CHAPTER 462. TEXAS PROPERTY AND CASUALTY INSURANCE GUARANTY ASSOCIATION
INSURANCE CODE
TITLE 4. REGULATION OF SOLVENCY
SUBTITLE D. GUARANTY ASSOCIATIONS
CHAPTER 462. TEXAS PROPERTY AND CASUALTY INSURANCE GUARANTY
ASSOCIATION
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 462.001. SHORT TITLE. This chapter may be cited as the
Texas Property and Casualty Insurance Guaranty Act.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
Sec. 462.002. PURPOSES. The purposes of this chapter are to:
(1) provide a mechanism for the payment of covered claims under
certain insurance policies to avoid excessive delay in payment;
(2) avoid financial loss to claimants or policyholders because
of an insurer's impairment;
(3) assist in the detection and prevention of insurer
insolvencies; and
(4) provide an association to assess the cost of that protection
among insurers.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
Sec. 462.003. CONSTRUCTION. This chapter shall be liberally
construed to implement the purposes of this chapter described by
Section 462.002, which shall be used to aid and guide
interpretation of this chapter.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
Sec. 462.004. GENERAL DEFINITIONS. In this chapter:
(1) "Affiliate" means a person who, directly or indirectly,
through one or more intermediaries, controls, is controlled by,
or is under common control with an impaired insurer on December
31 of the year preceding the date the insurer becomes an impaired
insurer.
(2) "Association" means the Texas Property and Casualty
Insurance Guaranty Association.
(3) "Board" means the board of directors of the association.
(4) "Claimant" means an insured making a first-party claim or a
person instituting a liability claim.
(5) "Impaired insurer" means a member insurer that is:
(A) placed in:
(i) temporary or permanent receivership or liquidation under a
court order, including a court order of another state, based on a
finding of insolvency; or
(ii) conservatorship after the commissioner determines that the
insurer is insolvent; and
(B) designated by the commissioner as an impaired insurer.
(6) "Member insurer" means an insurer, including a stock
insurance company, a mutual insurance company, a Lloyd's plan, a
reciprocal or interinsurance exchange, and a county mutual
insurance company, that:
(A) writes any kind of insurance to which this chapter applies
under Sections 462.007 and 462.008, including reciprocal or
interinsurance exchange contracts; and
(B) holds a certificate of authority to engage in the business
of insurance in this state.
(7) "Person" means an individual, corporation, partnership,
association, or voluntary organization.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
Sec. 462.005. DESCRIPTION OF CONTROL. (a) For purposes of this
chapter, control is the power to direct, or cause the direction
of, the management and policies of a person, other than power
that results from an official position with the person or a
corporate office held by the person. The power may be possessed
directly or indirectly by any means, including through the
ownership of voting securities or by contract, other than a
commercial contract for goods or nonmanagement services.
(b) A person is presumed to control another person if the person
directly or indirectly owns, controls, holds with the power to
vote, or holds proxies representing 10 percent or more of the
voting securities of the other person. This presumption may be
rebutted by a showing that the person does not in fact control
the other person.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
Sec. 462.006. NET DIRECT WRITTEN PREMIUMS. (a) Except as
provided by Subsection (b) and subject to Subsection (c), in this
chapter, "net direct written premiums" means direct premiums
written in this state on insurance policies to which this chapter
applies, less return premiums on those policies and dividends
paid or credited to policyholders on that direct business.
(b) Subject to Subsection (c), for assessing the workers'
compensation line of business, the term "net direct written
premiums" includes the modified annual premium before the
application of a deductible premium credit, less return premiums
on those policies and dividends paid or credited to policyholders
on that direct business.
(c) The term "net direct written premiums" does not include
premiums on contracts between insurers or reinsurers.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
Sec. 462.007. APPLICABILITY IN GENERAL; EXCEPTIONS. (a) Except
as provided by Subsection (b), this chapter applies to each kind
of direct insurance.
(b) Except as provided by Subchapter F, this chapter does not
apply to:
(1) life, annuity, health, or disability insurance;
(2) mortgage guaranty, financial guaranty, or other kinds of
insurance offering protection against investment risks;
(3) a fidelity or surety bond, or any other bonding obligation;
(4) credit insurance, vendors' single-interest insurance,
collateral protection insurance, or similar insurance protecting
a creditor's interest arising out of a creditor-debtor
transaction;
(5) insurance of warranties or service contracts;
(6) title insurance;
(7) ocean marine insurance;
(8) a transaction or combination of transactions between a
person, including an affiliate of the person, and an insurer,
including an affiliate of the insurer, that involves the transfer
of investment or credit risk unaccompanied by the transfer of
insurance risk, including transactions, except for workers'
compensation insurance, involving captive insurers, policies in
which deductible or self-insured retention is substantially equal
in amount to the limit of the liability under the policy, and
transactions in which the insured retains a substantial portion
of the risk; or
(9) insurance provided by or guaranteed by government.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
Amended by:
Acts 2007, 80th Leg., R.S., Ch.
730, Sec. 3B.005(a), eff. September 1, 2007.
Acts 2007, 80th Leg., R.S., Ch.
921, Sec. 9.005(a), eff. September 1, 2007.
Sec. 462.008. APPLICABILITY TO TEXAS MUTUAL INSURANCE COMPANY.
(a) This chapter applies to insurance written through the Texas
Mutual Insurance Company only as provided by this section.
(b) This chapter applies to the Texas Mutual Insurance Company
on a prospective basis on and after January 1, 2000. The Texas
Mutual Insurance Company is only liable for assessments for a
claim with a date of injury that occurs on or after January 1,
2000. The association, with respect to an insolvency of the
Texas Mutual Insurance Company, is only liable for a claim with a
date of injury that occurs on or after January 1, 2000.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
Sec. 462.009. APPLICABILITY TO FORMER TEXAS WORKERS'
COMPENSATION INSURANCE FACILITY AND SUCCESSOR. (a)
Notwithstanding any other provision of this chapter, this chapter
applies to each insurance policy issued under Article 5.76 or
5.76-2, as those articles existed before their repeal.
(b) Notwithstanding any other provision of this chapter, the
stock insurance company that resulted from the transfer of the
former Texas workers' compensation insurance facility is
considered an impaired insurer for purposes of this chapter if
any action described by Section 462.004(5) is taken with respect
to the company.
(c) A claim under an insurance policy described by Subsection
(a) is a covered claim for purposes of this chapter if the claim
is a covered claim for purposes of Sections 462.201-462.203,
462.205-462.210, 462.213, 462.214, and 462.305 without regard to
whether the stock insurance company described by Subsection (b):
(1) issued or assumed the policy; or
(2) was authorized to engage in business in this state at the
time:
(A) the policy was written; or
(B) the company became an impaired insurer.
(d) If a conflict exists between this section and any other
statute relating to the former Texas workers' compensation
insurance facility or the association, this section controls.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
Sec. 462.010. CONFLICT WITH OTHER LAWS. (a) Except as provided
by Subsection (b), if this chapter conflicts with another
statute relating to the association, this chapter controls.
(b) This section does not apply to a conflict between this
chapter and:
(1) Subtitle A, Title 5, Labor Code, except as described by
Subsection (c); or
(2) Subtitle E, Title 10.
(c) This chapter controls with respect to subrogation rights of
an insurance carrier under Chapter 417, Labor Code, against an
impaired insurer's insured or the association.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
Sec. 462.011. IMMUNITY IN GENERAL. (a) Liability does not
exist and a cause of action does not arise against any of the
following persons for any good faith act or omission in
performing the person's powers and duties under this chapter:
(1) the commissioner or the commissioner's representative;
(2) the association or the association's agent or employee;
(3) a member insurer;
(4) the board;
(5) the receiver; or
(6) a special deputy receiver or the special deputy receiver's
agent or employee.
(b) The attorney general shall defend any action to which this
section applies that is brought against the commissioner or the
commissioner's representative, the association or the
association's agent or employee, a member insurer or the
insurer's agent or employee, a board member, or a special deputy
receiver or the special deputy receiver's agent or employee,
including an action instituted after the defendant's service with
the association, commissioner, or department has terminated.
This subsection does not require the attorney general to defend a
person with respect to an issue other than the applicability or
effect of the immunity created by Subsection (a). The attorney
general is not required to defend the association or the
association's agent or employee, a member insurer or the member
insurer's agent or employee, a board member, or a special deputy
receiver or the special deputy receiver's agent or employee
against an action regarding the disposition of a claim filed with
the association under this chapter or any issue other than the
applicability or effect of the immunity created by Subsection
(a). The association may contract with the attorney general under
Chapter 771, Government Code, for legal services not covered by
this subsection.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
Sec. 462.012. IMMUNITY IN RELATION TO CERTAIN REPORTS AND
RECOMMENDATIONS. Liability does not exist and a cause of action
does not arise against any of the following persons for a
statement made in good faith by the person in a report or
recommendation made under Section 462.111 or 462.113:
(1) the commissioner or the commissioner's representative;
(2) the association or the association's agent or employee;
(3) a member insurer; or
(4) the board.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
Sec. 462.013. IMMUNITY IN RELATION TO CERTAIN NEGOTIATIONS. (a)
Liability does not exist and a cause of action does not arise
against any of the following persons for an act or omission in
the performance of an activity related to the negotiations
relating to the privatization of the former Texas workers'
compensation facility:
(1) the commissioner or the commissioner's representative;
(2) the association or the association's agent or employee;
(3) a member insurer; or
(4) a board member.
(b) This section applies to each activity undertaken by a person
described by Subsection (a), regardless of the date of the act or
omission.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
Sec. 462.014. RULES. The commissioner shall adopt reasonable
rules as necessary to implement and supplement this chapter and
this chapter's purposes.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
Sec. 462.015. INFORMATION PROVIDED BY OR TO COMMISSIONER. (a)
The commissioner shall notify the association of the existence of
an impaired insurer not later than the third day after the date
the commissioner gives notice of the designation of impairment.
The association is entitled to a copy of any complaint seeking an
order of receivership with a finding of insolvency against a
member insurer at the time the complaint is filed with a court.
(b) On the board's request, the commissioner shall provide the
association with a statement of the net direct written premiums
of each member insurer.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
Sec. 462.016. PENALTY FOR FAILURE TO PAY ASSESSMENTS OR COMPLY
WITH PLAN OF OPERATION. (a) The commissioner shall suspend or
revoke, after notice and hearing, the certificate of authority to
engage in the business of insurance in this state of a member
insurer that:
(1) fails to pay an assessment at the time the assessment is
due; or
(2) otherwise fails to comply with the plan of operation.
(b) As an alternative to action under Subsection (a), the
commissioner may assess a fine on a member insurer that fails to
pay an assessment at the time the assessment is due. The fine
may not exceed the lesser of:
(1) five percent of the unpaid assessment per month; or
(2) $100 per month.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
Sec. 462.017. APPEALS AND OTHER ACTIONS. (a) A final action or
order of the commissioner under this chapter is subject to
judicial review by a court.
(b) Venue in a suit by or against the commissioner or
association relating to an action or ruling of the commissioner
or association under this chapter is in Travis County. The
commissioner or association is not required to give an appeal
bond in an appeal of a cause of action arising under this
chapter.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
Amended by:
Acts 2007, 80th Leg., R.S., Ch.
730, Sec. 3B.008(a), eff. September 1, 2007.
Acts 2007, 80th Leg., R.S., Ch.
921, Sec. 9.008(a), eff. September 1, 2007.
SUBCHAPTER B. GOVERNANCE OF ASSOCIATION
Sec. 462.051. ASSOCIATION AS LEGAL ENTITY; MEMBERSHIP. (a) The
Texas Property and Casualty Insurance Guaranty Association is a
nonprofit unincorporated legal entity.
(b) The association is composed of all member insurers. A member
insurer must remain a member of the association as a condition of
engaging in the business of insurance in this state.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
Sec. 462.052. BOARD OF DIRECTORS. (a) The association's powers
are exercised through a board of directors consisting of nine
individuals.
(b) Member insurers shall select five insurance industry board
members, subject to the approval of the commissioner. In
approving selections to the board, the commissioner shall
consider whether all member insurers are fairly represented.
(c) Four board members must be public representatives appointed
by the commissioner.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
Sec. 462.053. ELIGIBILITY TO SERVE AS PUBLIC REPRESENTATIVE. A
board member who is a public representative may not be:
(1) an officer, director, or employee of an insurer, insurance
agency, agent, broker, adjuster, or any other business entity
regulated by the department;
(2) a person required to register with the Texas Ethics
Commission under Chapter 305, Government Code, in connection with
the person's representation of clients in the field of insurance;
or
(3) related to a person described by Subdivision (1) or (2)
within the second degree of affinity or consanguinity.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
Sec. 462.054. ELIGIBILITY TO SERVE AS INDUSTRY REPRESENTATIVE.
To be eligible to serve as an insurance industry board member, an
individual must be a full-time employee of a member insurer.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
Sec. 462.055. TERM; VACANCY. (a) A board member serves a term
established by the plan of operation.
(b) The remaining board members, by majority vote, shall fill a
vacancy on the board for the unexpired term, subject to the
commissioner's approval.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
Sec. 462.056. REIMBURSEMENT OF BOARD MEMBERS. A board member
may be reimbursed from the assets of the association for expenses
the board member incurs as a board member.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
Sec. 462.057. FINANCIAL STATEMENT OF BOARD MEMBER. Each board
member shall file with the Texas Ethics Commission a financial
statement as provided by Subchapter B, Chapter 572, Government
Code.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
Sec. 462.058. CONFLICT OF INTEREST. (a) A director of the
association or a member insurer or other entity represented by
the director may not receive money or another valuable thing
directly, indirectly, or through any substantial interest in any
other corporation, firm, or business unit for negotiating,
procuring, participating in, recommending, or aiding in a
reinsurance agreement, merger, or other transaction, including
the purchase, sale, or exchange of assets, insurance policies, or
property made by the association or the supervisor, conservator,
or receiver on behalf of an impaired insurer.
(b) The director, member insurer, or entity may not be
pecuniarily or contractually interested, as principal,
coprincipal, agent, or beneficiary, directly, indirectly, or
through any substantial interest in any other corporation, firm,
or business unit, in the reinsurance agreement, merger, purchase,
sale, exchange, or other transaction.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
Sec. 462.059. MEETING BY CONFERENCE CALL. (a) Notwithstanding
Chapter 551, Government Code, the board may hold an open meeting
by telephone conference call if immediate action is required and
convening of a quorum of the board at a single location is not
reasonable or practical.
(b) The meeting is subject to the notice requirements that apply
to other meetings.
(c) The notice of the meeting must specify as the location of
the meeting the location at which meetings of the board are
usually held, and each part of the meeting that is required to be
open to the public must be audible to the public at that location
and must be tape recorded. The tape recording shall be made
available to the public.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
SUBCHAPTER C. GENERAL POWERS AND DUTIES OF ASSOCIATION
Sec. 462.101. GENERAL POWERS AND DUTIES. (a) The association
may:
(1) employ or retain persons as necessary to handle claims and
perform other duties of the association;
(2) borrow money necessary to implement this chapter in
accordance with the plan of operation;
(3) sue or be sued;
(4) negotiate and enter into a contract as necessary to
implement this chapter; and
(5) perform other acts as necessary or proper to implement this
chapter.
(b) A contract authorized by Subsection (a)(4) includes a
lump-sum or structured compromise and settlement agreement with a
claimant who has a claim for medical or indemnity benefits for a
period of three years or more, other than a settlement or
lump-sum payment in violation of Subtitle A, Title 5, Labor Code.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
Sec. 462.102. ASSOCIATION NOT IN PLACE OF IMPAIRED INSURER. In
performing the association's statutory obligations under this
chapter, the association is not considered:
(1) to be engaged in the business of insurance;
(2) to have assumed or succeeded to a liability of the impaired
insurer; or
(3) to otherwise stand in the place of the impaired insurer for
any purpose, including for the purpose of determining whether the
association is subject to personal jurisdiction of the courts of
another state.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
Sec. 462.103. PLAN OF OPERATION. (a) The association shall
perform the association's functions under a plan of operation
necessary or suitable to ensure the fair, reasonable, and
equitable administration of the association. The plan of
operation must:
(1) be submitted to and approved in writing by the commissioner;
(2) establish:
(A) procedures under which the powers and duties of the
association are performed;
(B) procedures for handling assets of the association;
(C) the amount and method of reimbursing board members;
(D) acceptable forms of proof of covered claims;
(E) regular places and times for board meetings;
(F) procedures for records to be kept of each financial
transaction of the association, the association's agents, and the
board; and
(G) procedures under which selections for the board are
submitted to the commissioner;
(3) provide:
(A) for the establishment of a claims filing procedure that
includes:
(i) notice by the association to claimants;
(ii) procedures for filing claims seeking recovery from the
association; and
(iii) a procedure for appealing the denial of claims by the
association; and
(B) that a member insurer aggrieved by a final action or
decision of the association may appeal to the commissioner not
later than the 30th day after the date of the action or decision;
and
(4) contain additional provisions necessary or proper for the
execution of the association's powers and duties.
(b) The association shall submit to the commissioner any
amendment to the plan of operation necessary or suitable to
ensure the fair, reasonable, and equitable administration of the
association. The amendment takes effect on the commissioner's
written approval.
(c) If the association does not submit a suitable amendment to
the plan of operation, the commissioner after notice and hearing
shall adopt reasonable rules as necessary or advisable to
implement this chapter. A rule continues in effect until
modified by the commissioner or superseded by an amendment
submitted by the association and approved by the commissioner.
(d) Each member insurer shall comply with the plan of operation.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
Sec. 462.104. NOTICE TO INSUREDS. (a) The commissioner may
require that the association notify an impaired insurer's
insureds and any other interested parties of:
(1) the designation of impairment; and
(2) the insureds' and other parties' rights under this chapter.
(b) The association shall give notice as the commissioner
directs under this section. The association shall mail the
notice to the last known address, if available. If sufficient
information for notification by mail is not available, notice by
publication in a newspaper of general circulation is sufficient
notice.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
Sec. 462.105. ACCOUNTS. For purposes of administration and
assessment, the association is divided into:
(1) the workers' compensation insurance account;
(2) the automobile insurance account; and
(3) the account for all other lines of insurance to which this
chapter applies.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
Sec. 462.106. ADMINISTRATIVE EXPENSES. (a) The association may
use money in the administrative account to pay administrative
costs and other general expenses of the association.
(b) The association may transfer income from investment of the
association's money to the administrative account.
(c) On notification by the association of the amount of any
additional money needed for the administrative account, the
association shall assess member insurers in the manner provided
by Sections 462.159-462.168 for that money. The commissioner
shall consider the net direct written premiums collected in this
state for all lines of business covered by this chapter. An
assessment for administrative expenses incurred by a supervisor
or conservator appointed by the commissioner or a court-appointed
receiver for a nonmember of the association or unauthorized
insurer operating in this state may not exceed $1 million each
calendar year.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
Sec. 462.107. EXAMINATION OF ASSOCIATION. Not later than April
30 of each year, the association shall submit an audited
financial statement for the preceding calendar year to the state
auditor in a form approved by the state auditor's office.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
Sec. 462.108. DEPOSIT OF MONEY. The board may deposit the money
the association collects into the Texas Treasury Safekeeping
Trust Company in accordance with procedures established by the
comptroller. The comptroller shall account to the association
for the deposited money separately from all other money.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
Sec. 462.109. DELEGATION OF POWERS AND DUTIES. (a) Except as
provided by Subsection (b), the plan of operation may provide
that, on approval of the board and the commissioner, the
association may delegate by contract any or all powers or duties
of the association to a corporation or other organization that:
(1) performs or will perform in two or more states functions
similar to those of the association or the association's
equivalent; and
(2) provides protection not substantially less favorable and
effective than that provided by this chapter.
(b) The association may not delegate a power or duty under
Section 462.101(a)(2), 462.151, 462.154, 462.155, or 462.302(d)
under this section.
(c) The association shall:
(1) reimburse the corporation or other organization as a
servicing facility would be reimbursed; and
(2) pay the corporation or other organization for the
performance of any other functions of the association.
(d) A contract entered into under this section is subject to the
performance standards imposed under Section 442.112.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
Sec. 462.110. EXEMPTION FROM CERTAIN FEES AND TAXES. The
association is exempt from payment of all fees and of all taxes
levied by this state or a subdivision of this state, except taxes
levied on real or personal property.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
Sec. 462.111. ACCESS TO RECORDS OF MEMBER INSURER IN
RECEIVERSHIP; ACTUARIAL AND OPERATIONAL ANALYSIS. (a) The
association shall have access to the books and records of a
member insurer in receivership to determine the extent of the
impact on the association if the member becomes impaired.
(b) The association may:
(1) perform or cause to be performed an actuarial and
operational analysis of the member insurer; and
(2) prepare a report on matters relating to the impact or
potential impact on the association in the event of impairment.
(c) A report prepared under Subsection (b) is not a public
document.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
Sec. 462.112. BOARD ACCESS TO RECORDS OF IMPAIRED INSURER. The
receiver or statutory successor of an impaired insurer covered by
this chapter shall give the board or the board's representative:
(1) access to the insurer's records as necessary for the board
to perform the board's functions under this chapter relating to
covered claims; and
(2) copies of those records on the board's request and at the
board's expense.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
Sec. 462.1121. ACTION TO OBTAIN INFORMATION CONCERNING INSURER
IN RECEIVERSHIP AUTHORIZED. (a) The association may bring an
action against any third-party administrator, agent, attorney, or
other representative of an insurer for which a receiver has been
appointed to obtain custody and control of all information,
including files, records, and electronic data, related to the
insurer that is appropriate or necessary for the association, or
a similar association in other states, to carry out its duties
under this chapter or a similar law of another state. The
association has the absolute right to obtain information under
this section through emergency equitable relief, regardless of
where the information is physically located.
(b) In bringing an action under this section, the association is
not subject to any defense, possessory lien or other type of
lien, or other legal or equitable ground for refusal to surrender
the information that may be asserted against the receiver of the
insurer.
(c) The association is entitled to an award of reasonable
attorney's fees and costs incurred by the association in any
action to obtain information under this section.
(d) The rights granted to the association under this section do
not affect the receiver's title to information, and information
obtained under this section remains the property of the receiver
while in the custody of the association.
Added by Acts 2007, 80th Leg., R.S., Ch.
730, Sec. 3B.007(b), eff. September 1, 2007.
Added by Acts 2007, 80th Leg., R.S., Ch.
921, Sec. 9.007(b), eff. September 1, 2007.
Sec. 462.113. BOARD REPORT ON CONCLUSION OF INSOLVENCY. On the
conclusion of the insolvency of a domestic insurer with respect
to which the association was obligated to pay covered claims, the
board may:
(1) prepare a report on the history and causes of the
insolvency, based on information available to the association;
and
(2) submit the report to the commissioner.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
Sec. 462.114. DUTY OF RECEIVER. The receiver shall periodically
submit a list of claims to the association or similar
organization in another state.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
SUBCHAPTER D. ASSESSMENTS IN GENERAL
Sec. 462.151. MAKING OF ASSESSMENT; AMOUNT. (a) The
association shall assess member insurers the amount necessary to
pay:
(1) the association's obligations under Section 462.302 and the
expenses of handling covered claims subsequent to an insolvency;
and
(2) other expenses authorized by this chapter.
(b) The assessment of each member insurer must be in the
proportion that the net direct written premiums of the insurer
for the calendar year preceding the assessment bear to the net
direct written premiums of all member insurers for that year.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
Sec. 462.152. MAXIMUM TOTAL ASSESSMENT. (a) The total
assessment of a member insurer in a year may not exceed an amount
equal to two percent of the insurer's net direct written premiums
for the calendar year preceding the assessment.
(b) If the maximum assessment and the association's other assets
are insufficient in a year to make all necessary payments, the
money available shall be prorated and the association shall pay
the unpaid portion as soon as money becomes available.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
Sec. 462.153. REFUND OF CONTRIBUTION. The association may
refund to the member insurers in proportion to the contribution
of each member insurer to the association the amount by which the
association's assets exceed the association's liabilities, if at
the end of a calendar year the board finds that the assets of the
association exceed the liabilities of the association as
estimated by the board for the next year.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
Sec. 462.154. NOTICE OF ASSESSMENT. The association shall
notify a member insurer of an assessment not later than the 30th
day before the date the assessment is due.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
Sec. 462.155. DEFERMENT. (a) The association may defer wholly
or partly an assessment of a member insurer that would cause the
insurer's financial statement to show amounts of capital or
surplus less than the minimum amounts required for a certificate
of authority in any jurisdiction in which the insurer is
authorized to engage in the business of insurance.
(b) The member insurer shall pay the deferred assessment at the
time payment will not reduce capital or surplus below required
minimums. The payment shall be refunded to or credited against
future assessments of any member insurer receiving a larger
assessment because of the deferment, as elected by that insurer.
(c) During a period of deferment, the member insurer may not pay
a dividend to shareholders or policyholders.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
Sec. 462.156. USE OF ASSESSMENTS. (a) The amounts provided
under assessments made under this chapter supplement the
marshalling of assets by the receiver under Chapter 442 to make
payments on the impaired insurer's behalf.
(b) This section does not require the receiver to exhaust the
assets of the impaired insurer before an assessment is made or
before money derived from an assessment may be used to pay
covered claims.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
Sec. 462.157. TAX CREDIT. (a) An insurer is entitled to a
credit against the insurer's premium tax under Chapter 221 for
the total amount of an assessment paid by the insurer under this
chapter.
(b) The tax credit may be taken at a rate of 10 percent each
year for 10 successive years after the date of assessment. At
the option of the insurer, the tax credit may be taken over an
additional number of years.
(c) The balance of a tax credit not claimed in a particular year
may be reflected in the books and records of the insurer as an
admitted asset of the insurer for all purposes, including
exhibition in an annual statement under Section 862.001.
(d) Available credit against premium tax allowed under this
section may be transferred or assigned among insurers if:
(1) a merger, acquisition, or total assumption of reinsurance
among the insurers occurs; or
(2) the commissioner by order approves the transfer or
assignment.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
Sec. 462.158. ADVANCE AS LOAN. Money advanced by the
association under this chapter is considered a special fund loan
to the impaired insurer for payment of covered claims and does
not become an asset of the impaired insurer. The loan is
repayable to the extent money from the impaired insurer is
available.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
Sec. 462.159. ESTIMATE OF ADDITIONAL MONEY NEEDED ON IMPAIRMENT
OF INSURER. (a) If the commissioner determines that an insurer
has become an impaired insurer, the association shall promptly
estimate the amount of additional money, by lines of business,
needed to supplement the immediately available assets of the
impaired insurer to pay covered claims.
(b) The board shall make additional money available as the
actual need arises for each impaired insurer.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
Sec. 462.160. ASSESSMENT FOR ADDITIONAL MONEY FOR ACCOUNTS. If
the board determines that additional money is needed in any of
the three accounts described by Section 462.105, the board shall
make assessments as needed to produce the necessary money.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
Sec. 462.161. AMOUNT OF ASSESSMENT; PRORATION OF PAYMENT. (a)
The association, in determining the proportionate amount to be
paid by individual insurers under an assessment under Section
462.160, shall consider the lines of business written by the
impaired insurer and shall assess individual insurers in
proportion to the ratio that the total net direct written
premiums collected in this state by the insurer for those lines
of business bears to the total net direct written premiums
collected by all insurers, other than impaired insurers, in this
state for those lines of business.
(b) The association shall determine the total net direct written
premiums of an individual insurer and of all insurers in the
state from the insurers' annual statements for the year preceding
assessment.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
Sec. 462.162. MAXIMUM ASSESSMENT OF INSURER; ADDITIONAL
ASSESSMENT AUTHORITY UNDER CERTAIN CIRCUMSTANCES. (a) Except as
otherwise provided by this section, assessments under Section
462.160 during a calendar year may not exceed two percent of each
insurer's net direct written premiums for the preceding calendar
year in the lines of business for which the assessments are made.
(b) In the event of a natural disaster or other catastrophe, the
association may apply to the governor, in the manner prescribed
by the plan of operation, for authority to assess each member
insurer that writes insurance coverage, other than automobile
insurance coverage or workers' compensation insurance coverage,
an additional amount not to exceed two percent of the insurer's
net direct written premiums for the preceding calendar year.
(c) If the maximum assessment in a calendar year does not
provide an amount sufficient for payment of covered claims of
impaired insurers, the association may make assessments in
successive calendar years.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
Sec. 462.163. PAYMENT OF ASSESSMENT. An insurer shall pay the
amount of an assessment under Section 462.160 or 462.162(b) to
the association not later than the 30th day after the date the
association gives notice of the assessment.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
Sec. 462.164. PARTICIPATION RECEIPTS. (a) On receipt from a
member insurer of payment of an assessment or partial assessment
under Section 462.160 or 462.162(b), the association shall
provide the insurer with a participation receipt. A
participation receipt creates liability against the account
described by Section 462.105 for the line or lines of business
for which the assessment was made.
(b) The account from which an advance is made to an impaired
insurer for the payment of covered claims is a general creditor
of the impaired insurer for the money advanced. With reference
to the remaining balance of an advance not used to pay covered
claims, the claim of the account has preference over other
general creditors.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
Sec. 462.165. ACCOUNTING; REPORTS; REFUND. (a) The
association, with respect to an impaired insurer, shall adopt
accounting procedures that reflect the use of all money and shall
make a final report of the use of the money to the commissioner.
The final report must state any remaining balance from the money
advanced to an impaired insurer for the payment of covered
claims.
(b) The association shall make interim accounting reports as
required by the commissioner or requested by the conservator.
(c) As soon as practicable after completion of the final report,
the association shall refund by line of business the remaining
balance of those advances to the association's accounts.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
Sec. 462.166. USE OF EXCESS MONEY IN ACCOUNT. (a) If the
association determines that money in the account described by
Section 462.164(b) for a line of business exceeds the amount
reasonably necessary for efficient future operation under this
chapter, the association shall, after deducting any premium tax
credit taken under Section 462.157, return the excess money pro
rata to the holders of participation receipts:
(1) on which an outstanding balance exists; and
(2) that were issued for an assessment on the same line of
business as the line for which the excess money is found to
exist.
(b) The association shall transfer an excess amount that exists
in the account described by Section 462.164(b) to the comptroller
to be deposited to the credit of the general revenue fund if:
(1) after a distribution under this section the association
finds that an excess amount still exists; or
(2) participation receipts on which there is an outstanding
balance do not exist.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
Sec. 462.167. COLLECTION OF ASSESSMENTS. (a) The commissioner
may collect an assessment on behalf of the association through a
suit brought for that purpose.
(b) Venue for a suit under this section is in Travis County.
(c) Either party to the suit may appeal to an appellate court.
The appeal is at once returnable to the appellate court. The
appeal has precedence in the appellate court over all causes of a
different character pending before the court.
(d) The commissioner is not required to give an appeal bond in
any cause of action arising under this section.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
Sec. 462.168. EXEMPTION FOR IMPAIRED INSURER. An impaired
insurer is exempt from assessment from the date the insurer is
designated an impaired insurer until the date the commissioner
determines that the insurer is no longer an impaired insurer.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
SUBCHAPTER E. COVERED CLAIMS; CLAIMANTS
Sec. 462.201. COVERED CLAIMS IN GENERAL. A claim is a covered
claim if:
(1) the claim is an unpaid claim;
(2) the claim is made under an insurance policy to which this
chapter applies that is:
(A) issued by an insurer authorized to engage in business in
this state; or
(B) assumed by an insurer authorized to engage in business in
this state that issues an assumption certificate to the insured;
(3) the claim arises out of the policy and is within the
coverage and applicable limits of the policy;
(4) the insurer that issued the policy or assumed the policy
under an assumption certificate issued to the insured is an
impaired insurer; and
(5) the claim:
(A) is made by a liability claimant or insured who is a resident
of this state at the time of the insured event; or
(B) is a first-party claim for damage to property that is
permanently located in this state.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
Sec. 462.202. CLAIM FOR UNEARNED PREMIUMS. (a) A claim for
unearned premiums is a covered claim. A covered claim for
unearned premiums may not exceed $25,000.
(b) With respect to a covered claim for unearned premiums, a
person has a covered claim under this chapter if the person is a
resident of this state at the time:
(1) the policy is issued; or
(2) the insurer is determined to be an impaired insurer.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
Sec. 462.203. CERTAIN EXPENSES OF RECEIVERSHIP OR
CONSERVATORSHIP ESTATE COVERED. An administration expense
incurred in processing or paying a claim against a receivership
or conservatorship estate is a covered claim if the impaired
insurer has insufficient assets to pay the expenses of
administering the estate.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
Sec. 462.204. AFFILIATE MAY NOT BE CLAIMANT. A person who is an
affiliate of an impaired insurer may not be a claimant of the
insurer.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
Sec. 462.205. DETERMINATION OF RESIDENCE OF ENTITIES. A
corporation or other entity that is not an individual is
considered to be a resident of the state in which the entity's
principal place of business is located.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
Sec. 462.206. CLAIMS NOT COVERED: PREMIUM UNDER RETROSPECTIVE
RATING PLAN. An amount sought as a return of premium under a
retrospective rating plan is not a covered claim.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
Sec. 462.207. CLAIMS NOT COVERED: AMOUNTS DUE CERTAIN ENTITIES.
(a) Any amount directly or indirectly due any reinsurer,
insurer, self-insurer, insurance pool, or underwriting
association, as a subrogation recovery, reinsurance recovery,
contribution, or indemnification, or otherwise, is not a covered
claim.
(b) An impaired insurer's insured is not liable, and the
reinsurer, insurer, self-insurer, insurance pool, or underwriting
association is not entitled to sue or continue a suit against the
insured, for a subrogation recovery, reinsurance recovery,
contribution, indemnification, or any other claim asserted
directly or indirectly by a reinsurer, insurer, insurance pool,
or underwriting association to the extent of the applicable
liability limits of the insurance policy written and issued to
the insured by the insolvent insurer.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
Amended by:
Acts 2007, 80th Leg., R.S., Ch.
730, Sec. 3B.006(a), eff. September 1, 2007.
Acts 2007, 80th Leg., R.S., Ch.
921, Sec. 9.006(a), eff. September 1, 2007.
Sec. 462.208. CLAIMS NOT COVERED: SUPPLEMENTARY PAYMENT
OBLIGATIONS. A supplementary payment obligation, including an
adjustment fee or expense, attorney's fee or expense, court cost,
interest or penalty, or interest or bond premium, incurred before
an insurer is determined to be an impaired insurer is not a
covered claim.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
Sec. 462.209. CLAIMS NOT COVERED: PREJUDGMENT OR POSTJUDGMENT
INTEREST. Prejudgment or postjudgment interest that accrues
after an insurer is determined to be an impaired insurer is not a
covered claim.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
Sec. 462.210. CLAIMS NOT COVERED: CERTAIN DAMAGES. A claim
against the insured, insurer, guaranty association, receiver,
special deputy receiver, or commissioner for recovery of
punitive, exemplary, extracontractual, or bad-faith damages
awarded in a court judgment against an insured or insurer is not
a covered claim.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
Sec. 462.211. CLAIMS NOT COVERED: LATE FILED CLAIMS. (a)
Notwithstanding any other provision of this chapter or any other
law to the contrary, and subject to Subsection (b), a claim that
is filed with the association on a date that is later than 18
months after the date of the order of liquidation or that is
unknown and unreported as of the date is not a covered claim.
(b) This section does not apply to a claim for workers'
compensation benefits governed by Title 5, Labor Code, and the
applicable rules of the commissioner of workers' compensation.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
Amended by:
Acts 2007, 80th Leg., R.S., Ch.
730, Sec. 3B.007(a), eff. September 1, 2007.
Acts 2007, 80th Leg., R.S., Ch.
921, Sec. 9.007(a), eff. September 1, 2007.
Sec. 462.212. NET WORTH EXCLUSION. (a) Except for a workers'
compensation claim governed by Title 5, Labor Code, a covered
claim does not include, and the association is not liable for,
any claim arising from an insurance policy of any insured whose
net worth on December 31 of the year preceding the date the
insurer becomes an impaired insurer exceeds $50 million.
(b) For purposes of this section, an insured's net worth
includes the aggregate net worth of the insured and of the
insured's parent, subsidiary, and affiliated companies computed
on a consolidated basis.
(c) This section does not apply:
(1) to third-party claims against an insured that has:
(A) applied for or consented to the appointment of a receiver,
trustee, or liquidator for all or a substantial part of the
insurer's assets;
(B) filed a voluntary petition in bankruptcy; or
(C) filed a petition or an answer seeking a reorganization or
arrangement with creditors or to take advantage of any insolvency
law; or
(2) if an order, judgment, or decree is entered by a court of
competent jurisdiction, on the application of a creditor,
adjudicating the insured bankrupt or insolvent or approving a
petition seeking reorganization of the insured or of all or a
substantial part of its assets.
(d) In an instance described by Subsection (c), the association
is entitled to assert a claim in the bankruptcy or receivership
proceeding to recover the amount of any covered claim and costs
of defense paid on behalf of the insured.
(e) The association may establish procedures for requesting
financial information from an insured or claimant on a
confidential basis for the purpose of applying sections
concerning the net worth of first-party and third-party
claimants, subject to any information requested under this
subsection being shared with any other association similar to the
association and with the liquidator for the impaired insurer on
the same confidential basis. If the insured or claimant refuses
to provide the requested financial information, the association
requests an auditor's certification of that information, and the
auditor's certification is available but not provided, the
association may deem the net worth of the insured or claimant to
be in excess of $50 million at the relevant time.
(f) In any lawsuit contesting the applicability of Section
462.308 or this section when the insured or claimant has declined
to provide financial information under the procedure provided in
the plan of operation under Section 462.103, the insured or
claimant bears the burden of proof concerning its net worth at
the relevant time. If the insured or claimant fails to prove
that its net worth at the relevant time was less than the
applicable amount, the court shall award the association its full
costs, expenses, and reasonable attorney's fees in contesting the
claim.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
Amended by:
Acts 2007, 80th Leg., R.S., Ch.
730, Sec. 3B.010(a), eff. September 1, 2007.
Acts 2007, 80th Leg., R.S., Ch.
921, Sec. 9.010(a), eff. September 1, 2007.
Sec. 462.213. AMOUNT OF INDIVIDUAL COVERED CLAIM; LIMIT. (a)
Except as provided by Subsection (b) and Section 462.252, an
individual covered claim may not exceed $300,000.
(b) The association shall pay the full amount of a covered claim
arising out of a workers' compensation claim made under a
workers' compensation insurance policy.
(c) For purposes of this section, an individual covered claim
includes any derivative claims by more than one person that arise
from the same occurrence. The claims shall be considered
collectively as a single claim under this chapter.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
Sec. 462.214. CERTAIN SHAREHOLDERS' CLAIMS: LIMIT.
Notwithstanding any other provision of this chapter, the
association's liability for shareholder derivative actions or
other claims for economic loss incurred by a claimant in the
claimant's capacity as a shareholder under an insurance policy
placed in force on or after January 1, 1992, is limited to
$300,000 for each policy, including defense costs, regardless of
the number of claimants under each policy.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
SUBCHAPTER F. NONDUPLICATION OF RECOVERY
Sec. 462.251. EXHAUSTION OF RIGHTS UNDER OTHER POLICY REQUIRED.
(a) Any person who has a claim under an insurance policy, other
than an impaired insurer's policy, and whose claim arises from
the same facts, injury, or loss giving rise to a claim against an
impaired insurer or the insurer's insured, must first exhaust the
person's rights under the insurance policy, including:
(1) a claim for benefits under a workers' compensation insurance
policy or a claim for indemnity or medical benefits under a
health, disability, uninsured motorist, personal injury
protection, medical payment, liability, or other insurance
policy; and
(2) the right to defense under the insurance policy.
(b) Subsection (a) applies without regard to whether the
insurance policy is issued by a member insurer.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
Sec. 462.252. REDUCTION IN AMOUNT OF COVERED CLAIM FOR OTHER
POLICY. (a) Except as provided by Subsection (b), an amount
payable as a covered claim under this chapter is reduced by the
full applicable limits of another insurance policy described by
Section 462.251, and the association shall receive a full credit
in the amount of the full applicable limits of the other policy.
(b) A covered claim for workers' compensation benefits is
subject to reduction only by a third-party liability recovery
under Section 417.002, Labor Code.
(c) Subject to Section 462.255, the maximum amount payable by
the association is the damages incurred by the claimant, less the
association's credit or offset under this section, except that
the association's liability may not exceed the lesser of:
(1) $300,000; or
(2) the limits of the insurance policy under which the claim is
made.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
Sec. 462.253. EFFECT ON INSURED OF REDUCTION IN AMOUNT OF
COVERED CLAIM. To the extent that the association's obligation
is reduced by the application of Sections 462.251 and 462.252,
the liability of the person insured by the impaired insurer's
policy for the claim is reduced in the same amount.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
Sec. 462.254. RECOVERY FROM MORE THAN ONE GUARANTY ASSOCIATION.
(a) Except as provided by Subsections (b) and (c), a person who
has a claim that may be recovered from more than one insurance
guaranty association or the equivalent shall seek recovery first
from the association of the insured's residence.
(b) A claimant shall seek recovery of a first-party claim for
damage to property with a permanent location first from the
association of the location of the property.
(c) A claimant shall seek recovery of a workers' compensation
claim first from the association of the claimant's residence.
(d) The association has a credit or offset against the benefits
under this chapter in the amount of the claimant's recovery under
this section.
(e) Subject to Section 462.255, the maximum amount payable by
the association is the amount of damages incurred by the
claimant, less the credit or offset, except that the
association's liability may not exceed $300,000.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
Sec. 462.255. CERTAIN CLAIMS SUBJECT TO LIEN OR SUBROGATION;
LIMIT ON TOTAL RECOVERY. (a) Notwithstanding Sections
462.252(c) and 462.254(e), if a claimant is seeking recovery of
insurance policy benefits that, had the impaired insurer not been
insolvent, would be subject to lien or subrogation by any other
insurer, including a workers' compensation insurer or health
insurer, regardless of whether the other insurer is impaired, the
association's credit or offset is deducted from the lesser of the
damages incurred by the claimant or the limits of the policy
under which the claim is made.
(b) A claimant's recovery under this chapter may not result in a
total recovery to the claimant that is greater than the recovery
that would have resulted had the impaired insurer not been
insolvent.
(c) Subject to Sections 462.201-462.203, 462.205-462.210,
462.213, 462.214, and 462.305 of this code and Title 5, Labor
Code, a claim for workers' compensation benefits under this
chapter may not result in a recovery to the claimant that is less
than the recovery that would have resulted had the impaired
insurer not been insolvent.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
SUBCHAPTER G. ASSOCIATION POWERS AND DUTIES RELATING TO COVERED
CLAIMS
Sec. 462.301. GENERAL POWERS AND DUTIES OF ASSOCIATION IN
CONNECTION WITH PAYMENT OF COVERED CLAIMS. (a) The association
shall investigate and adjust, compromise, settle, and pay covered
claims to the extent of the association's obligation and deny all
other claims.
(b) The association may review a settlement, release, or
judgment to which an impaired insurer or the impaired insurer's
insured was a party to determine the extent to which the
settlement, release, or judgment may be properly contested.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
Sec. 462.302. PAYMENT OF COVERED CLAIMS. (a) The association
shall pay covered claims that exist before the designation of
impairment or that arise:
(1) not later than the 30th day after the date of the
designation of impairment;
(2) before the insurance policy expiration date, if that date is
not later than the 30th day after the date of the designation of
impairment; or
(3) before the insured replaces the insurance policy or causes
the policy's cancellation, if the insured does so not later than
the 30th day after the date of the designation of impairment.
(b) The association satisfies the obligation to pay a covered
claim by paying the claimant the full amount of a covered claim
for benefits.
(c) The association's liability is limited to the payment of
covered claims. The association is not liable for any other
claim or damages against the insured, an impaired insurer, the
association, the receiver, the special deputy receiver, the
commissioner, or the liquidator, including a claim for:
(1) recovery of attorney's fees, prejudgment or postjudgment
interest, or penalties;
(2) extracontractual damages, multiple damages, or exemplary
damages; or
(3) any other amount sought in connection with the assertion or
prosecution of a claim, without regard to whether the claim is a
covered claim, by or on behalf of:
(A) an insured or claimant; or
(B) a provider of goods or services retained by an insured or
claimant.
(d) The association shall pay claims in the order the
association considers reasonable, including paying as claims are
received from the claimants or in groups or categories of claims.
(e) This section does not exclude the payment of workers'
compensation benefits or other liabilities or penalties
authorized by Title 5, Labor Code, arising from the association's
processing and paying workers' compensation benefits after the
designation of impairment.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
Sec. 462.303. CERTAIN DETERMINATIONS NOT BINDING. (a) The
association is not bound by:
(1) a judgment taken before the designation of impairment in
which an insured under a liability insurance policy or the
insurer failed to exhaust all appeals;
(2) a judgment taken by default or consent against an insured or
the impaired insurer; or
(3) a judgment, settlement, or release entered into by the
in