CHAPTER 464. UNAUTHORIZED INSURANCE GUARANTY FUND ACT
INSURANCE CODE
TITLE 4. REGULATION OF SOLVENCY
SUBTITLE D. GUARANTY ASSOCIATIONS
CHAPTER 464. UNAUTHORIZED INSURANCE GUARANTY FUND ACT
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 464.001. SHORT TITLE. This chapter may be cited as the
Unauthorized Insurance Guaranty Fund Act.
Added by Acts 2009, 81st Leg., R.S., Ch.
1026, Sec. 1, eff. June 19, 2009.
Sec. 464.002. CONSTRUCTION AND PURPOSE. (a) The purpose of
this chapter is to alleviate the financial hardship imposed on
persons who are harmed by the sale of unauthorized insurance in
this state. Persons who suffer damages as a result of unpaid
claims on policies issued by unauthorized insurers in this state
are not covered under guaranty acts, which provide protection to
persons with claims against authorized insurers. The legislature
finds that it is appropriate to provide additional remedies to
these persons.
(b) The commissioner's powers under this Act shall be liberally
construed to support the purpose stated in Subsection (a).
(c) This chapter does not limit the powers granted the
commissioner under other provisions of law. The powers and
authority of the commissioner under this chapter are cumulative
and are in addition to all other powers and authority that are
available to the commissioner.
Added by Acts 2009, 81st Leg., R.S., Ch.
1026, Sec. 1, eff. June 19, 2009.
Sec. 464.003. DEFINITIONS.In this chapter:
(1) "Delinquency proceeding" has the meaning assigned by Section
443.004.
(2) "Fund" means the unauthorized insurance guaranty fund.
(3) "Fund account" means the account established for the deposit
of money held by the fund.
(4) "Policy claim" means an obligation incurred under a contract
or policy of insurance issued by an unauthorized insurer as
described by Chapter 101. The term does not include claims under
reinsurance contracts or claims of other creditors.
(5) "Receiver" means the receiver of an unauthorized insurer in
a delinquency proceeding, including the commissioner when acting
in that capacity, or a special deputy receiver.
(6) "Unauthorized insurer" has the meaning assigned by Section
443.004.
Added by Acts 2009, 81st Leg., R.S., Ch.
1026, Sec. 1, eff. June 19, 2009.
Sec. 464.004. APPLICABILITY. This chapter applies to a
delinquency proceeding under Chapter 443 of an unauthorized
insurer.
Added by Acts 2009, 81st Leg., R.S., Ch.
1026, Sec. 1, eff. June 19, 2009.
Sec. 464.005. IMMUNITY. Liability does not exist and a cause of
action does not arise against the commissioner or an agent,
employee, or representative of the commissioner for any good
faith act or omission in performing the commissioner's, or the
agent's, employee's, or representative's powers and duties under
this chapter.
Added by Acts 2009, 81st Leg., R.S., Ch.
1026, Sec. 1, eff. June 19, 2009.
Sec. 464.006. EXEMPTION FROM CERTAIN FEES AND TAXES. The fund
is exempt from payment of all fees and taxes levied by this state
or a political subdivision of this state.
Added by Acts 2009, 81st Leg., R.S., Ch.
1026, Sec. 1, eff. June 19, 2009.
Sec. 464.007. RULES. The commissioner may adopt rules as
necessary to implement this chapter.
Added by Acts 2009, 81st Leg., R.S., Ch.
1026, Sec. 1, eff. June 19, 2009.
SUBCHAPTER B. FUND
Sec. 464.051. CREATION OF UNAUTHORIZED INSURANCE GUARANTY FUND.
The unauthorized insurance guaranty fund is established.
Added by Acts 2009, 81st Leg., R.S., Ch.
1026, Sec. 1, eff. June 19, 2009.
Sec. 464.052. DEPOSIT OF FUNDS. (a) The fund account shall be
established with the Texas Treasury Safekeeping Trust Company in
accordance with procedures adopted by the comptroller. The
comptroller shall account for the deposited money separately from
all other money.
(b) The commissioner may identify collected penalties to be
deposited into the fund account from:
(1) administrative penalties assessed by the commissioner for
violations of Chapter 101 or penalties under Section 861.702,
including amounts collected through state warrant holds;
(2) civil penalties assessed under Chapter 101 when the
commissioner is the party requesting penalties;
(3) administrative penalties assessed by the commissioner
against a person holding a certificate of authority, license,
registration, or other authorization to engage in the business of
insurance that is issued or recognized by the commissioner for
engaging in conduct outside the scope of the person's
certificate, license, registration, or authorization;
(4) administrative penalties assessed by the commissioner
against a person holding a certificate of authority, license,
registration, or authorization issued or recognized by the
commissioner for using unapproved forms, rates, or advertisements
if the forms, rates, or advertisements are required to be
approved by the commissioner before being used in this state; and
(5) forfeitures of bonds issued under Section 101.353 or
101.354.
(c) In determining the amounts to be deposited into the fund
account, the commissioner shall consider:
(1) the amount existing in the fund account;
(2) the anticipated penalties described by Subsection (b) that
have been or may be collected;
(3) the estimated assets, administrative expenses, and claims of
any unauthorized insurers subject to a delinquency proceeding;
and
(4) any anticipated delinquency proceedings of unauthorized
insurers.
(d) If the commissioner determines that the amounts on deposit
in the fund account exceed the amount required to pay
administrative expenses and claims of existing and anticipated
delinquency proceedings of unauthorized insurers, the
commissioner may transfer the excess amount from the fund to the
comptroller for deposit into the general revenue fund.
(e) The commissioner shall notify the comptroller of the
existence of money under Subsection (c) to be credited to the
fund account. The commissioner must enter an order to transfer
amounts from the fund account.
Added by Acts 2009, 81st Leg., R.S., Ch.
1026, Sec. 1, eff. June 19, 2009.
Sec. 464.053. ADVANCE OF FUNDS. (a) In the event of a
delinquency proceeding of an unauthorized insurer, the
commissioner may advance funds from the fund account if the
assets of the unauthorized insurer are insufficient to pay
administrative expenses or policy claims. The commissioner shall
hold the funds in a separate account. Funds advanced under this
section are available to supplement the assets of the
unauthorized insurer, and do not become property of the
unauthorized insurer or the receivership estate.
(b) In determining an amount to be advanced, the commissioner
shall consider:
(1) the amount existing in the fund, and any estimated future
amounts to be deposited in the fund;
(2) the assets of the unauthorized insurer that are anticipated
to be available to pay administrative expenses and claims;
(3) the projected administrative expenses and claims in the
delinquency proceeding; and
(4) the projected administrative expenses and claims in other
existing and anticipated delinquency proceedings of unauthorized
insurers.
Added by Acts 2009, 81st Leg., R.S., Ch.
1026, Sec. 1, eff. June 19, 2009.
Sec. 464.054. USE OF FUNDS. (a) An amount advanced under Section
464.053 may be used to supplement the assets of an unauthorized
insurer to pay administrative expenses and policy claims that are
approved by:
(1) the commissioner in a proceeding under Section 443.051; or
(2) the receiver in a proceeding under Section 443.052.
(b) For the purposes of Section 443.301(b), approved policy
claims under this chapter shall be classified as Class 2 claims.
(c) The commissioner or receiver, as applicable, is not required
to make distributions from the assets of the unauthorized insurer
before using amounts advanced under Section 464.053. Any payment
of a policy claim made under Subsection (a) shall be treated as a
distribution under Section 443.302. If approved policy claims
cannot be paid in full from the funds advanced under Section
464.053 and the assets of the unauthorized insurer available for
distribution, the claims shall be paid on a pro rata basis in the
manner described in Section 443.301.
(d) Amounts advanced that are not needed to pay administrative
expenses or policy claims shall be returned to the fund account.
On a final distribution under Section 443.302 or the termination
of a delinquency proceeding, any funds of the unauthorized
insurer remaining after the payment in full of administrative
expenses and policy claims shall be used to repay the advance, up
to the amount of the advance.
(e) A person who has a policy claim may receive funds deposited
or advanced under this chapter only in accordance with this
section.
Added by Acts 2009, 81st Leg., R.S., Ch.
1026, Sec. 1, eff. June 19, 2009.