CHAPTER 2208. TEXAS PUBLIC ENTITY EXCESS INSURANCE POOL
INSURANCE CODE
TITLE 10. PROPERTY AND CASUALTY INSURANCE
SUBTITLE G. POOLS, GROUPS, PLANS, AND SELF-INSURANCE
CHAPTER 2208. TEXAS PUBLIC ENTITY EXCESS INSURANCE POOL
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 2208.001. DEFINITIONS. In this chapter:
(1) "Board" means the board of trustees of the pool.
(2) "Fund" means the Texas public entity excess insurance fund.
(3) "Insurance" means liability insurance or workers'
compensation insurance.
(4) "Pool" means the Texas public entity excess insurance pool.
(5) "Public entity" means one or more municipalities that have
formed an insurance pool under Chapter 791, Government Code.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2208.002. POOL NOT ENGAGED IN BUSINESS OF INSURANCE. (a)
Except as provided by Subsection (b), the pool is not engaged in
the business of insurance under this code or other laws of this
state, and the department has no jurisdiction over the pool.
(b) The pool is subject to Chapter 541 and Subchapter D, Chapter
38.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
SUBCHAPTER B. CREATION OF POOL
Sec. 2208.051. CREATION OF POOL. (a) The Texas Public Entity
Excess Insurance Pool is created on the written agreement of the
presiding officers of 25 or more public entities in this state.
(b) The pool provides excess liability and workers' compensation
insurance coverage to a public entity and the entity's officers
and employees as provided by this chapter.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2208.052. PARTICIPATION IN POOL. A public entity is
entitled to coverage from the pool if the entity:
(1) submits a complete application;
(2) provides other relevant information required by the pool;
(3) meets the underwriting guidelines 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.
SUBCHAPTER C. BOARD OF TRUSTEES
Sec. 2208.101. ADMINISTRATION OF POOL; BOARD MEMBERSHIP. (a) A
board of trustees shall administer the pool.
(b) The board is composed of the members of the governing board
of an association that:
(1) on September 2, 1987, had been providing pooled
self-insurance in this state for more than five years; and
(2) has as the association's members the public entities that
entered into the written agreement under Section 2208.051.
(c) Board members shall represent members of the pool.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2208.102. 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. 2208.103. OFFICERS; MEETINGS. (a) Each individual who
serves as an officer of the governing board of the association
described by Section 2208.101(b) serves as an officer of the
board.
(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. 2208.104. 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 insurance contracts
issued to public entities by the pool;
(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. 2208.105. 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 public entity covered by
the pool.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
SUBCHAPTER D. PLAN OF OPERATION
Sec. 2208.151. TIME FOR CREATION OF PLAN OF OPERATION. Not
later than the 30th day after the date the pool is created, the
board shall meet to prepare a detailed plan of operation for the
pool.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2208.152. CONTENTS OF PLAN OF OPERATION. (a) Subject to
the requirements of this chapter, the plan of operation must
include:
(1) the organizational structure of the pool, the board's method
of procedure and operation, and a summary of the method for
managing and operating the pool;
(2) a description of the 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 guidelines and procedures for evaluating risks;
(4) procedures for purchasing reinsurance;
(5) methods, procedures, and guidelines for:
(A) establishing premium rates for and maximum limits of excess
coverage available from the pool; and
(B) managing and investing the fund;
(6) procedures for processing and paying claims;
(7) methods and procedures for defraying losses and expenses of
the pool; and
(8) guidelines for nonrenewal of coverage.
(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 E. OPERATION OF POOL
Sec. 2208.201. GENERAL POWERS AND DUTIES OF POOL. (a) The pool
shall:
(1) issue insurance coverage to each public entity 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. 2208.202. POOL MANAGER. (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 compensation as
authorized by the board.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2208.203. 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 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
public entity 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. 2208.204. 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. 2208.205. PERFORMANCE BOND AUTHORIZED. The board may
require an employee or a person with whom the pool manager
contracts under Section 2208.204 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. 2208.206. IMMUNITY OF EMPLOYEES AND CONTRACTORS FROM
CERTAIN LIABILITIES. An employee or a person with whom the pool
manager contracts under Section 2208.204 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 public entity covered by
the pool.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2208.207. OFFICE; RECORDS. (a) The 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 F. TEXAS PUBLIC ENTITY EXCESS INSURANCE FUND
Sec. 2208.251. FUND CREATION; MANAGEMENT. (a) On creation of
the pool, the board shall create the Texas public entity excess
insurance fund.
(b) The fund is composed of:
(1) premiums paid by public entities for coverage provided by
the pool;
(2) proceeds from bonds and other money received by the pool to
cover the 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. 2208.252. USES OF FUND. (a) Administrative expenses of
the pool may be paid from the fund.
(b) Money in the fund may not be used to pay:
(1) punitive damages;
(2) a fine or penalty imposed for a violation of:
(A) a statute;
(B) an administrative rule or regulation; or
(C) an order or ordinance of a public entity; or
(3) a claim under excess insurance coverage until all benefits
payable under any other underlying policy or self-insurance
covering the claim or judgment are exhausted.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2208.253. DEPOSITORY. (a) The board may select one or
more banks to serve as 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 G. POOL COVERAGE
Sec. 2208.301. SCOPE OF COVERAGE. (a) Except as provided by
Subsection (b), under the excess insurance coverage, the pool
shall pay any portion of a claim against a public entity and the
entity's officers and employees that:
(1) exceeds $1 million; and
(2) is finally determined or settled or is included in a final
judgment of a court.
(b) The amount paid by the pool under this section may not
exceed the amount the board determines is actuarially sound for
the pool.
(c) The pool may participate in evaluating or defending a claim
made under the insurance coverage.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2208.302. BASIS OF COVERAGE. The pool may provide excess
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. 2208.303. PUNITIVE DAMAGES NOT COVERED. Excess insurance
coverage provided by the pool may not include coverage for
punitive damages.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2208.304. 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 insurance coverage provided.
(b) The pool manager, for the board's consideration, shall:
(1) collect and compile statistical data relating to the
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 insurance coverage.
(c) The board shall periodically reexamine the rate schedules
and the maximum limits of insurance coverage as conditions
change.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2208.305. USE OF PUBLIC MONEY FOR POOL COVERAGE AUTHORIZED.
A public entity may use the entity's money to pay any
contributions or premiums required by the pool to purchase excess
insurance coverage from the pool.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2208.306. COVERAGE PERIOD. A public entity that accepts
coverage provided by the pool shall maintain that coverage for at
least 35 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. 2208.307. NONRENEWAL OF COVERAGE. The pool may refuse to
renew the insurance coverage of a public entity that fails to
comply with the pool's underwriting or risk management
guidelines.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2208.308. SUBSEQUENT COVERAGE. (a) A public entity that
voluntarily discontinues insurance coverage provided by the 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 public entity whose insurance coverage is not renewed by
the pool is not eligible to subsequently apply for coverage
during the 11 calendar months following the month in which the
pool gives written notice of nonrenewal.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2208.309. 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 public entity incurring the original liability shall pay
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.