CHAPTER 881. STATEWIDE MUTUAL ASSESSMENT COMPANIES
INSURANCE CODE
TITLE 6. ORGANIZATION OF INSURERS AND RELATED ENTITIES
SUBTITLE E. MUTUAL AND FRATERNAL COMPANIES AND RELATED ENTITIES
CHAPTER 881. STATEWIDE MUTUAL ASSESSMENT COMPANIES
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 881.001. DEFINITION. In this chapter, "statewide mutual
assessment company" means a corporation engaged in the statewide
business of mutually protecting or insuring members' lives with
money provided by assessments on those members.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 881.002. LIMITED EXEMPTION FROM INSURANCE LAWS. (a)
Except as provided by this chapter and Chapter 887, the insurance
laws of this state do not apply to a statewide mutual assessment
company.
(b) A law enacted after June 20, 1933, does not apply to
statewide mutual assessment companies unless statewide mutual
assessment companies are expressly designated in the law.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 881.003. COMPLIANCE WITH INSURANCE LAWS. An individual,
firm, unincorporated association, or corporation may not engage
in business as a statewide mutual assessment company in this
state unless the entity complies with this chapter and Chapter
887.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 881.004. EXEMPTION FROM CHAPTER. This chapter applies only
to a statewide mutual assessment company. This chapter does not
apply to a company operating as a local mutual aid association,
fraternal benefit society, or reciprocal exchange or to a foreign
assessment company operating under any other law in this state.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 881.005. ORGANIZATION OF NEW COMPANY PROHIBITED. A new
statewide mutual assessment company may not be organized under
this chapter.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 881.006. ANNUAL STATEMENT. (a) For the filing of each
annual statement, the department shall charge the appropriate
fee. The fee must be deposited in the Texas Department of
Insurance operating account.
(b) Sections 201.001 and 201.002 apply to the fee.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Amended by:
Acts 2007, 80th Leg., R.S., Ch.
730, Sec. 2E.072, eff. April 1, 2009.
SUBCHAPTER B. STRUCTURE AND OPERATION OF STATEWIDE MUTUAL
ASSESSMENT COMPANIES
Sec. 881.051. AUTHORITY TO ACT AS STATEWIDE MUTUAL ASSESSMENT
COMPANY. A corporation may engage in business as a statewide
mutual assessment company only if the corporation:
(1) was incorporated in this state under a law that was amended,
repealed, or reenacted before June 20, 1933;
(2) was engaged in business as a statewide mutual assessment
company in this state on December 31, 1932;
(3) does not have capital stock; and
(4) is not for profit.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 881.052. APPLICABILITY OF TEXAS NON-PROFIT CORPORATION ACT.
(a) Except to the extent of any conflict with this code, the
Texas Non-Profit Corporation Act (Article 1396-1.01 et seq.,
Vernon's Texas Civil Statutes) applies to a statewide mutual
assessment company. The commissioner has each power and duty of,
and shall perform each act to be performed by, the secretary of
state under that Act with respect to statewide mutual assessment
companies.
(b) On advance approval of the commissioner, a statewide mutual
assessment company may pay dividends to its members.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 881.053. SEPARATE GROUPS, CLUBS, OR CLASSES. A statewide
mutual assessment company may provide in its by-laws for the
creation of separate groups, clubs, or classes based on
reasonable classifications specified in the by-laws.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 881.054. MINIMUM MEMBERSHIP REQUIRED. A statewide mutual
assessment company may not issue a certificate or policy unless
the membership of the company or the group, class, or club of the
company that is liable for assessments on the certificate or
policy is sufficient in number at the assessment rate charged the
company, group, class, or club to pay 50 percent of the maximum
benefit in the certificate or policy.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 881.055. USE OF COMPANY NAME. A statewide mutual
assessment company may not operate an independent branch office
or a separate group, club, or class under a name different from
the name of the company.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 881.056. ISSUANCE OF CERTIFICATE OR POLICY TO SEPARATE
GROUPS, CLUBS, OR CLASSES. (a) A certificate or policy issued
by the company to members of a group, club, or class may limit
benefits under the certificate or policy to the assessments made,
levied, and collected from the group, club, or class.
(b) The assets or benefits of a group, club, or class may not be
pledged or transferred without the consent of at least
three-fourths of the members of the group, club, or class.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 881.057. INSUFFICIENT MEMBERSHIP: CONSOLIDATION OR
DISCONTINUATION OF GROUP, CLUB, OR CLASS OR LIQUIDATION OF
COMPANY. (a) If membership of a group, club, or class of a
statewide mutual assessment company is less than the number
required by Section 881.054, the company shall immediately
notify:
(1) the members of the group, club, or class; or
(2) if the company has only one group, club, or class, the
members of the company.
(b) Not later than six months after a statewide mutual
assessment company notifies the members of a group, club, or
class under Subsection (a)(1), the company shall:
(1) increase the membership of the group, club, or class to at
least the number required by Section 881.054;
(2) consolidate the group, club, or class with another group,
club, or class; or
(3) discontinue the group, club, or class.
(c) Not later than six months after a statewide mutual
assessment company notifies the members of the company under
Subsection (a)(2), the company shall increase the membership to
at least the number required by Section 881.054. If the
membership is not increased to at least that number, the
commissioner shall take steps to liquidate the company under
Subchapter L, Chapter 887.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 881.058. AGENT. (a) A person who solicits an application
for a certificate or policy providing insurance on the life of
another is considered to be an agent of the statewide mutual
assessment company that issues the certificate or policy in a
controversy between the company and the insured or the insured's
beneficiary.
(b) An agent described by Subsection (a) may not waive or alter
the terms of an application, certificate, or policy.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
SUBCHAPTER C. BENEFITS PROVIDED BY STATEWIDE MUTUAL ASSESSMENT
COMPANIES
Sec. 881.101. TYPES OF CERTIFICATES OR POLICIES AUTHORIZED. (a)
A statewide mutual assessment company may issue only a
certificate or policy that provides for the continuous payment of
premiums or assessments during the policyholder's life.
(b) A statewide mutual assessment company may not:
(1) issue a certificate or policy on a limited payment plan; or
(2) promise to pay an endowment or annuity benefit.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 881.102. MAXIMUM BENEFIT UNDER CERTIFICATE OR POLICY. A
statewide mutual assessment company may not issue a certificate
or policy that provides a benefit that exceeds $5,000.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 881.103. LOCATION OF ISSUANCE OF CERTIFICATES OR POLICIES.
A statewide mutual assessment company may issue certificates or
policies only in the home office of the company.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 881.104. CERTIFICATE OR POLICY AND APPLICATION;
REPRESENTATIONS IN APPLICATION. (a) An application for a
certificate or policy may not be used as a defense against a
claim or loss under the certificate or policy unless a copy of
the application is attached to the certificate or policy.
(b) A misrepresentation in an application for a certificate or
policy may not be used as a defense against a claim or loss under
the certificate or policy unless it is shown that the
misrepresentation is material to the risk assumed.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
SUBCHAPTER O. ENFORCEMENT; CRIMINAL PENALTY
Sec. 881.701. GENERAL CRIMINAL PENALTY. (a) A person commits
an offense if:
(1) the person violates this chapter; or
(2) the person:
(A) is a corporation or a responsible officer of a corporation;
and
(B) permits or participates in a violation of this chapter by a
corporation.
(b) An offense under this section is a misdemeanor punishable by
a fine not to exceed $500.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 881.702. ENFORCEMENT BY ATTORNEY GENERAL. (a) The
attorney general may enforce the penalty provided under Section
881.701 and Section 887.705 against a corporation or
unincorporated association.
(b) Notwithstanding Section 887.209, venue of a prosecution
under this section may be in Travis County.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.