942.003 with respect to the application of a law
described by Section 942.003(b)(1) or (c);
(4) Subchapter A, B, or C, Chapter 5;
(5) Subchapter H, Chapter 544;
(6) Subchapter A, Chapter 2301;
(7) Chapter 252, 253, 254, 255, 426, 1806, 1807, 2001, 2002,
2003, 2004, 2005, 2006, 2008, 2051, 2052, 2053, 2055, 2171, 2251,
or 2252;
(8) Subtitle B or C, Title 10; or
(9) Chapter 2154, Occupations Code.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Amended by:
Acts 2007, 80th Leg., R.S., Ch.
730, Sec. 2H.001, eff. April 1, 2009.
Acts 2007, 80th Leg., R.S., Ch.
730, Sec. 3B.0591(e), eff. September 1, 2007.
SUBCHAPTER B. ADVISORY ORGANIZATIONS
Sec. 1805.051. LICENSE APPLICATION. (a) A corporation,
unincorporated association, partnership, or individual may file
with the commissioner an application for an advisory organization
license for the kinds of insurance specified in the application.
(b) The applicant must:
(1) file with the commissioner:
(A) a copy of the applicant's:
(i) constitution and bylaws;
(ii) article of agreement or association or certificate of
incorporation; and
(iii) rules governing the applicant's activities as an advisory
organization; and
(B) a statement of qualifications to act as an advisory
organization; and
(2) pay a $100 license fee.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 1805.052. ISSUANCE OF LICENSE; TERM. (a) The commissioner
shall issue a license to an applicant the commissioner determines
is qualified, without regard to:
(1) the state of domicile or residence of the applicant; or
(2) the location of the applicant's place of business.
(b) The commissioner shall grant or deny a license to an
applicant not later than the 60th day after the date the
commissioner receives the application.
(c) A license issued under this subchapter remains in effect
until the commissioner suspends or revokes the license.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 1805.053. INFORMATION REPORTED BY ADVISORY ORGANIZATION.
(a) An advisory organization may file with the commissioner
prospective loss costs, supplementary rating information, and
policy forms. A filing made by an advisory organization under
this section is subject to the provisions of this code or other
insurance laws of this state governing rate filings.
(b) An advisory organization at least quarterly shall file with
the commissioner a list of:
(1) each subscriber company engaging in business in this state;
and
(2) the products or information the subscriber company
purchases.
(c) On request by the commissioner, an advisory organization
shall provide to the department a summary of the actuarial
assumptions, trend factors, economic factors, and other criteria
used in trending data for companies engaging in business in this
state.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 1805.054. INSURER'S AUTHORITY TO SUBSCRIBE TO ADVISORY
ORGANIZATION. An insurer engaging in business in this state may
subscribe to an advisory organization.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 1805.055. SUBMISSION, RECEIPT, AND USE OF INFORMATION BY
INSURER. (a) Except as provided by Subsection (b), an insurer
may submit to or receive from an advisory organization the
following only if the advisory organization holds a license
issued under this subchapter:
(1) statistical plans;
(2) historical data;
(3) prospective loss costs;
(4) supplementary rating information;
(5) policy forms and endorsements;
(6) research;
(7) rates of individual insurers that are effective at the time
the information is submitted or received or that were previously
in effect; and
(8) performance of inspections.
(b) An insurer may not:
(1) accept from an advisory organization recommendations for
rates; or
(2) submit to or receive from an advisory organization
recommendations for profit or expenses other than loss adjustment
expenses.
(c) An insurer that subscribes to an advisory organization may
use prospective loss costs, supplementary rating information, and
policy forms filed by the advisory organization under Section
1805.053(a) and may incorporate the information into the
insurer's filings.
(d) Notwithstanding any other law, an insurer that reports data
under this subchapter is not relieved of the responsibility of
reporting that data directly to the department at the
department's request.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 1805.056. AUDIT. (a) The department shall require an
annual audit of an advisory organization that provides statistics
or other information to the department in a proceeding to set
rates.
(b) The audit must:
(1) be conducted at the expense of the advisory organization
under rules adopted by the commissioner; and
(2) examine the advisory organization's method of collecting,
analyzing, and reporting data to ensure the accuracy of data.
(c) The audit may examine source documents within individual
companies.
(d) Except for individual company information, an audit is
public information.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 1805.057. RATE FILING REVIEW. The commissioner may:
(1) review the rate filing of an insurer that relies on the
prospective loss costs provided by an advisory organization; and
(2) require the insurer to provide the insurer's actual data and
loss experience in addition to the information provided by the
advisory organization.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 1805.058. PROHIBITED ACTS. (a) An advisory organization
may not compile or distribute recommendations for:
(1) rates; or
(2) profit or expenses other than loss adjustment expenses.
(b) An insurer or advisory organization may not:
(1) attempt to monopolize, combine, or conspire with another
person to monopolize an insurance market;
(2) engage in a boycott, on a concerted basis, of an insurance
market; or
(3) make an agreement with another insurer, advisory
organization, or person if the agreement has the purpose or
effect of restraining trade unreasonably or substantially
lessening competition in the business of insurance.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 1805.059. DISCIPLINARY ACTION. (a) If, after a hearing,
the commissioner determines that the furnishing of specified
services by an advisory organization involves an act or practice
that is unfair, unreasonable, or otherwise inconsistent with this
chapter or other applicable laws of this state, the commissioner
may issue a written order:
(1) specifying the manner in which the act or practice is
unfair, unreasonable, or inconsistent with the applicable law;
and
(2) requiring the advisory organization to discontinue the act
or practice.
(b) In addition to any other remedies available at law, the
commissioner may impose a sanction authorized under Chapter 82.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 1805.060. SUNSET REVIEW. During the period in which the
Sunset Advisory Commission performs its review of the department
under Chapter 325, Government Code, the commission shall review
the authority granted under this subchapter.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 1805.061. CONFLICT WITH OTHER LAW. To the extent this
subchapter conflicts with Section 2053.052(c), 2053.055,
2053.151, 2053.152, or 2053.153, or Subchapter A or C, Chapter
2053, with respect to the setting of rates for workers'
compensation insurance, the referenced provision of Chapter 2053
controls.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
SUBCHAPTER C. EXAMINATIONS
Sec. 1805.101. EXAMINATION AUTHORIZED. (a) As often as the
department determines expedient, the department may examine a
group, association, or other organization referred to in this
chapter, including an advisory organization described by
Subchapter B.
(b) An officer, manager, agent, or employee of the group,
association, or organization may be examined at any time under
oath and shall make available any book, record, account,
document, or agreement governing the method of operation of the
group, association, or organization.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 1805.102. EXAMINATION COSTS. The group, association, or
other organization shall pay the reasonable costs of an
examination under this subchapter on presentation of a detailed
account of the costs.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 1805.103. OUT-OF-STATE EXAMINATION. In lieu of an
examination under this subchapter, the department may accept the
report of an examination made by the insurance supervisory
official of another state in accordance with the laws of that
state.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
SUBCHAPTER D. CERTAIN PRACTICES IN JOINT UNDERWRITING OR JOINT
REINSURANCE
Sec. 1805.151. AUTHORITY OF COMMISSIONER. If, after a hearing,
the commissioner determines that an activity or practice of a
group, association, or other organization of insurers engaging in
joint underwriting or joint reinsurance is unfair, unreasonable,
or otherwise inconsistent with this chapter or other applicable
law, the commissioner may issue a written order:
(1) specifying the manner in which the activity or practice is
unfair, unreasonable, or inconsistent with the applicable law;
and
(2) requiring the group, association, or organization to
discontinue the activity or practice.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.