CHAPTER 2207. EXCESS LIABILITY POOLS FOR COUNTIES AND CERTAIN EDUCATIONAL ENTITIES
INSURANCE CODE
TITLE 10. PROPERTY AND CASUALTY INSURANCE
SUBTITLE G. POOLS, GROUPS, PLANS, AND SELF-INSURANCE
CHAPTER 2207. EXCESS LIABILITY POOLS FOR COUNTIES AND CERTAIN
EDUCATIONAL ENTITIES
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 2207.001. DEFINITIONS. In this chapter:
(1) "Board" means the board of trustees of a pool.
(2) "County" means a county in this state.
(3) "Fund" means an excess liability fund.
(4) "Junior college district" means a junior college district
created under the laws of this state.
(5) "Pool" means an excess liability pool created under this
chapter.
(6) "School district" means a public school district created
under the laws of this state.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2207.002. POOL NOT ENGAGED IN BUSINESS OF INSURANCE. (a)
Except as provided by Subsection (b), a pool is not engaged in
the business of insurance under this code or other laws of this
state, and the department does not have jurisdiction over a pool.
(b) A pool:
(1) shall collect the necessary information and file with the
department the reports required by Subchapter D, Chapter 38; and
(2) is subject to Chapter 541 and Section 543.001.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
SUBCHAPTER B. COUNTY EXCESS LIABILITY POOL
Sec. 2207.051. CREATION OF COUNTY EXCESS LIABILITY POOL. (a)
The county judges of five or more counties may, on written
agreement, create a county excess liability pool.
(b) The county excess liability pool provides excess liability
insurance coverage as provided by this chapter and the pool's
plan of operation.
(c) Not more than one county excess liability pool may be
created under this subchapter.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2207.052. PARTICIPATION IN OTHER POOLS NOT PERMITTED. A
county may participate only in a pool created for counties.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2207.053. SELECTION OF TEMPORARY BOARD. At the time a
written agreement is executed under Section 2207.051, the county
judges of each county executing the agreement to create the pool
shall select nine individuals to:
(1) serve as a temporary board; and
(2) draft the plan of operation for the pool.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
SUBCHAPTER C. SCHOOL DISTRICT EXCESS LIABILITY POOL
Sec. 2207.101. CREATION OF SCHOOL DISTRICT EXCESS LIABILITY
POOL. (a) Acting on behalf of their boards, the presidents of
the boards of trustees of five or more school districts may, on
written agreement, create a school district excess liability
pool.
(b) The school district excess liability pool provides excess
liability insurance coverage as provided by this chapter and the
pool's plan of operation.
(c) Not more than one school district excess liability pool may
be created under this subchapter.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2207.102. PARTICIPATION IN OTHER POOLS NOT PERMITTED. A
school district may participate only in a pool created for school
districts.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2207.103. SELECTION OF TEMPORARY BOARD. At the time a
written agreement is executed under Section 2207.101, the
presidents of the boards of trustees of each school district
executing the agreement to create the pool shall select nine
individuals to:
(1) serve as a temporary board; and
(2) draft the plan of operation for the pool.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
SUBCHAPTER D. JUNIOR COLLEGE DISTRICT EXCESS LIABILITY POOL
Sec. 2207.151. CREATION OF JUNIOR COLLEGE DISTRICT EXCESS
LIABILITY POOL. (a) Acting on behalf of their boards, the
presiding officers of the boards of trustees of five or more
junior college districts may, on written agreement, create a
junior college district excess liability pool.
(b) The junior college district excess liability pool provides
excess liability insurance coverage as provided by this chapter
and the pool's plan of operation.
(c) Not more than one junior college district excess liability
pool may be created under this subchapter.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2207.152. PARTICIPATION IN OTHER POOLS NOT PERMITTED. A
junior college district may participate only in a pool created
for junior college districts.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2207.153. SELECTION OF TEMPORARY BOARD. At the time a
written agreement is executed under Section 2207.151, the
presiding officers of the boards of trustees of each junior
college district executing the agreement to create the pool shall
select nine individuals to:
(1) serve as a temporary board; and
(2) draft the plan of operation for the pool.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
SUBCHAPTER E. PLAN OF OPERATION
Sec. 2207.201. TIME FOR CREATION OF PLAN OF OPERATION. (a) Not
later than the 30th day after the date the temporary board of a
pool is selected, the temporary board shall meet to prepare a
detailed plan of operation for the pool.
(b) The temporary board shall complete and adopt the plan of
operation not later than the 90th day after the date the
temporary board is selected.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2207.202. CONTENTS OF PLAN OF OPERATION. (a) Subject to
the requirements of this chapter, a pool's plan of operation must
include:
(1) the organizational structure of the pool, including:
(A) the method of selecting the board;
(B) the board's method of procedure and operation; and
(C) a summary of the method for managing and operating the pool;
(2) a description of the contributions and other financial
arrangements necessary to cover the initial expenses of the pool
and estimates, supported by statistical data, of the amounts of
those contributions or other financial arrangements;
(3) underwriting standards and procedures for evaluating risks;
(4) procedures for purchasing reinsurance;
(5) methods, procedures, and guidelines for:
(A) establishing the premium rates for and maximum limits of
excess liability insurance coverage available from the pool; and
(B) managing and investing money in the fund created for the
pool;
(6) procedures for processing and paying claims;
(7) methods and procedures for defraying losses and expenses of
the pool;
(8) guidelines for nonrenewal of coverage;
(9) minimum capital and surplus to be maintained by the pool;
and
(10) minimum standards for reserve requirements for the pool.
(b) The plan of operation may include any matter relating to the
organization and operation of the pool or to the pool's finances.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
SUBCHAPTER F. BOARD OF TRUSTEES
Sec. 2207.251. BOARD OF TRUSTEES. (a) A pool is governed by a
board of trustees composed of nine members selected as provided
by the plan of operation.
(b) Not later than the 15th day after the date the temporary
board of a pool adopts the plan of operation, the initial regular
board must be selected as provided by the plan. The members of
the initial regular board shall take office not later than the
30th day after the date the plan of operation is adopted.
(c) An individual serving on the board who is an officer or
employee of a county, school district, or junior college district
covered by the pool performs duties on the board as additional
duties required of the individual's original office or
employment.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2207.252. TERMS; VACANCY. (a) Board members serve
two-year terms that expire at the time provided by the plan of
operation.
(b) A vacancy on the board shall be filled as provided by the
plan of operation.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2207.253. PERFORMANCE BOND REQUIRED. (a) Each board
member shall execute a bond in the amount required by the plan of
operation. The bond must be payable to the pool and conditioned
on the faithful performance of the member's duties.
(b) The pool shall pay the cost of the bond executed under this
section.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2207.254. COMPENSATION. A board member is not entitled to
compensation for the member's service on the board.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2207.255. OFFICERS; MEETINGS. (a) The board shall select
from the board members a presiding officer, an assistant
presiding officer, and a secretary who serve one-year terms that
expire as provided by the plan of operation.
(b) The board shall hold meetings at the call of the presiding
officer and at times established by the board's rules.
(c) A majority of the board members constitutes a quorum.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2207.256. GENERAL POWERS AND DUTIES OF BOARD. (a) In
addition to other duties provided by the plan of operation, the
board shall:
(1) approve contracts other than excess liability insurance
contracts issued by the pool to a county, school district, or
junior college district, as applicable;
(2) adopt premium rate schedules and policy forms for the pool;
and
(3) receive service of summons on behalf of the pool.
(b) The board may:
(1) adopt necessary rules, including rules to implement this
chapter;
(2) delegate specific responsibilities to the pool manager; and
(3) amend the plan of operation to ensure the orderly management
and operation of the pool.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2207.257. ANNUAL AUDIT; REPORT. (a) Each year as provided
by the plan of operation, the board shall have an actuary audit
the capital, surplus, and reserves of the pool and prepare a
formal report for the pool and the members of the pool.
(b) The actuary must be a member of the American Academy of
Actuaries.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2207.258. IMMUNITY OF BOARD MEMBERS FROM CERTAIN
LIABILITIES. A board member is not liable:
(1) with respect to a claim or judgment for which coverage is
provided by the pool; or
(2) for a claim or judgment against a county, school district,
or junior college district covered by the applicable pool.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
SUBCHAPTER G. OPERATION OF POOL
Sec. 2207.301. GENERAL POWERS AND DUTIES OF POOL. (a) A pool
shall:
(1) issue excess liability insurance coverage to each county,
school district, or junior college district entitled to coverage
under this chapter;
(2) collect premiums for coverage issued or renewed by the pool;
(3) process and pay valid claims; and
(4) maintain detailed data regarding the pool.
(b) The pool may:
(1) enter into contracts;
(2) purchase reinsurance;
(3) cancel or refuse to renew coverage; and
(4) perform any other act necessary to implement this chapter,
the plan of operation, or a rule adopted by the board.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2207.302. POOL MANAGER; PERFORMANCE BOND REQUIRED. (a)
The board shall appoint a pool manager who serves at the pleasure
of the board, and the board shall supervise the pool manager's
activities.
(b) The pool manager is entitled to receive the compensation
authorized by the board.
(c) The pool manager shall execute a bond in the amount
determined by the board. The bond must be payable to the pool
and conditioned on the faithful performance of the pool manager's
duties.
(d) The pool shall pay the cost of the bond executed under this
section.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2207.303. GENERAL POWERS AND DUTIES OF POOL MANAGER. (a)
The pool manager shall manage and conduct the affairs of the pool
under the general supervision of the board and shall perform any
other duties as directed by the board.
(b) In addition to any other duties provided by the board, the
pool manager shall:
(1) receive and pass on applications for excess liability
insurance coverage from the pool;
(2) negotiate contracts for the pool; and
(3) prepare and submit to the board for approval proposed policy
forms for coverage from the pool.
(c) The pool manager may refuse to renew the coverage of a
county, school district, or junior college district insured by
the pool based on the guidelines included in the plan of
operation.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2207.304. PERSONNEL. (a) The pool manager shall employ or
contract with persons necessary to assist the board and the pool
manager in implementing the powers and duties of the pool.
(b) The board must approve:
(1) the compensation paid to a pool employee; and
(2) a contract made with a person under this section.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2207.305. PERFORMANCE BOND AUTHORIZED. The board may
require an employee or a person with whom the pool manager
contracts under Section 2207.304 to execute a bond in an amount
determined by the board. The bond must be payable to the board
and conditioned on the faithful performance of the employee's or
other person's duties to the pool.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2207.306. IMMUNITY OF EMPLOYEES AND CONTRACTORS FROM
CERTAIN LIABILITIES. An employee or a person with whom the pool
manager contracts under Section 2207.304 is not liable:
(1) with respect to a claim or judgment for which coverage is
provided by the pool; or
(2) for a claim or judgment against a county, school district,
or junior college district covered by the applicable pool.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2207.307. OFFICE; RECORDS. (a) A pool shall maintain the
pool's principal office in Austin, Texas.
(b) Records, files, and other documents and information relating
to the pool must be maintained in the pool's principal office.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
SUBCHAPTER H. EXCESS LIABILITY FUND
Sec. 2207.351. FUND CREATION; MANAGEMENT. (a) On creation of a
pool, the initial regular board shall create an excess liability
fund.
(b) The fund is composed of:
(1) premiums paid by counties, school districts, or junior
college districts, as applicable, for coverage provided by the
pool;
(2) contributions and other money received by the pool to cover
the initial expenses of the fund;
(3) investments of the fund and money earned from those
investments; and
(4) any other money received by the pool.
(c) The pool manager shall manage the fund under the general
supervision of the board. The fund manager, under the general
supervision of the board, shall manage and invest the money in
the fund in the manner provided by the plan of operation.
(d) Money earned by the investment of money in the fund must be
deposited in the fund or reinvested for the fund.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2207.352. CONTRIBUTIONS. The board shall determine the
amount of any contributions necessary to meet the initial
expenses of the pool. The board shall make this determination
based on the data provided by the plan of operation.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2207.353. USES OF FUND. (a) Administrative expenses of
the pool may be paid from the fund. Payments for administrative
expenses during a fiscal year of the pool may not exceed the
amount established by the board.
(b) The pool may pay commissions from the fund on approval of
the board.
(c) Money in the fund may not be used to pay:
(1) punitive damages; or
(2) a fine or penalty imposed for a violation of:
(A) a statute;
(B) an administrative rule or regulation; or
(C) an order, rule, or ordinance.
(d) Money for a claim may not be paid from the fund under excess
liability insurance coverage until all benefits payable under any
other underlying liability insurance policy covering the claim or
judgment are exhausted.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2207.354. DEPOSITORY BANK. (a) The board may select one
or more banks to serve as a depository for money in the fund.
(b) A depository bank must execute a bond or provide other
security before the pool manager may deposit fund money in the
bank in an amount that exceeds the maximum amount secured by the
Federal Deposit Insurance Corporation. The bond or other
security must be in an amount sufficient to secure the excess
amount of the deposit.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
SUBCHAPTER I. POOL COVERAGE
Sec. 2207.401. ENTITLEMENT TO COVERAGE. A county, school
district, or junior college district is entitled to coverage from
the pool if the county, school district, or junior college
district:
(1) submits a complete application;
(2) provides other information required by the pool;
(3) meets the underwriting standards established by the pool;
and
(4) pays the premiums required for the coverage.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2207.402. SCOPE OF COVERAGE. (a) A pool shall insure a
county, school district, or junior college district and the
entity's officers and employees against liability for acts and
omissions under the laws governing that county, school district,
or junior college district and the entity's officers and
employees in their official or employment capacities.
(b) Except as provided by Subsection (c), under the excess
liability insurance coverage, a pool shall pay any portion of a
claim against a county, school district, or junior college
district, as applicable, and the entity's officers and employees
that:
(1) exceeds $500,000; and
(2) is finally determined or settled or is included in a final
judgment of a court.
(c) The amount paid by a pool under this section may not exceed
the amount the board determines is actuarially sound for the
pool.
(d) A pool may participate in evaluating, settling, or defending
a claim made under the excess liability insurance coverage.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2207.403. BASIS OF COVERAGE. The pool may provide excess
liability insurance coverage on a claims-made basis or an
occurrence basis.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2207.404. RATES AND LIMITS OF COVERAGE. (a) To ensure
that the pool is actuarially sound, the board shall:
(1) set the premium rates charged; and
(2) determine the maximum limits of coverage provided.
(b) The pool manager, for the board's consideration, shall:
(1) collect and compile statistical data relating to the excess
liability insurance coverage provided by the pool, including
relevant loss, expense, and premium data, and other information;
(2) prepare the proposed premium rate schedules for the approval
of the board; and
(3) prepare the maximum limits of coverage.
(c) The board shall periodically reexamine the rate schedules
and the maximum limits of coverage as conditions change.
(d) The pool manager shall make available to the public the
information described by Subsection (b)(1).
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2207.405. USE OF ENTITY MONEY FOR POOL COVERAGE AUTHORIZED.
A county, school district, or junior college district may use
its money to pay any contributions or premiums required by the
applicable pool to purchase excess liability insurance coverage
from the pool.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2207.406. COVERAGE PERIOD. A county, school district, or
junior college district that accepts coverage provided by the
applicable pool shall maintain that coverage for at least 36
calendar months following the month in which the pool issued the
coverage.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2207.407. NONRENEWAL OF COVERAGE. (a) Except as provided
by Subsection (b), the applicable pool may refuse to renew the
coverage of a county, school district, or junior college district
that fails to comply with the pool's underwriting standards.
(b) The applicable pool may not refuse to renew the coverage of
a county, school district, or junior college district during the
first 36 calendar months following the month in which the entity
is first provided coverage by the pool.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2207.408. SUBSEQUENT COVERAGE. (a) A county, school
district, or junior college district that voluntarily
discontinues coverage provided by the applicable pool may not
subsequently obtain coverage from the pool for at least 36
calendar months following the month in which the entity
discontinues the coverage.
(b) A county, school district, or junior college district whose
coverage is not renewed under Section 2207.407 is not eligible to
subsequently apply for coverage during the 12 calendar months
following the month in which the applicable pool gives written
notice of nonrenewal.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2207.409. PAYMENT OF CLAIMS AND JUDGMENTS. (a) If money
in the fund would be exhausted by the payment of all final and
settled claims and final judgments during a fiscal year, the pool
shall prorate the amount paid to each person having the claim or
judgment.
(b) If the amount paid by the pool is prorated under this
section, each person described by Subsection (a) shall receive an
amount equal to the percentage that the amount owed to that
person by the pool bears to the total amount owed, outstanding,
and payable by the pool.
(c) The pool shall pay in the next fiscal year the remaining
amount that is due and unpaid to a person who receives a prorated
payment under this section.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.