CHAPTER 463. TEXAS LIFE, ACCIDENT, HEALTH, AND HOSPITAL SERVICE INSURANCE GUARANTY ASSOCIATION
INSURANCE CODE
TITLE 4. REGULATION OF SOLVENCY
SUBTITLE D. GUARANTY ASSOCIATIONS
CHAPTER 463. TEXAS LIFE, ACCIDENT, HEALTH, AND HOSPITAL SERVICE
INSURANCE GUARANTY ASSOCIATION
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 463.001. SHORT TITLE. This chapter may be cited as the
Texas Life, Accident, Health, and Hospital Service Insurance
Guaranty Association Act.
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.012(b), eff. September 1, 2007.
Acts 2007, 80th Leg., R.S., Ch.
921, Sec. 9.012(b), eff. September 1, 2007.
Sec. 463.002. PURPOSE. The purpose of this chapter is to
protect, subject to certain limitations, a person specified by
Section 463.201 against failure in the performance of a
contractual obligation under a life, accident, or health
insurance policy or annuity contract with respect to which this
chapter provides coverage as determined under Subchapter E,
because of the impairment or insolvency of the member insurer
that issued the policy or contract.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
Sec. 463.003. GENERAL DEFINITIONS. In this chapter:
(1) "Association" means the Texas Life, Accident, Health, and
Hospital Service Insurance Guaranty Association.
(1-a) "Benefit plan" means a specific employee, union, or
association of natural persons benefit plan.
(2) "Board" means the board of directors of the association.
(3) "Contractual obligation" means an obligation under a policy
or contract or certificate under a group policy or contract, or
part of a policy or contract or certificate, for which coverage
is provided under Subchapter E.
(4) "Covered policy" means a policy or contract, or portion of a
policy or contract, with respect to which this chapter provides
coverage as determined under Subchapter E.
(5) "Impaired insurer" means a member insurer that is designated
an "impaired insurer" by the commissioner and is:
(A) placed by a court in this state or another state under an
order of supervision, liquidation, rehabilitation, or
conservation;
(B) placed under an order of liquidation or rehabilitation under
Chapter 443; or
(C) placed under an order of supervision or conservation by the
commissioner under Chapter 441.
(6) "Insolvent insurer" means a member insurer that has been
placed under an order of liquidation with a finding of insolvency
by a court in this state or another state.
(7) "Member insurer" means an insurer that is required to
participate in the association under Section 463.052.
(7-a) "Owner" means the owner of a policy or contract and
"policy owner" and "contract owner" mean the person who is
identified as the legal owner under the terms of the policy or
contract or who is otherwise vested with legal title to the
policy or contract through a valid assignment completed in
accordance with the terms of the policy or contract and is
properly recorded as the owner on the books of the insurer. The
terms "owner," "contract owner," and "policy owner" do not
include persons with a mere beneficial interest in a policy or
contract.
(8) "Person" means an individual, corporation, limited liability
company, partnership, association, governmental body or entity,
or voluntary organization.
(8-a) "Plan sponsor" means:
(A) the employer in the case of a benefit plan established or
maintained by a single employer;
(B) the employee organization in the case of a benefit plan
established or maintained by an employee organization; or
(C) in a case of a benefit plan established or maintained by two
or more employers or jointly by one or more employers and one or
more employee organizations, the association, committee, joint
board of trustees, or other similar group of representatives of
the parties who establish or maintain the benefit plan.
(9) "Premium" means an amount received on a covered policy, less
any premium, consideration, or deposit returned on the policy,
and any dividend or experience credit on the policy. The term
does not include:
(A) an amount received for a policy or contract or part of a
policy or contract for which coverage is not provided under
Section 463.202, except that assessable premiums may not be
reduced because of:
(i) an interest limitation provided by Section 463.203(b)(3); or
(ii) a limitation provided by Section 463.204 with respect to a
single individual, participant, annuitant, or contract owner;
(B) premiums in excess of $5 million on an unallocated annuity
contract not issued under a governmental benefit plan
established under Section 401, 403(b), or 457, Internal Revenue
Code of 1986;
(C) premiums received from the state treasury or the United
States treasury for insurance for which this state or the United
States contracts to:
(i) provide welfare benefits to designated welfare recipients;
or
(ii) implement Title 2, Human Resources Code, or the Social
Security Act (42 U.S.C. Section 301 et seq.); or
(D) premiums in excess of $5 million with respect to multiple
nongroup policies of life insurance owned by one owner,
regardless of whether the policy owner is an individual, firm,
corporation, or other person and regardless of whether the
persons insured are officers, managers, employees, or other
persons, regardless of the number of policies or contracts held
by the owner.
(10) "Resident" means a person who resides in this state on the
earlier of the date a member insurer becomes an impaired insurer
or the date of entry of a court order that determines a member
insurer to be an impaired insurer or the date of entry of a court
order that determines a member insurer to be an insolvent insurer
and to whom the member insurer owes a contractual obligation.
For the purposes of this subdivision:
(A) a person is considered to be a resident of only one state;
(B) a person other than an individual is considered to be a
resident of the state in which the person's principal place of
business is located; and
(C) a United States citizen who is either a resident of a
foreign country or a resident of a United States possession,
territory, or protectorate that does not have an association
similar to the association created by this chapter is considered
a resident of the state of domicile of the insurer that issued
the policy or contract.
(10-a) "Structured settlement annuity" means an annuity
purchased to fund periodic payments for a plaintiff or other
claimant in payment for or with respect to personal injury
suffered by the plaintiff or other claimant.
(11) "Supplemental contract" means a written agreement for the
distribution of policy or contract proceeds.
(12) "Unallocated annuity contract" means an annuity contract or
group annuity certificate that is not issued to and owned by an
individual, except to the extent of any annuity benefits
guaranteed to an individual by an insurer under the contract or
certificate.
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.013(a), eff. September 1, 2007.
Acts 2007, 80th Leg., R.S., Ch.
921, Sec. 9.013(a), eff. September 1, 2007.
Sec. 463.0031. DEFINITION OF PRINCIPAL PLACE OF BUSINESS OF PLAN
SPONSOR OR OTHER PERSON. (a) Except as otherwise provided by
this section, in this chapter, the "principal place of business"
of a plan sponsor or a person other than an individual means the
single state in which the individuals who establish policy for
the direction, control, and coordination of the operations of the
plan sponsor or person as a whole primarily exercise that
function, as determined by the association in its reasonable
judgment by considering the following factors:
(1) the state in which the primary executive and administrative
headquarters of the plan sponsor or person is located;
(2) the state in which the principal office of the chief
executive officer of the plan sponsor or person is located;
(3) the state in which the board of directors, or similar
governing person or persons, of the plan sponsor or person
conduct the majority of their meetings;
(4) the state in which the executive or management committee of
the board of directors, or similar governing person or persons,
of the plan sponsor or person conduct the majority of their
meetings;
(5) the state from which the management of the overall
operations of the plan sponsor or person is directed; and
(6) in the case of a benefit plan sponsored by affiliated
companies comprising a consolidated corporation, the state in
which the holding company or controlling affiliate has its
principal place of business as determined using the factors
described by Subdivisions (1)-(5).
(b) In the case of a plan sponsor, if more than 50 percent of
the participants in the benefit plan are employed in a single
state, that state is the principal place of business of the plan
sponsor.
(c) The principal place of business of a plan sponsor of a
benefit plan described in Section 463.003(8-a)(C) is the
principal place of business of the association, committee, joint
board of trustees, or other similar group of representatives of
the parties who establish or maintain the benefit plan that, in
lieu of a specific or clear designation of a principal place of
business, shall be deemed to be the principal place of business
of the employer or employee organization that has the largest
investment in that benefit plan.
Added by Acts 2007, 80th Leg., R.S., Ch.
730, Sec. 3B.013(b), eff. September 1, 2007.
Added by Acts 2007, 80th Leg., R.S., Ch.
921, Sec. 9.013(b), eff. September 1, 2007.
Sec. 463.004. CONSTRUCTION. This chapter shall be liberally
construed to implement the purpose of this chapter described by
Section 463.002. Section 463.002 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. 463.005. IMMUNITY. (a) The following persons are not
liable, and a cause of action does not arise against any of the
following persons, for a good faith act or omission in exercising
powers and performing 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 or the insurer's agent or employee;
(4) a board member;
(5) the receiver; and
(6) a special deputy receiver or the special deputy receiver's
agent or employee.
(b) Immunity under Subsection (a) extends to participation in an
organization of one or more state associations that have similar
purposes and to a similar organization and the organization's
agent or employee.
(c) 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 brought 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 this section. The attorney
general is not required to defend 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
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 this section.
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. 463.006. RULES. The commissioner shall adopt reasonable
rules as necessary to carry out and supplement this chapter and
the purposes of this chapter.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
SUBCHAPTER B. GOVERNANCE OF AND PARTICIPATION IN ASSOCIATION
Sec. 463.051. PURPOSE AND REGULATION OF ASSOCIATION. (a) The
Texas Life, Accident, Health, and Hospital Service Insurance
Guaranty Association is a nonprofit legal entity existing to pay
benefits and continue coverage as provided by this chapter.
(b) The association is subject to the applicable provisions of
this code and other insurance laws of this state and the
immediate supervision of the commissioner. The commissioner may
examine and regulate the association in the same manner as an
insurer under this code.
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.014(a), eff. September 1, 2007.
Acts 2007, 80th Leg., R.S., Ch.
921, Sec. 9.014(a), eff. September 1, 2007.
Sec. 463.052. REQUIRED PARTICIPATION IN ASSOCIATION. (a) As a
condition of engaging in the business of insurance in this state,
an insurer, including a mutual assessment company, a local mutual
aid association, a statewide mutual assessment company, and a
stipulated premium company authorized to engage in business in
this state, shall participate as a member of the association if
the insurer holds a certificate of authority to engage in a kind
of insurance business in this state with respect to which this
chapter provides coverage as determined under Subchapter E. The
requirement to participate applies regardless of whether the
insurer's certificate of authority in this state is suspended,
revoked, not renewed, or voluntarily withdrawn.
(b) The following do not participate as member insurers:
(1) a health maintenance organization;
(2) a fraternal benefit society;
(3) a mandatory state pooling plan;
(4) a reciprocal or interinsurance exchange;
(5) an organization which has a certificate of authority or
license limited to the issuance of charitable gift annuities, as
defined by this code or rules adopted by the commissioner; and
(6) an entity similar to an entity described by Subdivision (1),
(2), (3), (4), or (5).
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.013(c), eff. September 1, 2007.
Acts 2007, 80th Leg., R.S., Ch.
921, Sec. 9.013(c), eff. September 1, 2007.
Sec. 463.053. BOARD OF DIRECTORS. (a) The association's powers
are exercised through a board of directors consisting of nine
individuals appointed by the commissioner as provided by this
section.
(b) The commissioner shall appoint three board members from
officers or employees of the 50 member insurers having the
largest total direct premium income according to the most recent
financial statement on file on the date of appointment.
(c) To give fair representation to member insurers, the
commissioner shall appoint two board members from member insurers
other than insurers described by Subsection (b), considering the
varying categories of premium income and geographical location.
(d) The commissioner shall appoint four board members who are
public representatives.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
Sec. 463.054. ELIGIBILITY TO SERVE AS PUBLIC REPRESENTATIVE. To
be eligible to serve as a public representative, an individual
may not:
(1) be an officer, director, or employee of an insurer,
insurance agency, agent, broker, solicitor, adjuster, or other
business entity regulated by the department;
(2) be a person required to register under Chapter 305,
Government Code; or
(3) be related within the second degree by affinity or
consanguinity to a person described by Subdivision (1) or (2).
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
Sec. 463.055. TERM; VACANCY. (a) Board members serve staggered
six-year terms, with the terms of three members expiring each
odd-numbered year. A member may be reappointed.
(b) A board member shall serve until a successor is appointed.
(c) If a board member who is an officer or employee of a member
insurer ceases to be an officer or employee of the insurer, the
member's office becomes vacant.
(d) The commissioner shall appoint an individual to fill a
vacancy on the board for the unexpired term.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
Sec. 463.056. COMPENSATION OF BOARD MEMBERS. A board member may
not receive compensation from the association for the member's
services but may be reimbursed from the association's assets for
expenses incurred as a board member.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
Sec. 463.057. 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. 463.058. CONFLICT OF INTEREST. (a) In this section,
"transaction on behalf of an impaired insurer" includes a
reinsurance agreement, transaction, merger, purchase, sale,
contribution, or exchange of assets, insurance policies, or
property made by the association or a supervisor, conservator, or
receiver on behalf of an impaired insurer.
(b) A board member may not:
(1) receive money or another thing of value for negotiating,
procuring, participating in, recommending, or aiding a
transaction on behalf of an impaired insurer; or
(2) as a principal, coprincipal, agent, or beneficiary, have a
pecuniary interest in a transaction on behalf of an impaired
insurer.
(c) For the purposes of this section, a board member is
considered to receive a thing of value or have a pecuniary
interest in a transaction on behalf of an impaired insurer
regardless of whether the receipt or interest is direct,
indirect, or through a substantial interest in a corporation,
firm, or other business unit.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
SUBCHAPTER C. GENERAL POWERS AND DUTIES OF ASSOCIATION
Sec. 463.101. GENERAL POWERS AND DUTIES. (a) The association
may:
(1) enter into contracts as necessary or proper to carry out
this chapter and the purposes of this chapter;
(2) sue or be sued, including taking:
(A) necessary or proper legal action to:
(i) recover an unpaid assessment under Subchapter D; or
(ii) settle a claim or potential claim against the association;
or
(B) necessary legal action to avoid payment of an improper
claim;
(3) borrow money to effect the purposes of this chapter;
(4) exercise, for the purposes of this chapter and to the extent
approved by the commissioner, the powers of a domestic life,
accident, or health insurance company or a group hospital service
corporation, except that the association may not issue an
insurance policy or annuity contract other than to perform the
association's obligations under this chapter;
(5) to further the association's purposes, exercise the
association's powers, and perform the association's duties, join
an organization of one or more state associations that have
similar purposes;
(6) request information from a person seeking coverage from the
association in determining its obligations under this chapter
with respect to the person, and the person shall promptly comply
with the request; and
(7) take any other necessary or appropriate action to discharge
the association's duties and obligations under this chapter or to
exercise the association's powers under this chapter.
(b) If not in default, a note or other evidence of indebtedness
of the association is a legal investment for a domestic insurer
and may be carried as an admitted asset.
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.015(a), eff. September 1, 2007.
Acts 2007, 80th Leg., R.S., Ch.
921, Sec. 9.015(a), eff. September 1, 2007.
Sec. 463.102. PLAN OF OPERATION; AMENDMENTS. (a) The
association shall perform the association's functions under a
plan of operation approved by the commissioner. The plan of
operation must:
(1) establish:
(A) procedures for handling the assets of the association;
(B) the amount and method of reimbursing board members under
Section 463.056;
(C) regular places and times for board meetings, including
telephone conference calls;
(D) procedures for maintaining records of all financial
transactions of the association, the association's agents, and
the board; and
(E) additional procedures for assessments under Subchapter D;
and
(2) contain additional provisions necessary or proper for the
execution of the association's powers and duties.
(b) The association may amend the plan of operation. An
amendment must be approved by the commissioner and takes effect
on:
(1) the date the commissioner approves the amendment; or
(2) the 30th day after the date the amendment is submitted to
the commissioner for approval, if the commissioner does not
approve or disapprove the amendment before the 30th day.
(c) 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. 463.103. PERSONNEL. The association may employ or retain
employees or contractors to handle the association's financial
transactions and to perform other functions under this chapter.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
Sec. 463.104. ASSOCIATION RECORDS. (a) The association shall
maintain a record of each negotiation or meeting in which the
association or the association's representative discusses the
association's activities in carrying out the powers and duties
under Section 463.101, 463.103, 463.109, or 463.111(c) or
Subchapter F.
(b) A record under Subsection (a) may be made public only on:
(1) termination of a liquidation, rehabilitation, or
conservation proceeding involving the impaired or insolvent
insurer;
(2) termination of the impairment or insolvency of the insurer;
or
(3) order of a court.
(c) This section does not limit the association's duty to report
on the association's activities as required by Section 463.110.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
Sec. 463.105. ACCOUNTS. For the purposes of administration and
assessment, the association shall maintain:
(1) an accident, health, and hospital services insurance
account;
(2) a life insurance account;
(3) an annuity account; and
(4) an administrative account.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
Sec. 463.106. DELEGATION OF POWERS AND DUTIES. (a) The plan of
operation may provide that, on approval of the board and the
commissioner, a power or duty of the association is delegated to
a corporation or other organization that:
(1) performs 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) A power or duty under Section 463.261(c) or Subchapter D,
other than a duty under Section 463.161(c), may not be delegated
under this section.
(c) The corporation or other organization to which a power or
duty is delegated shall be:
(1) reimbursed for a payment made on behalf of the association;
and
(2) paid for performing any other function of the association.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
Sec. 463.107. EXEMPTION FROM TAXATION. The association is
exempt from payment of all fees and all taxes levied by this
state or a subdivision of this state, except taxes levied on
property.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
Sec. 463.108. DETECTION AND PREVENTION OF IMPAIRMENT AND
INSOLVENCY. On a majority vote, the board:
(1) may make recommendations to the commissioner for detecting
and preventing insurer insolvencies; and
(2) shall notify the commissioner of information indicating that
a member insurer may be impaired or insolvent.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
Sec. 463.109. ASSOCIATION APPEARANCE BEFORE COURT; INTERVENTION.
(a) The association may appear before a court in this state
with jurisdiction over an impaired or insolvent insurer
concerning which the association is or may become obligated under
this chapter. The association's right to appear applies to:
(1) a proposal for reinsuring, modifying, or guaranteeing the
insurer's policies or contracts;
(2) the determination of the insurer's policies or contracts and
contractual obligations; and
(3) any other matter germane to the association's powers and
duties.
(b) The association may appear or intervene before a court in
another state with jurisdiction over:
(1) an impaired or insolvent insurer concerning which the
association is or may become obligated; or
(2) a third party against whom the association may have rights
through subrogation of the insurer's policyholders.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
Sec. 463.110. ANNUAL REPORT. Not later than the 120th day after
the last day of each association fiscal year, the board shall
submit to the commissioner:
(1) a financial report in a form approved by the commissioner;
and
(2) a report of the association's activities during the
preceding fiscal year.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
Sec. 463.111. BOARD AND ASSOCIATION ADVICE AND ASSISTANCE. (a)
On a majority vote, the board may report and make recommendations
to the commissioner on any matter germane to:
(1) the solvency, liquidation, rehabilitation, or conservation
of a member insurer; or
(2) the solvency of an insurer seeking to engage in the business
of insurance in this state.
(b) A report or recommendation under Subsection (a) is not a
public document, and Chapter 552, Government Code, does not apply
to the report or recommendation until the insurer that is the
subject of the report or recommendation is designated as
impaired.
(c) On the commissioner's request, the association may assist
and advise the commissioner concerning rehabilitation, payment of
claims, continuation of coverage, or the performance of other
contractual obligations of an impaired or insolvent insurer.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
Sec. 463.112. BOARD ACCESS TO RECORDS. The receiver or
statutory successor of an impaired insurer shall give the board
or a representative of the board:
(1) access to the insurer's records as necessary for the board
to carry out 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. 463.113. BOARD REPORT AT CONCLUSION OF INSOLVENCY. (a) At
the conclusion of an insurer insolvency in which the association
was obligated to pay a covered claim, the board shall prepare and
submit to the commissioner a report containing any information
the board possesses concerning the history and causes of the
insolvency.
(b) The board:
(1) shall cooperate with the boards of directors of guaranty
associations in other states to prepare a report on the history
and causes of the insolvency of a particular insurer; and
(2) may adopt by reference a report prepared by any of those
associations.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
Sec. 463.114. SUMMARY DOCUMENT; DISCLAIMER. (a) The
association shall prepare a summary document describing the
general purposes and limitations of this chapter and amend the
document as necessary to comply with this chapter. The document
must clearly and conspicuously contain on the document's face a
disclaimer that:
(1) states the name and address of the association and
department;
(2) warns the policy or contract holder that:
(A) the association may not cover the policy; or
(B) coverage, if available, is subject to substantial
limitations and exclusions and requires continuous residence in
this state;
(3) states that an insurer and the insurer's agent are
prohibited by law from using the association's existence to sell,
solicit, or induce the purchase of any kind of insurance;
(4) warns the policy or contract holder not to rely on
association coverage in selecting an insurer; and
(5) provides other information the commissioner prescribes.
(b) The association shall submit the document to the
commissioner for approval.
(c) At the expiration of the 60th day after approval of the
document, an insurer may not deliver a policy or contract with
respect to which this chapter provides coverage as determined
under Subchapter E to a policy or contract holder before a copy
of the summary document is delivered to the policy or contract
holder. The document must also be available on request of a
policyholder.
(d) The distribution, delivery, content, or interpretation of a
summary document does not guarantee that a policy or contract or
a policy or contract holder is provided coverage by this chapter
if a member insurer becomes impaired or insolvent. Failure to
receive the document does not give an insured or policy,
contract, or certificate holder any rights greater than those
provided by this chapter.
(e) An insurer or agent may not deliver a policy or contract
described by Section 463.202 that is excluded from the coverage
provided by this chapter by Section 463.203 unless the insurer or
agent, either before or in conjunction with delivery, gives the
policy or contract holder a separate written notice clearly and
conspicuously disclosing that the policy or contract is not
covered by the association.
(f) The commissioner shall specify by rule the form and content
of the disclaimer required by Subsection (a) and the notice
required by Subsection (e).
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
SUBCHAPTER D. ASSESSMENTS
Sec. 463.151. MAKING AND PAYMENT OF ASSESSMENT. (a) The
association shall assess member insurers, separately for each
account under Section 463.105, in the amounts and at the times
the board determines necessary to provide money for the
association to exercise the association's powers, perform the
association's duties, and carry out the purposes of this chapter.
The association may not authorize and call an assessment to meet
the requirements of the association with respect to an impaired
or insolvent insurer until the assessment is necessary to carry
out the purposes of this chapter. The board shall classify
assessments under Section 463.152 and determine the amount of
assessments with reasonable accuracy, recognizing that exact
determinations may not always be possible.
(a-1) The association shall notify each member insurer of its
anticipated pro rata share of an authorized assessment not yet
called not later than the 180th day after the date the assessment
is authorized.
(b) An assessment is due on the date the association specifies,
which may not be earlier than the 30th day after the date the
association gives written notice of the assessment to member
insurers. Interest accrues on an unpaid amount at a rate of 10
percent beginning on the due date.
(c) An insurer whose certificate of authority to engage in
business in this state is revoked or surrendered remains liable
for any unpaid assessment made before the date of the revocation
or surrender.
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.016(a), eff. September 1, 2007.
Acts 2007, 80th Leg., R.S., Ch.
921, Sec. 9.016(a), eff. September 1, 2007.
Sec. 463.152. CLASSES OF ASSESSMENTS. (a) Assessments are
classified as Class A or Class B assessments.
(b) Class A assessments are authorized and called to pay:
(1) the association's administrative costs;
(2) administrative expenses that:
(A) are properly incurred under this chapter; and
(B) relate to an unauthorized insurer or to an entity that is
not a member insurer; and
(3) other general expenses not related to a particular impaired
or insolvent insurer.
(c) Class B assessments are authorized and called to the extent
necessary for the association to carry out the association's
powers and duties under Sections 463.101, 463.103, 463.109, and
463.111(c) and Subchapter F with regard to an impaired or
insolvent insurer.
(d) For purposes of this section, an assessment is authorized at
the time a resolution by the board is passed under which an
assessment will be called immediately or in the future from
member insurers for a specified amount and an assessment is
called at the time a notice has been issued by the association to
member insurers requiring that an authorized assessment be paid
within a period stated in the notice. An authorized assessment
becomes a called assessment at the time notice is mailed by the
association to member insurers.
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.016(b), eff. September 1, 2007.
Acts 2007, 80th Leg., R.S., Ch.
921, Sec. 9.016(b), eff. September 1, 2007.
Sec. 463.153. AMOUNT OF ASSESSMENTS. (a) The board shall
determine the amount of a Class A assessment for each account
under Section 463.105, considering with respect to member
insurers one or more of the following as shown by annual
statements for the year preceding the date of the assessment:
(1) annual premium receipts;
(2) admitted assets; or
(3) insurance in force.
(b) Class B assessments against a member insurer for each
account under Section 463.105 shall be authorized and called in
the proportion that the premiums received on business in this
state by the insurer on policies or contracts covered by each
account for the three most recent calendar years for which
information is available preceding the year in which the insurer
became impaired or insolvent bear to premiums received on
business in this state for those calendar years by all assessed
member insurers. The amount of a Class B assessment shall be
allocated among the separate accounts in accordance with an
allocation formula that may be based on:
(1) the premiums or reserves of the impaired or insolvent
insurer; or
(2) any other standard deemed by the board in the board's sole
discretion as being fair and reasonable under the circumstances.
(c) The total amount of assessments on a member insurer for each
account under Section 463.105 may not exceed two percent of the
insurer's premiums on the policies covered by the account during
the three calendar years preceding the year in which the insurer
became an impaired or insolvent insurer. If two or more
assessments are authorized in a calendar year with respect to
insurers that become impaired or insolvent in different calendar
years, the average annual premiums for purposes of the aggregate
assessment percentage limitation described by this subsection
shall be equal to the higher of the three-year average annual
premiums for the applicable subaccount or account as computed in
accordance with this section. If the maximum assessment and the
other assets of the association do not provide in a year an
amount sufficient to carry out the association's
responsibilities, the association shall make necessary additional
assessments as soon as this chapter permits.
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.016(c), eff. September 1, 2007.
Acts 2007, 80th Leg., R.S., Ch.
921, Sec. 9.016(c), eff. September 1, 2007.
Sec. 463.154. DEFERMENT. The association may wholly or partly
defer an assessment of a member insurer if the association
believes payment of the assessment would endanger the ability of
the insurer to fulfill the insurer's contractual obligations.
The amount of the assessment that is deferred may be assessed
against the other member insurers in a manner consistent with
this subchapter.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
Sec. 463.155. DEPOSIT OF ASSESSMENTS. The association may
deposit assessments 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. 463.156. CERTIFICATE OF CONTRIBUTION. The association
shall issue to each member insurer that pays a Class B assessment
a certificate of contribution, in a form the commissioner
prescribes, for the amount paid. All outstanding certificates
are of equal priority regardless of the amount of the assessment
paid or the date the certificate is issued.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
Sec. 463.157. REFUNDS. (a) The board may refund to member
insurers the amount by which the association's assets, including
any net realized gains and income from investments, exceed the
amount the board determines is necessary to carry out the
association's obligations regarding that amount during the next
year.
(b) A refund must be made:
(1) by an equitable method established in the plan of operation;
and
(2) in proportion to the contribution of each member insurer.
(c) The board may retain a reasonable amount to provide for the
association's continuing expenses and for future losses if
refunds are impractical.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
Sec. 463.158. USE OF ASSESSMENTS. Money from assessments
supplements the marshalling of an impaired insurer's assets to
make payments on the insurer's behalf.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
Sec. 463.159. FAILURE TO PAY; COLLECTION BY COMMISSIONER. On
failure of a member insurer to pay an assessment when due, the
commissioner may either:
(1) suspend or revoke, after notice and hearing, the insurer's
certificate of authority to engage in the business of insurance
in this state; or
(2) levy a forfeiture in an amount not less than $100 each month
or more than five percent of the unpaid assessment each month.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
Sec. 463.160. PREMIUM TAX CREDIT FOR CLASS A ASSESSMENT. The
amount of a Class A assessment paid by a member insurer shall be
allowed as a credit on the amount of premium taxes due in the
same manner as a credit is allowed under Section 401.151(e).
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
Sec. 463.161. PREMIUM TAX CREDIT FOR CLASS B ASSESSMENT. (a) A
member insurer is entitled to show as an admitted asset a
certificate of contribution in the form the commissioner approves
under Section 463.156. Unless the commissioner requires a longer
period, the certificate may be shown at:
(1) for the calendar year of issuance, an amount equal to the
certificate's original face value approved by the commissioner;
and
(2) beginning with the year following the calendar year of
issuance, an amount equal to the certificate's original face
value, reduced by 20 percent a year for each year after the year
of issuance, for a period of five years.
(b) An amount written off during a calendar year under
Subsection (a) shall be allowed as a credit against the member
insurer's premium tax owed for business engaged in during that
year. The insurer is not required to write off in a single year
an amount that exceeds the amount of premium tax owed for the
business described by this subsection.
(c) The association shall pay to the commissioner, and the
commissioner shall deliver to the comptroller for deposit to the
credit of the general revenue fund, any amount owed as a refund
from the association under Section 463.157 that was written off
and used for a tax credit under this section.
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.017(a), eff. September 1, 2007.
Acts 2007, 80th Leg., R.S., Ch.
921, Sec. 9.017(a), eff. September 1, 2007.
Sec. 463.162. ASSIGNMENT OR TRANSFER OF CREDIT. (a) A member
insurer may assign or transfer a credit against premium tax to
another member insurer if:
(1) an acquisition, merger, or total assumption of reinsurance
occurs between the insurers; or
(2) the commissioner by order approves the assignment or
transfer.
(b) Not later than the later of November 1 or the 60th day after
the date of the assignment or transfer, each member insurer
shall:
(1) report the assignment or transfer to the comptroller on a
form the comptroller prescribes; and
(2) include with the report any documents from the commissioner
that show approval of the assignment or transfer.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
Sec. 463.163. INSURED'S LIABILITY UNDER ASSESSMENT PLAN. This
chapter does not reduce the liability for unpaid assessments of
the insureds of an impaired or insolvent insurer operating under
a plan with assessment liability.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
SUBCHAPTER E. COVERAGE PROVIDED BY ASSOCIATION
Sec. 463.201. INSUREDS COVERED. (a) Subject to Subsections (b)
and (c), this chapter provides coverage for a policy or contract
described by Section 463.202 to a person who is:
(1) a person, other than a certificate holder under a group
policy or contract who is not a resident, who is a beneficiary,
assignee, or payee of a person described by Subdivision (2);
(2) a person who is an owner of or certificate holder under a
policy or contract specified by Section 463.202, other than an
unallocated annuity contract or structured settlement annuity,
and who is:
(A) a resident; or
(B) not a resident, but only under all of the following
conditions:
(i) the insurers that issued the policies or contracts are
domiciled in this state;
(ii) the state in which the person resides has an association
similar to the association; and
(iii) the person is not eligible for coverage by an association
in any other state because the insurer was not licensed in the
state at the time specified in that state's guaranty association
law;
(3) a person who is the owner of an unallocated annuity contract
issued to or in connection with:
(A) a benefit plan whose plan sponsor has the sponsor's
principal place of business in this state; or
(B) a government lottery, if the owner is a resident; or
(4) a person who is the payee under a structured settlement
annuity, or beneficiary of the payee if the payee is deceased,
if:
(A) the payee is a resident, regardless of where the contract
owner resides;
(B) the payee is not a resident, the contract owner of the
structured settlement annuity is a resident, and the payee is not
eligible for coverage by the association in the state in which
the payee resides; or
(C) the payee and the contract owner are not residents, the
insurer that issued the structured settlement annuity is
domiciled in this state, the state in which the contract owner
resides has an association similar to the association, and
neither the payee or, if applicable, the payee's beneficiary, nor
the contract owner is eligible for coverage by the association in
the state in which the payee or contract owner resides.
(b) This chapter does not provide coverage to:
(1) a person who is a payee or the beneficiary of a payee with
respect to a contract the owner of which is a resident of this
state, if the payee or the payee's beneficiary is afforded any
coverage by the association of another state; or
(2) a person otherwise described by Subsection (a)(3), if any
coverage is provided by the association of another state to that
person.
(c) This chapter is intended to provide coverage to persons who
are residents of this state, and in those limited circumstances
as described in this chapter, to nonresidents. In order to avoid
duplicate coverage, if a person who would otherwise receive
coverage under this chapter is provided coverage under the laws
of any other state, the person may not be provided coverage under
this chapter. In determining the application of the provisions
of this subsection in situations in which a person could be
covered by the association of more than one state, whether as an
owner, payee, beneficiary, or assignee, this chapter shall be
construed in conjunction with other state laws to result in
coverage by only one association.
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.018(a), eff. September 1, 2007.
Acts 2007, 80th Leg., R.S., Ch.
921, Sec. 9.018(a), eff. September 1, 2007.
Sec. 463.202. POLICIES AND CONTRACTS COVERED. (a) Except as
limited by this chapter, the coverage provided by this chapter to
a person specified by Section 463.201, subject to Sections
463.201(b) and (c), applies with respect to the following
policies and contracts issued by a member insurer:
(1) a direct, nongroup life, health, accident, annuity, or
supplemental policy or contract;
(2) a certificate under a direct group policy or contract;
(3) a group hospital service contract; and
(4) an unallocated annuity contract.
(b) The coverage provided by this chapter also applies with
respect to all other insurance coverage written by the following
entities authorized to engage in business in this state:
(1) a mutual assessment company;
(2) a local mutual aid association;
(3) a statewide mutual assessment company; and
(4) a stipulated premium company.
(c) For the purposes of this section, an annuity contract or a
certificate under a group annuity contract includes:
(1) a guaranteed investment contract;
(2) a deposit administration contract;
(3) an allocated or unallocated funding agreement;
(4) a structured settlement annuity;
(5) an annuity issued to or in connection with a government
lottery; and
(6) an immediate or deferred annuity contract.
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.018(b), eff. September 1, 2007.
Acts 2007, 80th Leg., R.S., Ch.
921, Sec. 9.018(b), eff. September 1, 2007.
Sec. 463.203. POLICIES AND CONTRACTS EXCLUDED. (a) In this
section, "Moody's Corporate Bond Yield Average" means the monthly
average corporates as published by Moody's Investors Service,
Inc., or any successor to that entity.
(b) This chapter does not provide coverage for:
(1) any part of a policy or contract not guaranteed by the
insurer or under which the risk is borne by the policy or
contract owner;
(2) a policy or contract of reinsurance, unless an assumption
certificate has been issued;
(3) any part of a policy or contract to the extent that the rate
of interest on which that part is based:
(A) as averaged over the period of four years before the date
the member insurer becomes impaired or insolvent under this
chapter, whichever is earlier, exceeds a rate of interest
determined by subtracting two percentage points from Moody's
Corporate Bond Yield Average averaged for the same four-year
period or for a lesser period if the policy or contract was
issued less than four years before the date the member insurer
becomes impaired or insolvent under this chapter, whichever is
earlier; and
(B) on and after the date the member insurer becomes impaired or
insolvent under this chapter, whichever is earlier, exceeds the
rate of interest determined by subtracting three percentage
points from Moody's Corporate Bond Yield Average as most recently
available;
(4) a portion of a policy or contract issued to a plan or
program of an employer, association, similar entity, or other
person to provide life, health, or annuity benefits to the
entity's employees, members, or others, to the extent that the
plan or program is self-funded or uninsured, including benefits
payable by an employer, association, or similar entity under:
(A) a multiple employer welfare arrangement as defined by
Section 3, Employee Retirement Income Security Act of 1974 (29
U.S.C. Section 1002);
(B) a minimum premium group insurance plan;
(C) a stop-loss group insurance plan; or
(D) an administrative services-only contract;
(5) any part of a policy or contract to the extent that the part
provides dividends, experience rating credits, or voting rights,
or provides that fees or allowances be paid to any person,
including the policy or contract owner, in connection with the
service to or administration of the policy or contract;
(6) a policy or contract issued in this state by a member
insurer at a time the insurer was not authorized to issue the
policy or contract in this state;
(7) an unallocated annuity contract issued to or in connection
with a benefit plan protected under the federal Pension Benefit
Guaranty Corporation, regardless of whether the Pension Benefit
Guaranty Corporation has not yet become liable to make any
payments with respect to the benefit plan;
(8) any part of an unallocated annuity contract that is not
issued to or in connection with a specific employee, a benefit
plan for a union or association of individuals, or a governmental
lottery;
(9) any part of a financial guarantee, funding agreement, or
guaranteed investment contract that:
(A) does not contain a mortality guarantee; and
(B) is not issued to or in connection with a specific employee,
a benefit plan, or a governmental lottery;
(10) a part of a policy or contract to the extent that the
assessments required by Subchapter D with respect to the policy
or contract are preempted by federal or state law;
(11) a contractual agreement that established the member
insurer's obligations to provide a book value accounting guaranty
for defined contribution benefit plan participants by reference
to a portfolio of assets that is owned by the benefit plan or the
plan's trustee in a case in which neither the benefit plan
sponsor nor its trustee is an affiliate of the member insurer; or
(12) a part of a policy or contract to the extent the policy or
contract provides for interest or other changes in value that are
to be determined by the use of an index or external reference
stated in the policy or contract, but that have not been credited
to the policy or contract, or as to which the policy or contract
owner's rights are subject to forfeiture, as of the date the
member insurer becomes an impaired or insolvent insurer under
this chapter, whichever date is earlier, subject to Subsection
(c).
(c) For purposes of determining the values that have been
credited and are not subject to forfeiture as described by
Subsection (b)(12), if a policy's or contract's interest or
changes in value are credited less frequently than annually, the
interest or change in value determined by using the procedures
defined in the policy or contract is credited as if the
contractual date of crediting interest or changing values is the
earlier of the date of impairment or the date of insolvency, and
is not subject to forfeiture.
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.018(c), eff. September 1, 2007.
Acts 2007, 80th Leg., R.S., Ch.
921, Sec. 9.018(c), eff. September 1, 2007.
Sec. 463.204. OBLIGATIONS EXCLUDED. A contractual obligation
does not include:
(1) death benefits in an amount in excess of $300,000 or a net
cash surrender or net cash withdrawal value in an amount in
excess of $100,000 under one or more policies on a single life;
(2) an amount in excess of:
(A) $100,000 in the present value under one or more annuity
contracts issued with respect to a single life under individual
annuity policies or group annuity policies; or
(B) $5 million in unallocated annuity contract benefits with
respect to a single contract owner regardless of the number of
those contracts;
(3) an amount in excess of the following amounts, including any
net cash surrender or cash withdrawal values, under one or more
accident, health, accident and health, or long-term care
insurance policies on a single life:
(A) $500,000 for basic hospital, medical-surgical, or major
medical insurance, as those terms are defined by this code or
rules adopted by the commissioner;
(B) $300,000 for disability and long-term care insurance, as
those terms are defined by this code or rules adopted by the
commissioner; or
(C) $200,000 for coverages that are not defined as basic
hospital, medical-surgical, major medical, disability, or
long-term care insurance;
(4) an amount in excess of $100,000 in present value annuity
benefits, in the aggregate, including any net cash surrender and
net cash withdrawal values, with respect to each individual
participating in a governmental retirement benefit plan
established under Section 401, 403(b), or 457, Internal Revenue
Code of 1986 (26 U.S.C. Sections 401, 403(b), and 457), covered
by an unallocated annuity contract or the beneficiary or
beneficiaries of the individual if the individual is deceased;
(5) an amount in excess of $100,000 in present value annuity
benefits, in the aggregate, including any net cash surrender and
net cash withdrawal values, with respect to each payee of a
structured settlement annuity or the beneficiary or beneficiaries
of the payee if the payee is deceased;
(6) aggregate benefits in an amount in excess of $300,000 with
respect to a single life, except with respect to:
(A) benefits paid under basic hospital, medical-surgical, or
major medical insurance policies, described by Subdivision
(3)(A), in which case the aggregate benefits are $500,000; and
(B) benefits paid to one owner of multiple nongroup policies of
life insurance, whether the policy owner is an individual, firm,
corporation, or other person, and whether the persons insured are
officers, managers, employees, or other persons, in which case
the maximum benefits are $5 million regardless of the number of
policies and contracts held by the owner;
(7) an amount in excess of $5 million in benefits, with respect
to either one plan sponsor whose plans own directly or in trust
one or more unallocated annuity contracts not included in
Subdivision (4) irrespective of the number of contracts with
respect to the contract owner or plan sponsor or one contract
owner provided coverage under Section 463.201(a)(3)(B), except
that, if one or more unallocated annuity contracts are covered
contracts under this chapter and are owned by a trust or other
entity for the benefit of two or more plan sponsors, coverage
shall be afforded by the association if the largest interest in
the trust or entity owning the contract or contracts is held by a
plan sponsor whose principal place of business is in this state,
and in no event shall the association be obligated to cover more
than $5 million in benefits with respect to all these unallocated
contracts;
(8) any contractual obligations of the insolvent or impaired
insurer under a covered policy or contract that do not materially
affect the economic value of economic benefits of the covered
policy or contract; or
(9) punitive, exemplary, extracontractual, or bad faith damages,
regardless of whether the damages are:
(A) agreed to or assumed by an insurer or insured; or
(B) imposed by a court.
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.013(d), eff. September 1, 2007.
Acts 2007, 80th Leg., R.S., Ch.
921, Sec. 9.013(d), eff. September 1, 2007.
Sec. 463.205. PROTECTION PROVIDED BY OTHER JURISDICTION. This
chapter does not provide coverage for a resident with respect to
an impaired or insolvent insurer domiciled in another
jurisdiction if guaranty protection is provided to the resident
by the law of that jurisdiction.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
Sec. 463.206. ASSOCIATION DISCRETION IN MANNER OF PROVIDING
BENEFITS. (a) The board shall have discretion and may exercise
reasonable business judgment to determine the means by which the
association is to provide the benefits of this chapter in an
economical and efficient manner.
(b) If the association arranges or offers to provide the
benefits of this chapter to a covered person under a plan or
arrangement that fulfills the association's obligations under
this chapter, the person is not entitled to benefits from the
association in addition to or other than those provided under the
plan or arrangement.
Added by Acts 2007, 80th Leg., R.S., Ch.
730, Sec. 3B.015(b), eff. September 1, 2007.
Added by Acts 2007, 80th Leg., R.S., Ch.
921, Sec. 9.015(b), eff. September 1, 2007.
SUBCHAPTER F. POWERS AND DUTIES OF ASSOCIATION RELATING
TO IMPAIRED OR INSOLVENT INSURER
Sec. 463.251. IMPAIRED DOMESTIC INSURER. (a) This section
applies only to a member insurer that is an impaired domestic
insurer.
(b) With the commissioner's approval, the association may:
(1) guarantee, assume, or reinsure, or cause to be guaranteed,
assumed, or reinsured, one or more of the insurer's policies or
contracts;
(2) provide money, pledges, notes, guarantees, or other means
proper to:
(A) implement Subdivision (1); and
(B) ensure payment of the insurer's contractual obligations
until action is taken under Subdivision (1); or
(3) loan money to the insurer.
(c) In taking action under Subsection (b), the association may
impose any condition that:
(1) does not impair the insurer's contractual obligations; and
(2) is approved by:
(A) the commissioner; and
(B) the insurer, except in a conservation or rehabilitation
ordered by a court.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 1, eff. April 1, 2007.
Sec. 463.252. IMPAIRED DOMESTIC, FOREIGN, OR ALIEN INSURER NOT
PAYING CLAIMS. (a) This section applies only to a member
insurer that:
(1) is an impaired domestic, foreign, or alien insurer; and
(2) is not timely paying claims.
(b) Subject to Subsection (d), the association shall:
(1) with respect to the insurer, take one or more actions that
the association is authorized to take under Section 463.251 with
respect to an impaired domestic insurer, subject to the
conditions of that section; or
(2) provide substitute benefits instead of the insurer's
contractual obligations as provided by Subsection (c).
(c) A policy or contract owner who claims