CHAPTER 827. WITHDRAWAL AND RESTRICTION PLANS
INSURANCE CODE
TITLE 6. ORGANIZATION OF INSURERS AND RELATED ENTITIES
SUBTITLE B. ORGANIZATION OF REGULATED ENTITIES
CHAPTER 827. WITHDRAWAL AND RESTRICTION PLANS
Sec. 827.001. DEFINITIONS. In this chapter:
(1) "Insurer" means an insurance company or other legal entity
authorized to engage in the business of insurance in this state,
including a reciprocal or interinsurance exchange, a Lloyd's
plan, and a county mutual insurance company. The term includes an
affiliate. The term does not include a farm mutual insurance
company or an eligible surplus lines insurer regulated under
Chapter 981.
(2) "Rating territory" means a rating territory established by
the department.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003. Amended by Acts 2003, 78th Leg., ch. 206, Sec. 10.01(a),
eff. June 11, 2003.
Sec. 827.002. EXEMPTION. This chapter does not apply to a
transfer of business from an insurer to a company that:
(1) is within the same insurance group as the insurer;
(2) is authorized to engage in the business of insurance in this
state; and
(3) is not a reciprocal or interinsurance exchange, a Lloyd's
plan, a county mutual insurance company, or a farm mutual
insurance company.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003. Amended by Acts 2003, 78th Leg., ch. 206, Sec. 10.02, eff.
June 1, 2003.
Sec. 827.003. WITHDRAWAL PLAN REQUIRED. An insurer shall file
with the commissioner a plan for orderly withdrawal if the
insurer proposes to:
(1) reduce the insurer's total annual premium volume by 50
percent or more;
(2) reduce the insurer's annual premium by 75 percent or more in
a line of insurance in this state; or
(3) reduce in this state, or in any applicable rating territory,
the insurer's total annual premium volume in a line of personal
automobile or residential property insurance by 50 percent or
more.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003. Amended by Acts 2003, 78th Leg., ch. 206, Sec. 10.03, eff.
June 11, 2003.
Sec. 827.004. PROVISIONS OF WITHDRAWAL PLAN. A withdrawal plan
filed under Section 827.003 must:
(1) be constructed to protect the interests of the people of
this state;
(2) indicate the dates on which the insurer intends to begin and
to complete the plan; and
(3) provide for:
(A) meeting the insurer's contractual obligations;
(B) providing service to the insurer's policyholders and
claimants in this state; and
(C) meeting any applicable statutory obligations, such as
payment of assessments to the guaranty fund and participation in
an assigned risk plan or joint underwriting arrangement.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 827.005. APPROVAL OF WITHDRAWAL PLAN. (a) Except as
provided by Subsection (b), the commissioner shall approve a
withdrawal plan that adequately provides for meeting the
requirements prescribed by Section 827.004(3).
(b) The commissioner may modify, restrict, or limit a withdrawal
plan under this section as necessary if the commissioner finds
that a line of insurance subject to the withdrawal plan is not
offered in a quantity or manner to adequately cover the risks in
this state or to adequately protect the residents of this state
and policyholders in this state. The commissioner may by order
set the date on which the insurer's withdrawal begins.
(c) A withdrawal plan is deemed approved if the commissioner:
(1) does not hold a hearing on the plan before the 61st day
after the date the plan is filed with the commissioner; or
(2) does not deny approval before the 61st day after the date a
hearing on the plan is held.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003. Amended by Acts 2003, 78th Leg., ch. 206, Sec. 10.04, eff.
June 11, 2003.
Sec. 827.006. RESUMPTION OF WRITING INSURANCE AFTER COMPLETE
WITHDRAWAL. An insurer that withdraws from writing all lines of
insurance in this state may not, without the approval of the
commissioner, resume writing insurance in this state before the
fifth anniversary of the date of withdrawal.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 827.007. PENALTIES. The commissioner may impose the civil
penalties under Chapter 82 on an insurer that fails to obtain the
commissioner's approval before the insurer:
(1) withdraws from writing a line of insurance in this state; or
(2) reduces the insurer's total annual premium volume by 75
percent or more in any year.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 827.008. RESTRICTION PLAN. (a) Before an insurer, in
response to a catastrophic natural event that occurred during the
preceding six months, may restrict writing new business in a
rating territory in a line of personal automobile or residential
property insurance, the insurer must file a proposed restriction
plan with the commissioner for the commissioner's review and
approval.
(b) The commissioner may modify, restrict, or limit a
restriction plan under this section as necessary if the
commissioner finds that a line of insurance subject to the
restriction plan is not offered in this state in a quantity or
manner to adequately cover the risks in this state or to
adequately protect the residents of this state and policyholders
in this state in light of the impact of the catastrophic natural
event. The commissioner may by order set the date on which the
insurer's restriction begins.
(c) A withdrawal plan must be filed and approved under Sections
827.003 and 827.004 if an insurer's decision not to accept new
business in a line of personal automobile or residential property
insurance results in a reduction of the insurer's total annual
premium volume by 50 percent or more.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003. Amended by Acts 2003, 78th Leg., ch. 206, Sec. 10.05, eff.
June 11, 2003.
Sec. 827.009. DEPOSIT OF SECURITIES. Under this chapter, the
commissioner may require the deposit of securities in this state
in trust in the name of the commissioner if the commissioner
determines, after notice and hearing, that there is reasonable
cause to conclude that the interests of the people of this state
are best served by the deposit.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 827.010. MORATORIUM. (a) The commissioner may impose a
moratorium of not longer than two years on:
(1) the approval of withdrawal plans; or
(2) the implementation of plans to restrict the writing of new
business described by Section 827.008.
(b) A moratorium under this section may be imposed on plans
implemented after the commissioner has published notice of
intention to impose a moratorium on plans under Subsection
(a)(2).
(c) The commissioner may annually renew a moratorium imposed
under this section.
(d) To impose or renew a moratorium under this section, the
commissioner must determine, after notice and hearing, that a
catastrophic event has occurred and that as a result of that
event a particular line of insurance is not reasonably expected
to be available to a substantial number of policyholders or
potential policyholders in this state or, in the case of lines of
personal automobile or residential property insurance, in a
rating territory.
(e) The provisions of Chapter 2001, Government Code, relating to
contested cases apply to the notice and hearing.
(f) The commissioner by rule shall establish reasonable criteria
for applying the standards for determining whether to impose a
moratorium under this section.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003. Amended by Acts 2003, 78th Leg., ch. 206, Sec. 10.06(a),
eff. June 11, 2003.
Sec. 827.011. RULES. The commissioner shall adopt rules as
necessary to enforce this chapter.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.