CHAPTER 885. FRATERNAL BENEFIT SOCIETIES
INSURANCE CODE
TITLE 6. ORGANIZATION OF INSURERS AND RELATED ENTITIES
SUBTITLE E. MUTUAL AND FRATERNAL COMPANIES AND RELATED ENTITIES
CHAPTER 885. FRATERNAL BENEFIT SOCIETIES
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 885.001. DEFINITIONS. In this chapter:
(1) "Benefit certificate" means a document issued as written
evidence of a benefit contract.
(2) "Benefit contract" means an agreement for provision of
benefits authorized by Section 885.301, as that agreement is
described by Section 885.306.
(3) "Benefit member" means an adult designated by the laws or
rules of a fraternal benefit society as a benefit member under a
benefit contract.
(4) "Fraternal benefit society's laws" means a fraternal benefit
society's articles of incorporation, constitution, and bylaws,
however designated.
(5) "Lodge" means a subordinate member unit of a fraternal
benefit society. The term includes a camp, court, council, or
branch.
(6) "Premium" means a premium, a rate, dues, or another required
contribution that is payable under a benefit certificate or
benefit contract.
(7) "Rule" means a rule, regulation, or resolution adopted by
the supreme governing body or board of directors that has general
application to the members of a fraternal benefit society.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 885.002. LIMITED EXEMPTION FROM INSURANCE LAWS. (a)
Except as provided by this chapter, a fraternal benefit society
is governed by this chapter and is exempt from all other
insurance laws of this state for all purposes.
(b) A law enacted after July 1, 1913, does not apply to
fraternal benefit societies unless a fraternal benefit society is
expressly designated in the law.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 885.003. EXEMPTION FROM TAXATION. (a) A fraternal benefit
society organized or holding a certificate of authority under
this chapter, including the former Chapter 10 of this code and
Chapter 8, Title 78, Revised Statutes, is a charitable and
benevolent institution. Except as provided by Subsection (b), all
funds of a fraternal benefit society described by this subsection
are exempt from any state, county, district, municipal, or school
tax, including an occupation tax.
(b) Real estate or office equipment used for a purpose other
than a lodge purpose is subject to taxation.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 885.004. INAPPLICABILITY TO CERTAIN SOCIETIES. (a) Except
as provided by Subsection (b), this chapter does not apply to:
(1) a grand or subordinate lodge of Masons, Odd Fellows, Knights
of Pythias, or the Junior Order of the United American Mechanics;
(2) a society that limits its membership to those engaged in one
or more hazardous occupations in the same or similar lines of
business;
(3) a society that does not issue benefit certificates;
(4) an association of local lodges of a society engaged in
business in this state on July 1, 1913, that provides:
(A) death benefits of not more than $500 to any one individual;
(B) disability benefits of not more than $300 in any one year to
any one individual; or
(C) both death benefits described by Paragraph (A) and
disability benefits described by Paragraph (B);
(5) a contract of reinsurance on a plan in this state described
by Subdivision (4);
(6) a domestic society that limits its membership to the
employees of:
(A) a particular municipality; or
(B) a designated firm or corporation; or
(7) a domestic lodge, order, or association of a purely
religious, charitable, and benevolent description that does not
provide:
(A) death benefits of more than $100; or
(B) disability benefits of more than $150 to any one individual
in any one year.
(b) This chapter applies to:
(1) the insurance department of the supreme lodge Knights of
Pythias; and
(2) the beneficiary degree of insurance branch of the Junior
Order of the United American Mechanics.
(c) The department may require from any society information that
will permit the department to determine whether the society is
exempt from this chapter.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 885.005. FRATERNAL BENEFIT SOCIETIES THAT PROVIDE BENEFITS
RESULTING FROM ACCIDENTS ONLY. (a) A fraternal benefit society
that provides benefits for death or disability resulting from
accidents only and does not provide death benefits or benefits
for sickness may hold a certificate of authority under this
chapter if the society:
(1) was organized and incorporated before July 1, 1913; and
(2) operates as provided by Sections 885.051-885.054 and
885.062.
(b) A fraternal benefit society that holds a certificate of
authority as provided by Subsection (a) may exercise all the
privileges provided by and is subject to this chapter other than:
(1) provisions requiring medical examination;
(2) provisions requiring that a benefit certificate specify the
amount of benefits; and
(3) provisions relating to the valuation of benefit
certificates.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 885.006. TREATMENT OF CERTAIN GRAND LODGES. A grand lodge,
by whatever name known and without regard to whether
incorporated, that holds a charter from any supreme governing
body and that was engaging in business in this state on July 1,
1913, as a fraternal beneficiary association under the separate
jurisdiction plan is considered to be a single state
organization.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
SUBCHAPTER B. STRUCTURE OF FRATERNAL BENEFIT SOCIETY
Sec. 885.051. FRATERNAL BENEFIT SOCIETY DEFINED. A corporation,
society, order, or voluntary association is a fraternal benefit
society if it:
(1) has a lodge system and a representative form of government
or limits its membership to a secret fraternity that has a lodge
system and a representative form of government;
(2) is organized and operated solely for the mutual benefit of
its members and their beneficiaries and not for profit;
(3) does not have capital stock; and
(4) provides for the payment of benefits in accordance with
Section 885.301.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 885.052. CONTROL OF FRATERNAL BENEFIT SOCIETY. (a) In
this section, "control" has the meaning described by Sections
823.005 and 823.151.
(b) Control of a fraternal benefit society must be ultimately
vested in the membership as provided by this chapter. Control of
a fraternal benefit society may be exercised by lodges and a
supreme governing body elected under Section 885.054.
(c) The methods provided by this section for exercising control
over a fraternal benefit society are exclusive.
(d) Chapter 823 applies to a fraternal benefit society. Each
change in control of a fraternal benefit society must be
consistent with the nature of a fraternal benefit society as
specified by this section, Sections 885.051, 885.053, and
885.054, and other applicable law.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 885.053. LODGE SYSTEM DEFINED. A fraternal benefit society
is considered to be operating on the lodge system if the society:
(1) has a supreme governing body; and
(2) has lodges:
(A) into which members are admitted in accordance with the
fraternal benefit society's laws, rituals, and rules; and
(B) that are required by the fraternal benefit society's laws to
hold periodic meetings.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 885.054. REPRESENTATIVE FORM OF GOVERNMENT DEFINED. A
fraternal benefit society has a representative form of government
if:
(1) the society has a supreme governing body constituted as:
(A) an assembly, as described by Section 885.055; or
(B) a board, as described by Section 885.057;
(2) the officers of the society are elected by the supreme
governing body or the board of directors;
(3) only a benefit member is eligible to serve as a member of
the supreme governing body, the board of directors, or an
intermediate assembly of the society;
(4) only a benefit member may vote on the management of the
society's insurance affairs;
(5) a voting member of the society has only one vote; and
(6) a voting member of the society may not cast a vote by proxy.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 885.055. ASSEMBLY AS SUPREME GOVERNING BODY. (a) The
supreme governing body of a fraternal benefit society is an
assembly if the body is composed of:
(1) delegates elected directly by the members or at intermediate
assemblies or conventions by the members or their
representatives; and
(2) other delegates as prescribed by the fraternal benefit
society's laws.
(b) The elected delegates to an assembly must:
(1) constitute a majority of the assembly in number; and
(2) be entitled to cast the greater of:
(A) two-thirds of the votes in the assembly; or
(B) the number of votes required to amend the fraternal benefit
society's laws.
(c) A fraternal benefit society may provide for election of
delegates by mail.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 885.056. ASSEMBLY MEETINGS; DIRECTORS. (a) An assembly
that is the supreme governing body of a fraternal benefit society
shall:
(1) meet at least once every four years; and
(2) elect a board of directors to conduct the business of the
society between meetings of the assembly.
(b) A vacancy on the board of directors that occurs between
elections may be filled in the manner prescribed by the fraternal
benefit society's laws.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 885.057. BOARD AS SUPREME GOVERNING BODY. (a) The supreme
governing body of a fraternal benefit society is a board if the
body is composed of:
(1) individuals elected directly by the members or at
intermediate assemblies by the members or their representatives;
and
(2) other individuals as prescribed by the fraternal benefit
society's laws.
(b) The individuals elected to the board must:
(1) constitute a majority of the board in number; and
(2) have at least the number of votes required to amend the
fraternal benefit society's laws, other than laws, if any, that
must be amended by direct vote of the members.
(c) A fraternal benefit society may provide for election of the
board by mail.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 885.058. BOARD MEMBERS; MEETINGS. (a) The term of a
member of a board that is the supreme governing body of a
fraternal benefit society may not exceed four years.
(b) A vacancy on the board that occurs between elections may be
filled in the manner prescribed by the fraternal benefit
society's laws. An individual filling the unexpired term of an
elected board member is considered to be an elected member.
(c) A board shall meet at least annually to conduct the business
of the fraternal benefit society.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 885.059. LOCATION OF MEETINGS OF SUPREME GOVERNING BODY.
(a) A domestic fraternal benefit society may provide that its
supreme governing body may hold meetings in any state, district,
province, or territory in which the society has a lodge.
(b) All business transacted at a meeting authorized under
Subsection (a) is as valid in all respects as if the meeting were
held in this state.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 885.060. FRATERNAL BENEFIT SOCIETY'S LAWS BINDING. A
fraternal benefit society's laws may provide that a lodge or a
subordinate officer or member of the society may not waive any
provision of those laws. Those laws are binding on:
(1) the society;
(2) each member of the society; and
(3) each beneficiary of a member.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 885.061. AMENDMENT OF FRATERNAL BENEFIT SOCIETY'S LAWS.
(a) A fraternal benefit society transacting business under this
chapter shall file with the department a certified copy of each
amendment of the fraternal benefit society's laws not later than
the 90th day after the date of enactment of the amendment.
(b) A printed copy of a fraternal benefit society's laws, as
amended, that is certified by the society's secretary or
corresponding officer is prima facie evidence that the laws were
legally adopted.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 885.062. QUARTERLY LODGE MEETINGS REQUIRED. A fraternal
benefit society's laws must require each lodge to hold regular
meetings at least once each calendar quarter to further the
society's purposes.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 885.063. MERGER OR TRANSFER OF MEMBERSHIP OR FUNDS. (a) A
domestic fraternal benefit society may not merge with or accept a
transfer of the membership or funds of another fraternal benefit
society unless:
(1) the merger or transfer is evidenced by a written contract
that fully sets out the terms of the merger or transfer; and
(2) the societies file with the department:
(A) a copy of the contract;
(B) a sworn statement of the financial condition of each society
by its president and secretary or corresponding officers; and
(C) a certificate of those officers, verified under oath, that
the merger or transfer has been approved by a vote of two-thirds
of the members of the supreme governing body of each society.
(b) On submission, the commissioner shall examine the contract,
financial statements, and certificates. The commissioner shall
approve the merger or transfer and issue a certificate to that
effect if the commissioner determines that:
(1) the contract conforms with this section and Section
885.052(d);
(2) the financial statements are correct;
(3) the merger or transfer is just and equitable to the members
of each society; and
(4) the new or surviving society complies with each requirement
of a fraternal benefit society under this chapter.
(c) A contract of merger or transfer takes effect on issuance of
a certificate under Subsection (b).
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
SUBCHAPTER C. MEMBERS
Sec. 885.101. QUALIFICATIONS FOR FRATERNAL BENEFIT SOCIETY
MEMBERSHIP. (a) A fraternal benefit society shall specify in
the fraternal benefit society's laws or rules:
(1) subject to Subsection (b), the eligibility standards for
each membership class;
(2) the process for admission for each membership class; and
(3) subject to Subsection (c), the rights and privileges of each
membership class.
(b) If a fraternal benefit society provides benefits on the
lives of children, the minimum age for adult membership may not
be less than 15 years or more than 21 years.
(c) Only a benefit member may vote on the management of the
insurance affairs of a fraternal benefit society.
(d) Membership rights in a fraternal benefit society are
personal to the member, and a member may not assign those rights.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 885.102. SOCIAL MEMBERS. A fraternal benefit society may
admit social members. A social member may not vote in the
management of the insurance affairs of the society.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 885.103. CHILDREN. (a) A fraternal benefit society may
organize and operate branches for children on whose lives the
society provides insurance or annuities.
(b) A child is not required to be a member of a lodge or to be
initiated in a lodge.
(c) A child may not have any voice in the management of a
fraternal benefit society.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 885.104. GRIEVANCE OR COMPLAINT PROCEDURES. A fraternal
benefit society's laws or rules may provide for grievance or
complaint procedures for members.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
SUBCHAPTER D. AUTHORITY TO ENGAGE IN BUSINESS
Sec. 885.151. APPLICABILITY TO CERTAIN FRATERNAL BENEFIT
SOCIETIES CONTINUOUSLY AUTHORIZED TO ENGAGE IN BUSINESS. This
subchapter does not apply to a fraternal benefit society
authorized to engage in business in this state on June 1, 1965,
as long as the society's certificate of authority or any renewal
or extension of its certificate of authority continues in force.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 885.152. ELIGIBILITY TO PROVIDE BENEFITS. After June 1,
1965, a corporation, society, order, or voluntary association may
qualify as a fraternal benefit society as defined by Section
885.051 for the purpose of providing for the payment of benefits
as provided by Section 885.301 only if it:
(1) has at least 500 members and at least 10 lodges; and
(2) has been in continuous operation for at least the five years
preceding the filing of its articles of incorporation or
association as provided by Section 885.153.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 885.153. FILING OF ARTICLES OF INCORPORATION OR
ASSOCIATION. A corporation, society, order, or voluntary
association eligible under Section 885.152 may qualify as a
fraternal benefit society by filing with the department:
(1) certified articles of incorporation or association that set
out:
(A) the name of the society;
(B) the purpose for which the society is formed; and
(C) the manner in which the society's corporate powers are to be
exercised;
(2) certified copies of the fraternal benefit society's laws and
rules;
(3) copies of all proposed forms of benefit certificates,
applications for benefit certificates, and circulars to be issued
by the society;
(4) a surety bond as required by Section 885.156; and
(5) additional information that the commissioner considers
necessary.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 885.154. NAME OF FRATERNAL BENEFIT SOCIETY. The name of a
fraternal benefit society may not so closely resemble the name of
any society or insurance company engaging in business in this
state as to mislead the public or lead to confusion.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 885.155. PURPOSES OF FRATERNAL BENEFIT SOCIETY. (a) The
purposes for which a fraternal benefit society is organized may
not include more liberal powers than are granted by this chapter.
Any lawful, social, intellectual, educational, charitable,
benevolent, moral, fraternal, patriotic, or religious advantages
may be set out among the society's purposes.
(b) A fraternal benefit society's purposes may be implemented
directly by the society or indirectly through subsidiary
corporations or affiliated organizations.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 885.156. SURETY BOND. (a) A fraternal benefit society
must file with the department a bond in an amount not less than
$300,000 and not more than $1.5 million, as required by the
commissioner, with sureties approved by the commissioner.
(b) The bond must be conditioned on the return of advance
payments to applicants for benefit certificates as provided by
this subchapter if the fraternal benefit society fails to qualify
under this subchapter within one year.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 885.157. ISSUANCE OF PRELIMINARY CERTIFICATE OF AUTHORITY.
If the purposes of a fraternal benefit society conform to the
requirements of this chapter and all provisions of law have been
complied with, the commissioner shall:
(1) certify that the society is in compliance with all
provisions of law;
(2) retain and record the articles of incorporation or
association; and
(3) issue to the society a preliminary certificate of authority.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 885.158. POWERS AND DUTIES UNDER PRELIMINARY CERTIFICATE OF
AUTHORITY; QUALIFICATION. (a) On receipt of a preliminary
certificate of authority from the department under Section
885.157, a fraternal benefit society:
(1) may solicit from its members applications for insurance
benefits for the purpose of completing the society's
qualification;
(2) shall collect from each applicant an amount equal to at
least one regular monthly payment, in accordance with the
society's table of rates as provided by the fraternal benefit
society's laws; and
(3) shall issue to each applicant a receipt for the amount
collected under Subdivision (2).
(b) A fraternal benefit society operating under a preliminary
certificate of authority may not incur a liability other than for
advance payments collected under Subsection (a)(2), issue a
benefit certificate, or pay, allow, or offer or promise to pay or
allow to any person a death or disability benefit until:
(1) the society has established 10 lodges into which at least
500 applicants have been initiated;
(2) the society has received bona fide applications for death
benefit certificates on at least 500 lives for at least $2,000
each;
(3) each applicant for death benefits under Subdivision (2) has
been regularly examined by a legally qualified practicing
physician;
(4) a certificate of each medical examination has been filed
with and approved by the chief medical examiner of the society;
(5) the society submits to the department a list of the
applicants for death benefits under Subdivision (2); and
(6) the society shows to the department, by the sworn statement
of its treasurer or corresponding officer, that at least 500
applicants have each paid in cash in advance at least one regular
monthly payment per $1,000 of indemnity to be provided and that
the payments in the aggregate amount to at least $150,000.
(c) The list of applicants for death benefits submitted under
Subsection (b)(5) must be under oath of the fraternal benefit
society's president and secretary or corresponding officers and
must provide for each applicant:
(1) the applicant's name and address;
(2) the date the applicant was examined;
(3) the date the applicant was approved;
(4) the date the applicant was initiated;
(5) the name and number of the lodge of which the applicant is a
member;
(6) the amount of benefits to be granted; and
(7) the rate of stated premiums.
(d) The rate of stated premiums under Subsection (c)(7) must be
sufficient to provide for meeting the obligations the fraternal
benefit society has contracted to pay, when valued for death
benefits on the basis of the National Fraternal Congress Table of
Mortality, as adopted by the National Fraternal Congress, August
23, 1899, or, at the society's option, any higher standard, and
for disability benefits or combined death and permanent total
disability benefits by tables based on reliable experience, with
an interest assumption not greater than a rate of four percent a
year.
(e) A fraternal benefit society shall hold advance payments
received under this section in trust during the period of
completing qualification. The society shall credit the advance
payments to the mortuary or disability fund on account of the
applicants and may not use any part of the payments for expenses.
If the society does not complete its qualification within one
year, as provided by this subchapter, the society shall return
the advance payments to the applicants.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 885.159. TERMINATION OF AUTHORITY UNDER PRELIMINARY
CERTIFICATE OF AUTHORITY. (a) Unless a fraternal benefit
society has qualified under this subchapter, a preliminary
certificate of authority granted under Section 885. 157 is void
on the first anniversary of the date the certificate is issued.
(b) The department, on cause shown, may extend the period
prescribed by Subsection (a). An extension may not exceed one
year.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 885.160. ISSUANCE OF CERTIFICATE OF AUTHORITY. (a) The
department may make an examination and require information in
addition to that required by Section 885.158(b) that the
department considers advisable. On presentation of satisfactory
evidence that a fraternal benefit society has complied with all
provisions of law, the department shall issue to the society a
certificate of authority.
(b) The certificate of authority issued is prima facie evidence
of the qualification of the fraternal benefit society as of the
date of the certificate.
(c) The department shall make a record of a certificate of
authority issued under Subsection (a). A certified copy or
duplicate of the department's record shall be accepted in
evidence with the same effect as the original certificate.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
SUBCHAPTER E. FOREIGN FRATERNAL BENEFIT SOCIETIES
Sec. 885.201. CERTIFICATE OF AUTHORITY REQUIRED. A foreign
fraternal benefit society organized and engaging in business
before July 1, 1913, that was not authorized to engage in
business in this state as of that date may not engage in business
in this state without a certificate of authority from the
commissioner.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 885.202. ADMISSION OF FOREIGN FRATERNAL BENEFIT SOCIETY.
(a) To engage in business in this state, a foreign fraternal
benefit society described by Section 885.201 must:
(1) have the qualifications required of a domestic fraternal
benefit society under this chapter; and
(2) have its assets invested as required by the laws of the
state, territory, district, province, or country in which the
society is organized.
(b) A foreign fraternal benefit society described by Section
885.201 is entitled to a certificate of authority to engage in
business in this state on filing with the department:
(1) a certified copy of the society's charter or articles of
association;
(2) a copy of the fraternal benefit society's laws, certified by
its secretary or corresponding officer;
(3) a statement of the society's business;
(4) a certificate from the proper official in the society's home
state, province, or country showing that the society is legally
organized;
(5) a copy of the society's benefit contract;
(6) information showing that the society's assets are invested
as required by Subsection (a)(2); and
(7) additional information the commissioner considers necessary
to demonstrate the society's business and method of operation.
(c) A statement of business filed by a foreign fraternal benefit
society under Subsection (b)(3) must:
(1) be under oath of the society's president and secretary or
corresponding officers;
(2) be in the form required by the commissioner; and
(3) be verified by an examination made by the supervising
insurance official of the society's home state or another state
satisfactory to the commissioner.
(d) A benefit contract filed by a foreign fraternal benefit
society under Subsection (b)(5) must show that benefits are
provided for by premiums paid by persons holding similar
contracts.
(e) The commissioner shall issue a certificate of authority to a
foreign fraternal benefit society that complies with Subsection
(b).
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 885.203. REFUSAL TO ISSUE CERTIFICATE OF AUTHORITY TO
FOREIGN FRATERNAL BENEFIT SOCIETY. (a) If the commissioner
refuses to issue a certificate of authority to a foreign
fraternal benefit society under Section 885.202, the commissioner
shall:
(1) make the refusal in writing;
(2) file the refusal in the department's office; and
(3) on request, provide a copy of the refusal and a statement of
the commissioner's reasons for the refusal to the society's
officers.
(b) The commissioner's refusal to issue a certificate of
authority to a foreign fraternal benefit society for authority to
engage in business in this state is reviewable by proper
proceedings in a state court.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 885.204. NOTICE OF INTENT TO REVOKE FOREIGN FRATERNAL
BENEFIT SOCIETY'S CERTIFICATE OF AUTHORITY. (a) The
commissioner shall notify a foreign fraternal benefit society
engaging in business under this chapter of the commissioner's
determination if, following an investigation, the commissioner
determines that the society:
(1) has failed to comply with this chapter;
(2) has exceeded its powers;
(3) is not fulfilling its contracts in good faith; or
(4) is engaging in business fraudulently.
(b) A notification under Subsection (a) must:
(1) state in writing the grounds of the commissioner's
dissatisfaction; and
(2) require that the society, after reasonable notice and on the
date stated in the notice, show cause why the society's
certificate of authority should not be revoked.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 885.205. REVOCATION OF FOREIGN FRATERNAL BENEFIT SOCIETY'S
CERTIFICATE OF AUTHORITY. (a) The commissioner may revoke a
foreign fraternal benefit society's certificate of authority to
engage in business in this state if, on the date stated in the
notice under Section 885.204, the society:
(1) has not, to the commissioner's satisfaction, removed the
commissioner's objections; or
(2) does not present good and sufficient reason why its
certificate of authority should not be revoked.
(b) Section 885.203 applies to a decision by the commissioner to
revoke a foreign fraternal benefit society's authority to engage
in business in this state as if it were a decision to refuse to
issue a certificate of authority.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 885.206. CONTINUANCE OF CONTRACTS FOLLOWING REVOCATION OF
CERTIFICATE OF AUTHORITY. This subchapter may not be construed
to prevent a foreign fraternal benefit society that has had its
certificate of authority refused under former Article 10.23,
Insurance Code, or a predecessor to that statute, or that has had
its certificate of authority revoked, from continuing in good
faith each contract made in this state during the time the
society was authorized to engage in business in this state.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
SUBCHAPTER F. POWERS AND DUTIES OF FRATERNAL BENEFIT SOCIETY
Sec. 885.251. GENERAL POWERS. A fraternal benefit society may:
(1) make a constitution and bylaws for the government of the
society, the admission of its members, the management of its
affairs, and the setting and readjusting of premiums;
(2) amend its constitution and bylaws; and
(3) exercise other powers necessary and incidental to achieving
its purposes.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 885.252. POWERS OF CERTAIN FRATERNAL BENEFIT SOCIETIES.
(a) A fraternal benefit society engaged in business in this
state on July 1, 1913, may exercise:
(1) each right conferred by this chapter; and
(2) if the society is incorporated, each right, power, or
privilege exercised or possessed as of July 1, 1913, by the
society under its charter or articles of incorporation consistent
with this chapter.
(b) A fraternal benefit society engaged in business in this
state on July 1, 1913, that is a voluntary association may
incorporate under this chapter.
(c) A fraternal benefit society organized as of July 1, 1913, is
not required to reincorporate under this chapter and may amend
the society's articles of incorporation in the manner provided in
the articles or the fraternal benefit society's laws. A society
shall file an amendment described by this subsection with the
department. The amendment becomes operative on filing unless a
later time is provided in the amendment or in the fraternal
benefit society's articles of incorporation or laws.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 885.253. PRINCIPAL OFFICE OF DOMESTIC FRATERNAL BENEFIT
SOCIETY. A domestic fraternal benefit society shall have its
principal office in this state.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 885.254. IMMUNITY. (a) A director, officer, employee,
member, or volunteer of a fraternal benefit society serving
without compensation is not personally liable for damages
resulting from an act or omission in the exercise of judgment or
discretion in connection with the duties of that person for the
society unless the act or omission involved wilful or wanton
misconduct.
(b) This section does not limit a fraternal benefit society's
direct or indirect liability.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 885.255. INDEMNIFICATION OR REIMBURSEMENT. (a) A
fraternal benefit society may indemnify and reimburse a person
for expenses reasonably incurred by, and liabilities imposed on,
that person in connection with or arising out of a proceeding,
whether civil, criminal, administrative, or investigative, in
which the person is involved, or in connection with or arising
out of a threat of a proceeding against that person, because that
person is or was a director, officer, employee, or agent of:
(1) the society; or
(2) a firm, corporation, or organization with which the person
served in any capacity at the request of the society.
(b) The right of indemnification and reimbursement under
Subsection (a) is not exclusive of other rights to which a person
may be entitled as a matter of law and inures to the benefit of
the person's devisees, legatees, heirs, and estate.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 885.256. INDEMNIFICATION OR REIMBURSEMENT IN RELATION TO
BREACH OF DUTY PROHIBITED. (a) Except as provided by Subsection
(b), a person may not be indemnified or reimbursed under Section
885.255 in relation to:
(1) a matter in a proceeding in which the person is finally
adjudged guilty of breach of a duty as a director, officer,
employee, or agent of the fraternal benefit society; or
(2) an agreement that settles:
(A) a matter in a proceeding described by Subdivision (1); or
(B) the threat of a proceeding involving the person's alleged
breach of a duty as a director, officer, employee, or agent of a
fraternal benefit society.
(b) A fraternal benefit society may indemnify or reimburse a
person in relation to a matter described by Subsection (a) only
if the supreme governing body, the board of directors, or a court
determines that:
(1) the person acted in good faith for a purpose the person
reasonably believed to be in or not opposed to the best interests
of the society; and
(2) in a criminal proceeding, the person had no reasonable cause
to believe that the person's conduct was unlawful.
(c) A determination by a supreme governing body or board of
directors under Subsection (b) must be made by majority vote of a
quorum consisting of persons who were not parties to the
proceeding under review.
(d) The termination of a proceeding by judgment, order,
settlement, or conviction or on a plea of no contest does not
create a conclusive presumption that a person does not meet the
standard of conduct required to justify indemnification and
reimbursement.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 885.257. INSURANCE FOR DIRECTORS, OFFICERS, EMPLOYEES, OR
AGENTS. (a) A fraternal benefit society may purchase and
maintain insurance on behalf of a person who is or was a
director, officer, employee, or agent of the society or who is or
was serving at the request of the society as a director, officer,
employee, or agent of another firm, corporation, or organization
against a liability asserted against that person or incurred by
that person in any capacity or arising out of that person's
status as a director, officer, employee, or agent of the society
or the other firm, corporation, or organization.
(b) A fraternal benefit society may purchase and maintain
insurance under this section regardless of whether the society
has the power to indemnify or reimburse the person with respect
to the covered liability under Sections 885.255 and 885.256.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 885.258. MANAGEMENT AND USE OF ASSETS AND FUNDS. (a) A
fraternal benefit society shall hold, invest, and disburse all
assets for the use and benefit of the society. A member or
beneficiary may not have or acquire individual rights in the
assets of a fraternal benefit society or become entitled to any
apportionment or surrender of any part of a society's assets
except as provided by a benefit contract.
(b) A fraternal benefit society may create, maintain, invest,
disburse, and apply any special fund necessary to implement any
purpose permitted by the fraternal benefit society's laws.
(c) A fraternal benefit society may create, maintain, invest,
disburse, and apply an emergency surplus or other similar fund in
accordance with the fraternal benefit society's laws. Unless
otherwise provided by a benefit contract, a fraternal benefit
society shall hold, invest, and disburse a fund created under
this subsection for the use and benefit of the society. A member
or beneficiary may not have or acquire individual rights in a
fund created under this subsection or become entitled to any
apportionment or the surrender of any part of the fund except as
provided by Section 885.301.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 885.259. SOURCE OF FUNDS. (a) A fraternal benefit society
shall derive the funds from which the society pays benefits and
the funds from which the society defrays its expenses from:
(1) premiums paid by members of the society; and
(2) accretions of those funds.
(b) A domestic or foreign fraternal benefit society may not
engage in business in this state unless the society provides for
stated premiums sufficient to permit meeting the obligations
contracted, when valued in accordance with the reserving
standards specified by this chapter.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 885.260. SPECIFIED PAYMENTS. (a) A fraternal benefit
society may provide in the fraternal benefit society's laws and
benefit certificates for specified payments on account of the
expense or general fund.
(b) A payment under this section may or may not be mingled with
the general fund of the fraternal benefit society as provided by
the society's constitution and bylaws.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 885.261. CONTROL OF FUND BY LODGE. (a) This section
applies if the constitution and bylaws of the grand lodge or
governing body of a fraternal benefit society:
(1) provide that all or part of the beneficiary, mortuary, or
insurance fund of the society that is paid by or collected from
the members of a lodge may be retained in the custody of and
controlled and managed by the lodge; and
(2) designate an officer of the lodge to have custody and
control of a fund described by Subdivision (1) and authority to
loan or invest the fund.
(b) A lodge officer having custody and control of a fund
described by Subsection (a)(1) shall execute a bond or other
written instrument to be prescribed and approved in terms and
amount by the commissioner to indemnify the fund against waste,
depletion, or loss. The lodge officer shall file the bond or
other written instrument with the department, if required to do
so by the department.
(c) A fund secured as provided by Subsection (b) is exempt from
this chapter.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 885.262. INVESTMENT OF FRATERNAL BENEFIT SOCIETY FUNDS.
(a) Except as provided by Subsection (b), a fraternal benefit
society may invest its funds only in securities permitted by
state law for the investment of the assets of life insurance
companies.
(b) A foreign fraternal benefit society authorized to or seeking
to engage in the business of insurance in this state that invests
its funds in accordance with the laws of the state in which the
society is incorporated is considered to meet the requirements of
this chapter for the investment of funds.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 885.263. TREATMENT OF DEFERRED CLAIMS. (a) A deferred
payment or an installment of a claim is considered to be a fixed
liability on the occurrence of the contingency on which the
payment or installment is to be paid. The amount of the liability
is the present value of the future payment or installment at the
rates of interest and mortality assumed by the fraternal benefit
society for valuation.
(b) A fraternal benefit society shall maintain a fund sufficient
to meet each fixed liability under Subsection (a) regardless of
proposed future collections to meet the liability.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
SUBCHAPTER G. BENEFITS PROVIDED BY FRATERNAL BENEFIT SOCIETIES
Sec. 885.301. TYPES OF BENEFITS PERMITTED. (a) A fraternal
benefit society may provide for the payment of:
(1) death benefits in any form;
(2) endowment benefits;
(3) annuity benefits;
(4) benefits for temporary or permanent disability resulting
from disease or accident;
(5) benefits for hospital, medical, or nursing expenses
resulting from sickness, bodily infirmity, or accident;
(6) benefits for the erection of a monument or tombstone to the
memory of a deceased member;
(7) funeral benefits; and
(8) any other benefit that may be provided by a life, accident,
or health insurance company and that is:
(A) offered in compliance with a law described by Section
841.002 applicable to a life, accident, or health insurance
company; and
(B) consistent with this chapter.
(b) A fraternal benefit society shall:
(1) specify in the fraternal benefit society's laws or rules
those persons to whom a benefit certificate may be issued or who
may be covered by benefits; and
(2) make the provision of those benefits consistent with the
provision of benefits to members and their beneficiaries.
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.091, eff. April 1, 2009.
Sec. 885.302. ISSUANCE OF BENEFIT CONTRACTS ON VARIABLE BASIS.
A fraternal benefit society may, as provided by a resolution of
its supreme governing body, establish and operate one or more
separate accounts and issue benefit contracts on a variable
basis, subject to laws regulating a life insurance company that
establishes those types of accounts and issues those types of
contracts. To comply with applicable federal or state laws or
rules, the society may:
(1) issue on a variable basis contracts to which Sections
885.306(b) and (c) and 885.311(a) do not apply; and
(2) adopt special procedures for conducting the business and
affairs of a separate account and provide special voting and
other rights for a person having beneficial interests in a
separate account, including special procedures and rights
relating to:
(A) investment policy;
(B) investment advisory services;
(C) selection of certified public accountants; and
(D) selection of a committee to manage the business and affairs
of the account.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 885.303. BENEFITS FOR CHILDREN. (a) A fraternal benefit
society may provide by its laws, in addition to other benefits
provided for by the fraternal benefit society's laws, for
insurance or annuities, or insurance and annuities, on the lives
of children of any age, on the application of an adult individual
related to or interested in the child, as provided by the
fraternal benefit society's laws.
(b) A life insurance benefit contract issued on the life of an
individual who is younger than a fraternal benefit society's
minimum age for adult membership may provide for transfer of
control or ownership to the insured at an age specified in the
benefit certificate. A fraternal benefit society may require
approval of an application for membership in order to make the
transfer and may provide in all other respects for control of the
benefit certificate and rights, obligations, and liabilities
incident and connected to the certificate. Ownership rights under
the benefit certificate before a transfer must be specified in
the certificate.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 885.304. BENEFICIARIES. (a) The owner of a benefit
contract may change the beneficiary at any time in accordance
with a fraternal benefit society's laws or rules unless the owner
waives that right by specifically requesting in writing that the
beneficiary designation be irrevocable.
(b) A fraternal benefit society may, through the fraternal
benefit society's laws or rules, limit the scope of beneficiary
designations and shall provide that a person whose designation as
a beneficiary is revocable may not have or obtain a vested
interest in the proceeds, in conformity with the benefit
contract.
(c) If, at the death of an insured, a lawful beneficiary to whom
the proceeds of the benefit contract are payable does not exist
under the benefit contract, a fraternal benefit society shall pay
the amount of the benefit under the benefit contract:
(1) to the personal representative of the insured; or
(2) if the owner of the benefit certificate is a person other
than the insured, to the owner of the certificate.
(d) Subsection (c) does not apply to the extent funeral benefits
may be paid under the benefit contract.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 885.305. ORGANIZATION AS BENEFICIARY. A fraternal benefit
society may provide in the fraternal benefit society's laws for
the issuance to its members of benefit certificates under which
an association, society, or corporation that is organized and
operated for religious, eleemosynary, or educational purposes is
named as beneficiary.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 885.306. BENEFIT CERTIFICATE. (a) A fraternal benefit
society may not deliver or issue for delivery in this state a
benefit certificate unless the form of the certificate has been
filed under Chapter 1701.
(b) Each benefit certificate issued by a fraternal benefit
society must:
(1) specify the amount of benefits provided under the
certificate;
(2) state the amount of premiums that are payable under the
certificate; and
(3) provide that the certificate, the society's charter or
articles of incorporation or, if the society is a voluntary
association, the society's articles of association, the fraternal
benefit society's laws, the application for membership and
medical examination, signed by the applicant, and all amendments
to each of those constitute the agreement between the society and
the member.
(c) An amendment to a fraternal benefit society's charter,
articles of incorporation or association, or laws made or enacted
after the issuance of a benefit certificate:
(1) binds the member and the member's beneficiaries; and
(2) controls the agreement in all respects as if the amendment
had been in force at the time of the application for membership.
(d) A life, accident, health, or disability insurance benefit
certificate or annuity benefit certificate issued by a fraternal
benefit society must meet the requirements applicable to similar
policies issued by an insurer in this state that are not
inconsistent with this chapter as determined by rule of the
commissioner.
(e) A copy of a document described by Subsection (b)(3),
certified by a fraternal benefit society's secretary or
corresponding officer, shall be admitted as evidence of the terms
of the agreement between the society and the member.
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.092, eff. April 1, 2009.
Sec. 885.307. GRACE PERIOD. A fraternal benefit society shall
include in the terms of a benefit certificate a grace period of
at least one month for payment of premiums.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 885.308. ASSIGNMENT OF LIFE INSURANCE BENEFIT CONTRACT. A
fraternal benefit society may specify the terms for the
assignment of a life insurance benefit contract.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 885.309. NONFORFEITURE BENEFITS. (a) The value of a
nonforfeiture benefit provided under a benefit certificate issued
before January 1, 2001, must comply with the law applicable to
the certificate immediately before that date.
(b) The value of a nonforfeiture benefit provided under a
benefit certificate issued on or after January 1, 2001, is
computed as provided under:
(1) the provisions of Chapters 1105 and 1107 applicable to life
insurance companies issuing policies containing similar benefits;
and
(2) the applicable tables required by those chapters.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 885.310. ENFORCING PAYMENT OF PREMIUMS; CONTROL OF BENEFIT
CERTIFICATES. A fraternal benefit society may provide for:
(1) enforcing payment of premiums;
(2) designating beneficiaries; and
(3) controlling benefit certificates and all rights,
obligations, and liabilities incident to the certificates not in
conflict with this chapter.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 885.311. DEFICIENCY PAYMENTS. (a) A fraternal benefit
society shall provide in the fraternal benefit society's laws
that if the society's reserves for any class of the society's
benefit certificates become impaired, the society's supreme
governing body or board of directors may require the certificate
holders to pay the society an equitable proportion of the
deficiency as determined by the governing body or board.
(b) If a holder of a benefit certificate does not pay a
fraternal benefit society the amount determined under Subsection
(a), the holder, in a manner determined by the society, may elect
to accept:
(1) the amount determined under Subsection (a) as an
indebtedness against the certificate, with the amount drawing
interest at a rate that does not exceed the rate specified for a
certificate loan under a certificate that has cash value;
(2) a proportionate reduction in the benefits payable under the
certificate; or
(3) a combination of the limitations on the certificate
described by Subdivisions (1) and (2).
(c) A fraternal benefit society may determine a presumed
election for a holder of a benefit certificate under Subsection
(b) if the holder fails to make an election.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 885.312. CONTINUATION OF BENEFIT CERTIFICATE ON EXPULSION
OR SUSPENSION OF MEMBER. If a fraternal benefit society's laws
provide for expulsion or suspension of a member, the benefit
certificate must provide that a member who is expelled or
suspended may maintain the certificate in force by continuing
payment of the required premium unless the expulsion or
suspension:
(1) is for nonpayment of a premium; or
(2) occurs within the contestable period of the benefit contract
and is for material misrepresentation in the application for
membership or insurance.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 885.313. CONTINUATION OF BENEFIT CERTIFICATE ISSUED ON
CHILD. If the membership in a fraternal benefit society of a
person responsible for the support of a child on whose account a
benefit certificate has been issued terminates, the certificate
may be continued for the benefit of:
(1) the child's estate, if payment of the premiums is continued;
or
(2) any other person responsible for the support and maintenance
of the child, if the person assumes the payment of the required
premiums.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 885.314. RESPONSIBILITY FOR PAYMENT OF BENEFITS. (a) An
officer or member of the supreme, the grand, or any subordinate
body of an incorporated fraternal benefit society is not
individually liable for the payment of any disability or death
benefit provided for by the fraternal benefit society's laws and
contracts.
(b) Benefits are payable only out of the fraternal benefit
society's funds and in the manner provided by the fraternal
benefit society's laws.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 885.315. DAMAGES FOR FAILURE TO TIMELY PAY BENEFITS. A
fraternal benefit society that is liable for a loss and that does
not pay benefits before the 61st day after the date of the demand
for payment is liable to the holder of the benefit certificate,
in addition to the amount of the loss, for damages of 12 percent
of the amount of the loss and reasonable attorney's fees for the
prosecution and collection of the loss.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 885.316. EXEMPTION OF BENEFITS. Money or another benefit
or charity to be paid or provided by a fraternal benefit society,
before or after payment is not subject to attachment,
garnishment, or other process and may not be seized or applied by
any legal or equitable process or operation of law to pay any
debt or liability of a member, a beneficiary, or any other person
who may have a right under the benefit contract.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
SUBCHAPTER H. AGENTS
Sec. 885.351. AGENTS. (a) A fraternal benefit society may
appoint an agent licensed by the department under Subchapter B,
Chapter 4054, to sell benefits listed under Section 885.301(a) to
society members.
(b) Except as provided by Section 885.352, a person may not
solicit or procure benefit contracts for a fraternal benefit
society unless the person is licensed as a general life,
accident, and health agent or a life agent under Subchapter B,
Chapter 4054.
(c) The licensing and regulation of agents for fraternal benefit
societies is subject to Title 13 and other laws regulating those
agents.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003. Amended by Acts 2003, 78th Leg., ch. 1276, Sec. 10A.222(a),
eff. Sept. 1, 2003.
Amended by:
Acts 2007, 80th Leg., R.S., Ch.
548, Sec. 2.08, eff. September 1, 2007.
Acts 2007, 80th Leg., R.S., Ch.
730, Sec. 2E.093, eff. April 1, 2009.
Reenacted by Acts 2009, 81st Leg., R.S., Ch.
87, Sec. 14.011, eff. September 1, 2009.
Sec. 885.352. EXCEPTION. (a) Section 885.351(b) does not apply
to an agent, representative, or member of a fraternal benefit
society who devotes less than 50 percent of the person's time to
the solicitation and procurement of benefit contracts for that
society.
(b) For purposes of this section, a person is presumed for a
calendar year to have devoted at least 50 percent of the person's
time to the solicitation or procurement of benefit contracts if,
in the preceding calendar year, the person solicited or procured
on behalf of a fraternal benefit society:
(1) life insurance contracts that have generated, in the
aggregate, more than $20,000 of direct premiums for all lives
insured;
(2) benefit contracts other than life insurance contracts that
have insured the individual lives of more than 25 persons; or
(3) variable life insurance or variable annuity contracts.
(c) A person to whom this section applies may not solicit or
procure on behalf of a fraternal benefit society an
interest-sensitive life insurance contract that exceeds $35,000
of coverage on an individual life unless the person holds the
designation of fraternal insurance counselor.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003. Amended by Acts 2003, 78th Leg., ch. 1276, Sec. 10A.222(b),
eff. Sept. 1, 2003.
Sec. 885.353. EMPLOYMENT OF CERTAIN PERSONS TO SOLICIT BUSINESS
PROHIBITED. A fraternal benefit society may not employ or
otherwise retain a person to solicit business if the person has
had a license revoked under Chapter 4005.
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.094, eff. April 1, 2009.
SUBCHAPTER I. REGULATION OF FRATERNAL BENEFIT SOCIETIES
Sec. 885.401. ANNUAL REPORT. (a) Each fraternal benefit
society engaged in business in this state shall annually, on or
before March 1:
(1) file with the department in the form required by the
commissioner a statement, under oath of the society's president
and secretary or corresponding officers, of:
(A) the society's condition and standing on the preceding
December 31; and
(B) the society's transactions for the preceding calendar year;
and
(2) provide additional information the commissioner considers
necessary to demonstrate the society's business and method of
operation.
(b) The commissioner may periodically require any additional
statement the commissioner considers necessary relating to a
fraternal benefit society.
(c) The department or the state may use the report required
under Subsection (a) in determining a fraternal benefit society's
financial solvency.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 885.402. REPORTS OF CERTAIN GRAND LODGES. The officers of
the supreme state governing body of a grand lodge considered to
be a single state organization under Section 885.006 shall make
each report required by this chapter. The report must include the
transactions, liabilities, and assets of the state organization.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 885.403. VALUATION OF BENEFIT CERTIFICATES. (a) A
fraternal benefit society shall include in its report under
Section 885.401 a valuation of the society's benefit certificates
in force on the preceding December 31. The report of valuation
shall show:
(1) as contingent liabilities, the present midyear value of the
promised benefits provided by the fraternal benefit society's
laws under the benefit certificates subject to valuation; and
(2) as contingent assets, the present midyear value of the
future net premiums provided by the fraternal benefit society's
laws as the premiums are in practice actually collected.
(b) At the option of a fraternal benefit society, instead of the
valuation determined under Subsections (a)(1) and (2), the
valuation may show the net value of benefit certificates subject
to valuation under Subsection (a). The net value, when computed
in case of monthly premiums, may be the mean of the terminal
values for the end of the preceding and of the current insurance
years