H.B. No. 2636
 
AN ACT
relating to the nonsubstantive revision of statutes relating to the
Texas Department of Insurance, the business of insurance, and
certain related businesses, to nonsubstantive additions to and
corrections in the codified Insurance Code, and to conforming the
provisions of that code that were codified by the 79th Legislature
to other Acts of that legislature, including conforming amendments,
repeals, and penalties.
       BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
ARTICLE 1.  REVISION OF THE INSURANCE CODE OF 1951
PART A.  ADDITIONS AND CONFORMING AMENDMENTS TO TITLE 2,
INSURANCE CODE
       SECTION 1A.001.  CONFORMING AMENDMENT.  Chapter 30,
Insurance Code, is amended to read as follows:
CHAPTER 30.  GENERAL PROVISIONS
       Sec. 30.001.  PURPOSE OF TITLES 2, 3, 4, 5, 6, 7, 8, 9, 10,
11, 12, 13, [AND] 14, AND 20.  (a)  This title and Titles 3, 4, 5, 6,
7, 8, 9, 10, 11, 12, 13, [and] 14, and 20 are enacted as a part of the
state's continuing statutory revision program, begun by the Texas
Legislative Council in 1963 as directed by the legislature in the
law codified as Section 323.007, Government Code.  The program
contemplates a topic-by-topic revision of the state's general and
permanent statute law without substantive change.
       (b)  Consistent with the objectives of the statutory
revision program, the purpose of this title and Titles 3, 4, 5, 6,
7, 8, 9, 10, 11, 12, 13, [and] 14, and 20 is to make the law
encompassed by the titles more accessible and understandable by:
             (1)  rearranging the statutes into a more logical
order;
             (2)  employing a format and numbering system designed
to facilitate citation of the law and to accommodate future
expansion of the law;
             (3)  eliminating repealed, duplicative,
unconstitutional, expired, executed, and other ineffective
provisions; and
             (4)  restating the law in modern American English to
the greatest extent possible.
       Sec. 30.002.  CONSTRUCTION.  Except as provided by Section
30.003 and as otherwise expressly provided in this code, Chapter
311, Government Code (Code Construction Act), applies to the
construction of each provision in this title and in Titles 3, 4, 5,
6, 7, 8, 9, 10, 11, 12, 13, [and] 14, and 20.
       Sec. 30.003.  DEFINITION OF PERSON.  The definition of
"person" assigned by Section 311.005, Government Code, does not
apply to any provision in this title or in Title 3, 4, 5, 6, 7, 8, 9,
10, 11, 12, 13, [or] 14, or 20.
       Sec. 30.004.  REFERENCE IN LAW TO STATUTE REVISED BY TITLE 2,
3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, [OR] 14, OR 20.  A reference in a
law to a statute or a part of a statute revised by this title or by
Title 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, [or] 14, or 20 is
considered to be a reference to the part of this code that revises
that statute or part of that statute.
SECTION 1A.002.  ADDITION. Subchapter A, Chapter 32,
Insurance Code, is amended by adding Sections 32.0015 and 32.004 to
read as follows:
       Sec. 32.0015.  FILING ARTICLES OF INCORPORATION AND OTHER
PAPERS; CERTIFIED COPIES. (a)  The department shall file and
maintain in a department office:
             (1)  all insurance companies' acts or articles of
incorporation; and
             (2)  any other paper required by law to be filed with
the department.
       (b)  The department shall provide a certified copy of a
document described by Subsection (a)(1) or (2) to a party
interested in the document who:
             (1)  submits an application; and
             (2)  pays the fee prescribed by law. (V.T.I.C. Art.
1.10, Sec. 2.)
       Sec. 32.004.  PUBLICATION OF RESULTS OF EXAMINATION. The
department shall publish the results of an examination of a
company's affairs if the commissioner determines that publication
is in the public interest.  (V.T.I.C. Art. 1.10, Sec. 6.)
PART B.  ADDITIONS TO TITLE 3, INSURANCE CODE
       SECTION 1B.001.  ADDITION.  Subtitle B, Title 3, Insurance
Code, is amended by adding Chapter 228 to read as follows:
CHAPTER 228.  PREMIUM TAX CREDIT FOR CERTAIN INVESTMENTS
SUBCHAPTER A.  GENERAL PROVISIONS
       Sec.228.001.GENERAL DEFINITIONS.  In this chapter:
             (1)  "Allocation date" means the date on which
certified investors are allocated premium tax credits.
             (2)  "Certified capital" means cash invested by a
certified investor that fully funds the purchase price of an equity
interest in a certified capital company or a qualified debt
instrument issued by the company.
             (3)  "Certified capital company" means a partnership,
corporation, or trust or limited liability company, whether
organized on a profit or nonprofit basis, that:
                   (A)  has as the company's primary business
activity the investment of cash in qualified businesses; and
                   (B)  is certified as meeting the criteria of this
chapter.
             (4)  "Certified investor" means an insurer or other
person that has state premium tax liability and that contributes
certified capital pursuant to a premium tax credit allocation under
this chapter.
             (5)  "Early stage business" means a business described
by Section 228.152(a).
             (6)  "Person" means an individual or entity, including
a corporation, general or limited partnership, or trust or limited
liability company.
             (7)  "Premium tax credit allocation claim" means a
claim for allocation of premium tax credits.
             (8)  "Qualified business" means a business described by
Section 228.201.
             (9)  "Qualified debt instrument" means a debt
instrument issued by a certified capital company, at par value or a
premium, that:
                   (A)  has an original maturity date that is a date
on or after the fifth anniversary of the date of issuance;
                   (B)  has a repayment schedule that is not faster
than a level principal amortization over five years; and
                   (C)  does not have interest, distribution, or
payment features that are related to:
                         (i)  the profitability of the company; or
                         (ii)  the performance of the company's
investment portfolio.
             (10)  "Qualified investment" means the investment of
cash by a certified capital company in a qualified business for the
purchase of any debt, debt participation, equity, or hybrid
security of any nature or description, including a debt instrument
or security that has the characteristics of debt but that provides
for conversion into equity or equity participation instruments such
as options or warrants.
             (11)  "State premium tax liability" means:
                   (A)  any liability incurred by any person under
Chapter 221, 222, 223, or 224; or
                   (B)  if the tax liability imposed under Chapter
221, 222, 223, or 224 is eliminated or reduced, any tax liability
imposed on an insurer or other person that had premium tax liability
under Subchapter A, Chapter 4, or Article 9.59 as those laws existed
on January 1, 2003.
             (12)  "Strategic investment business" means a business
described by Section 228.153(a). (V.T.I.C. Art. 4.51, Subdivs.
(2), (3), (4), (5), (6) (part), (7), (8), (9) (part), (10), (12),
(13), (15) (part).)
       Sec.228.002.DEFINITION OF AFFILIATE.  In this chapter,
"affiliate" of another person means:
             (1)  a person that is an affiliate for purposes of
Section 823.003;
             (2)  a person that directly or indirectly:
                   (A)  beneficially owns 10 percent or more of the
outstanding voting securities or other voting or management
interests of the other person, whether through rights, options,
convertible interests, or otherwise; or
                   (B)  controls or holds power to vote 10 percent or
more of the outstanding voting securities or other voting or
management interests of the other person;
             (3)  a person 10 percent or more of the outstanding
voting securities or other voting or management interests of which
are directly or indirectly:
                   (A)  beneficially owned by the other person,
whether through rights, options, convertible interests, or
otherwise; or
                   (B)  controlled or held with power to vote by the
other person;
             (4)  a partnership in which the other person is a
general partner;
             (5)  an officer, director, employee, or agent of the
other person; or
             (6)  an immediate family member of an officer,
director, employee, or agent described by Subdivision (5). 
(V.T.I.C. Art. 4.51, Subdiv. (1).)
[Sections 228.003-228.050 reserved for expansion]
SUBCHAPTER B.  ADMINISTRATION AND PROMOTION
       Sec.228.051.ADMINISTRATION BY COMPTROLLER. The
comptroller shall administer this chapter. (V.T.I.C. Art. 4.52
(part).)
       Sec.228.052.RULES; FORMS. The comptroller shall adopt
rules and forms as necessary to implement this chapter, including
rules that:
             (1)  establish the application procedures for
certified capital companies; and
             (2)  facilitate the transfer or assignment of premium
tax credits by certified investors. (V.T.I.C. Art. 4.52 (part);
Art. 4.53, Sec. (a); Art. 4.71, Sec. (a) (part).)
       Sec.228.053.REPORT TO LEGISLATURE.  (a)  The comptroller
shall prepare a biennial report concerning the results of the
implementation of this chapter.  The report must include:
             (1)  the number of certified capital companies holding
certified capital;
             (2)  the amount of certified capital invested in each
certified capital company;
             (3)  the amount of certified capital the certified
capital company invested in qualified businesses as of January 1,
2006, and the cumulative total for each subsequent year;
             (4)  the total amount of tax credits granted under this
chapter for each year that credits have been granted;
             (5)  the performance of each certified capital company
with respect to renewal and reporting requirements imposed under
this chapter;
             (6)  with respect to the qualified businesses in which
certified capital companies have invested:
                   (A)  the classification of the qualified
businesses according to the industrial sector and size of the
business;
                   (B)  the total number of jobs created by the
investment and the average wages paid for the jobs; and
                   (C)  the total number of jobs retained as a result
of the investment and the average wages paid for the jobs; and
             (7)  the certified capital companies that have been
decertified or that have failed to renew the certification and the
reason for any decertification.
       (b)  The comptroller shall file the report with the governor,
the lieutenant governor, and the speaker of the house of
representatives not later than December 15 of each even-numbered
year. (V.T.I.C. Art. 4.73.)
       Sec.228.054.PROMOTION OF PROGRAM.  The Texas Economic
Development and Tourism Office shall promote the program
established under this chapter in the Texas Business and Community
Economic Development Clearinghouse. (V.T.I.C. Art. 4.72.)
[Sections 228.055-228.100 reserved for expansion]
SUBCHAPTER C. APPLICATION FOR AND GENERAL OPERATION OF CERTIFIED
CAPITAL COMPANIES
       Sec.228.101.APPLICATION FOR CERTIFICATION.  (a)  An
applicant for certification must file the application in the form
prescribed by the comptroller.  The application must be accompanied
by a nonrefundable application fee of $7,500.
       (b)  The application must include an audited balance sheet of
the applicant, with an unqualified opinion from an independent
certified public accountant, as of a date not more than 35 days
before the date of the application. (V.T.I.C. Art. 4.53, Sec. (b).)
       Sec.228.102.QUALIFICATION.  To qualify as a certified
capital company:
             (1)  the applicant must have, at the time of
application for certification, an equity capitalization of at least
$500,000 in unencumbered cash or cash equivalents;
             (2)  at least two principals or persons employed to
manage the funds of the applicant must have at least four years of
experience in the venture capital industry; and
             (3)  the applicant must satisfy any additional
requirement imposed by the comptroller by rule. (V.T.I.C. Art.
4.53, Sec. (c).)
       Sec.228.103.MANAGEMENT BY AND CERTAIN OWNERSHIP INTERESTS OF INSURANCE ENTITIES PROHIBITED
OF INSURANCE ENTITIES PROHIBITED
insurers, or other persons who may have state premium tax liability
or the insurer's or person's affiliates may not directly or
indirectly:
             (1)  manage a certified capital company;
             (2)  beneficially own, whether through rights,
options, convertible interests, or otherwise, more than 10 percent
of the outstanding voting securities of a certified capital
company; or
             (3)  control the direction of investments for a
certified capital company.
       (b)  Subsection (a) applies without regard to whether the
insurer or other person or the affiliate of the insurer or other
person is authorized by or engages in business in this state.
       (c)  Subsections (a) and (b) do not preclude an insurer,
certified investor, or any other party from exercising its legal
rights and remedies, including interim management of a certified
capital company, if authorized by law, with respect to a certified
capital company that is in default of the company's statutory or
contractual obligations to the insurer, certified investor, or
other party.
       (d)  This chapter does not limit an insurer's ownership of
nonvoting equity interests in a certified capital company. 
(V.T.I.C. Art. 4.54; Art. 4.56, Sec. (d).)
       Sec.228.104.ACTION ON APPLICATION.  (a)  The comptroller
shall:
             (1)  review the application, organizational documents,
and business history of each applicant; and
             (2)  ensure that the applicant satisfies the
requirements of this chapter.
       (b)  Not later than the 30th day after the date an
application is filed, the comptroller shall:
             (1)  issue the certification; or
             (2)  refuse to issue the certification and communicate
in detail to the applicant the grounds for the refusal, including
suggestions for the removal of those grounds. (V.T.I.C. Art. 4.53,
Secs. (d), (e).)
       Sec.228.105.CONTINUATION OF CERTIFICATION.  To continue
to be certified, a certified capital company must make qualified
investments according to the schedule established by Section
228.151. (V.T.I.C. Art. 4.56, Sec. (a) (part).)
       Sec.228.106.REPORTS TO COMPTROLLER; AUDITED FINANCIAL STATEMENT
STATEMENT
comptroller as soon as practicable after the receipt of certified
capital:
             (1)  the name of each certified investor from whom the
certified capital was received, including the certified investor's
insurance premium tax identification number;
             (2)  the amount of each certified investor's investment
of certified capital and premium tax credits; and
             (3)  the date on which the certified capital was
received.
       (b)  Not later than January 31 of each year, each certified
capital company shall report to the comptroller:
             (1)  the amount of the company's certified capital at
the end of the preceding year;
             (2)  whether or not the company has invested more than
15 percent of the company's total certified capital in a single
business;
             (3)  each qualified investment that the company made
during the preceding year and, with respect to each qualified
investment, the number of employees of the qualified business at
the time the qualified investment was made; and
             (4)  any other information required by the comptroller,
including any information required by the comptroller to comply
with Section 228.053.
       (c)  Not later than April 1 of each year, each certified
capital company shall provide to the comptroller an annual audited
financial statement that includes the opinion of an independent
certified public accountant. The audit must address the methods of
operation and conduct of the business of the company to determine
whether:
             (1)  the company is complying with this chapter and the
rules adopted under this chapter;
             (2)  the funds received by the company have been
invested as required within the time provided by Section 228.151;
and
             (3)  the company has invested the funds in qualified
businesses. (V.T.I.C. Art. 4.58.)
       Sec.228.107.RENEWAL FEE; LATE FEE; EXCEPTION.  (a)  Not
later than January 31 of each year, each certified capital company
shall pay a nonrefundable renewal fee of $5,000 to the comptroller.
       (b)  If a certified capital company fails to pay the renewal
fee on or before the date specified by Subsection (a), the company
must pay, in addition to the renewal fee, a late fee of $5,000 to
continue the company's certification.
       (c)  Notwithstanding Subsection (a), a renewal fee is not
required within six months of the date on which a certified capital
company's initial certification is issued under Section
228.104(b). (V.T.I.C. Art. 4.59.)
       Sec.228.108.OFFERING MATERIAL USED BY CERTIFIED CAPITAL COMPANY
COMPANY
the certified capital company must include the following statement:
             By authorizing the formation of a certified
capital company, the State of Texas does not endorse
the quality of management or the potential for
earnings of the company and is not liable for damages
or losses to a certified investor in the company. Use
of the word "certified" in an offering does not
constitute a recommendation or endorsement of the
investment by the comptroller of public accounts. If
applicable provisions of law are violated, the State
of Texas may require forfeiture of unused premium tax
credits and repayments of used premium tax credits.
(V.T.I.C. Art. 4.55.)
[Sections 228.109-228.150 reserved for expansion]
SUBCHAPTER D.  INVESTMENT BY CERTIFIED CAPITAL COMPANIES
       Sec.228.151.REQUIRED SCHEDULE OF INVESTMENT.  (a)  Before
the third anniversary of a certified capital company's allocation
date, the company must make qualified investments in an amount
cumulatively equal to at least 30 percent of the company's
certified capital, subject to Section 228.153(b).
       (b)  Before the fifth anniversary of a certified capital
company's allocation date, the company must make qualified
investments in an amount cumulatively equal to at least 50 percent
of the company's certified capital, subject to Sections 228.152(b)
and 228.153(b). (V.T.I.C. Art. 4.56, Sec. (a) (part).)
       Sec.228.152.INVESTMENT IN EARLY STAGE BUSINESS REQUIRED.  
(a)  In this section, "early stage business" means a qualified
business that:
             (1)  is involved, at the time of a certified capital
company's first investment, in activities related to the
development of initial product or service offerings, such as
prototype development or establishment of initial production or
service processes;
             (2)  was initially organized less than two years before
the date of the certified capital company's first investment; or
             (3)  during the fiscal year immediately preceding the
year of the certified capital company's first investment had, on a
consolidated basis with the business's affiliates, gross revenues
of not more than $2 million as determined in accordance with
generally accepted accounting principles.
       (b)  A certified capital company must place at least 50
percent of the amount of qualified investments required by Section
228.151(b) in early stage businesses. (V.T.I.C. Art. 4.51, Subdiv.
(6); Art. 4.56, Sec. (b) (part).)
       Sec.228.153.INVESTMENT IN STRATEGIC INVESTMENT BUSINESS REQUIRED
REQUIRED
             (1)  "Strategic investment area" means an area of this
state that qualifies as a strategic investment area under
Subchapter O, Chapter 171, Tax Code, or, after the date that
subchapter expires, an area that qualified as a strategic
investment area under that subchapter immediately before that date.
             (2)  "Strategic investment business" means a qualified
business that:
                   (A)  has the business's principal business
operations located in one or more strategic investment areas; and
                   (B)  intends to maintain business operations in
the strategic investment areas after receipt of the investment by
the certified capital company.
       (b)  A certified capital company must place at least 30
percent of the amount of qualified investments required by Sections
228.151(a) and (b) in a strategic investment business. (V.T.I.C.
Art. 4.51, Subdivs. (14), (15); Art. 4.56, Sec. (b) (part).)
       Sec.228.154.CERTIFIED CAPITAL NOT INVESTED IN QUALIFIED INVESTMENTS
INVESTMENTS
certified capital not invested in qualified investments only in:
             (1)  cash deposited with a federally insured financial
institution;
             (2)  certificates of deposit in a federally insured
financial institution;
             (3)  investment securities that are:
                   (A)  obligations of the United States or agencies
or instrumentalities of the United States; or
                   (B)  obligations that are guaranteed fully as to
principal and interest by the United States;
             (4)  debt instruments rated at least "A" or the
equivalent by a nationally recognized credit rating organization,
or issued by, or guaranteed with respect to payment by, an entity
whose unsecured indebtedness is rated at least "A" or the
equivalent by a nationally recognized credit rating organization,
and which indebtedness is not subordinated to other unsecured
indebtedness of the issuer or the guarantor;
             (5)  obligations of this state or a municipality or
political subdivision of this state; or
             (6)  any other investment approved in advance in
writing by the comptroller. (V.T.I.C. Art. 4.56, Sec. (h).)
       Sec.228.155.COMPUTATION OF AMOUNT OF INVESTMENTS.  (a)  
The aggregate cumulative amount of all qualified investments made
by a certified capital company after the company's allocation date
shall be considered in the computation of the percentage
requirements under this subchapter.
       (b)  A certified capital company may invest proceeds
received from a qualified investment in another qualified
investment, and that investment counts toward any requirement of
this chapter with respect to investments of certified capital.
(V.T.I.C. Art. 4.56, Sec. (c).)
       Sec.228.156.LIMIT ON QUALIFIED INVESTMENT. A certified
capital company may not make a qualified investment at a cost to the
company that is greater than 15 percent of the company's total
certified capital at the time of investment. (V.T.I.C. Art. 4.56,
Sec. (f).)
       Sec.228.157.DISTRIBUTIONS BY CERTIFIED CAPITAL COMPANY.  
(a)  In this section, "qualified distribution" means any
distribution or payment from certified capital by a certified
capital company in connection with:
             (1)  the reasonable costs and expenses of forming,
syndicating, managing, and operating the company, provided that the
distribution or payment is not made directly or indirectly to a
certified investor, including:
                   (A)  reasonable and necessary fees paid for
professional services, including legal and accounting services,
related to the company's formation and operation; and
                   (B)  an annual management fee in an amount that
does not exceed 2.5 percent of the company's certified capital; and
             (2)  a projected increase in federal or state taxes,
including penalties and interest related to state and federal
income taxes, of the company's equity owners resulting from the
earnings or other tax liability of the company to the extent that
the increase is related to the ownership, management, or operation
of the company.
       (b)  A certified capital company may make a qualified
distribution at any time. To make a distribution or payment other
than a qualified distribution, a company must have made qualified
investments in an amount cumulatively equal to 100 percent of the
company's certified capital.
       (c)  If a business in which a qualified investment is made
relocates the business's principal business operations to another
state during the term of the certified capital company's investment
in the business, the cumulative amount of qualified investments
made by the certified capital company for purposes of satisfying
the requirements of Subsection (b) only is reduced by the amount of
the certified capital company's qualified investments in the
business that has relocated.
       (d)  Subsection (c) does not apply if the business
demonstrates that the business has returned the business's
principal business operations to this state not later than the 90th
day after the date of the relocation. (V.T.I.C. Art. 4.51, Subdiv.
(11); Art. 4.60, Secs. (a), (c).)
       Sec.228.158.REPAYMENT OF DEBT.  Notwithstanding Section
228.157(b), a certified capital company may make repayments of
principal and interest on the company's indebtedness without any
restriction, including repaying the company's indebtedness on
which certified investors earned premium tax credits. (V.T.I.C.
Art. 4.60, Sec. (b).)
[Sections 228.159-228.200 reserved for expansion]
SUBCHAPTER E.  QUALIFIED BUSINESS
       Sec.228.201.DEFINITION OF QUALIFIED BUSINESS. (a)  In
this chapter, "qualified business" means a business that complies
with this section at the time of a certified capital company's first
investment in the business.
       (b)  A qualified business must:
             (1)  be headquartered in this state and intend to
remain in this state after receipt of the certified capital
company's investment; and
             (2)  have the business's principal business operations
located in this state and intend to maintain business operations in
this state after receipt of the certified capital company's
investment.
       (c)  A qualified business must agree to use the qualified
investment primarily to:
             (1)  support business operations in this state, other
than advertising, promotion, and sales operations which may be
conducted outside of this state; or
             (2)  in the case of a start-up company, establish and
support business operations in this state, other than advertising,
promotion, and sales operations which may be conducted outside of
this state.
       (d)  A qualified business may not have more than 100
employees and must:
             (1)  employ at least 80 percent of the business's
employees in this state; or
             (2)  pay 80 percent of the business's payroll to
employees in this state.
       (e)  A qualified business must be primarily engaged in:
             (1)  manufacturing, processing, or assembling
products;
             (2)  conducting research and development; or
             (3)  providing services.
       (f)  A qualified business may not be primarily engaged in:
             (1)  retail sales;
             (2)  real estate development;
             (3)  the business of insurance, banking, or lending; or
             (4)  the provision of professional services provided by
accountants, attorneys, or physicians. (V.T.I.C. Art. 4.51,
Subdiv. (9).)
       Sec.228.202.RELOCATION OF PRINCIPAL BUSINESS OPERATIONS.  
If, before the 90th day after the date a certified capital company
makes an investment in a qualified business, the qualified business
moves the business's principal business operations from this state,
the investment may not be considered a qualified investment for
purposes of the percentage requirements under this chapter. 
(V.T.I.C. Art. 4.56, Sec. (g).)
       Sec.228.203.EVALUATION OF BUSINESS BY COMPTROLLER.  (a)  A
certified capital company may, before making an investment in a
business, request a written opinion from the comptroller as to
whether the business in which the company proposes to invest is a
qualified business, an early stage business, or a strategic
investment business.
       (b)  Not later than the 15th business day after the date of
the receipt of a request under Subsection (a), the comptroller
shall:
             (1)  determine whether the business meets the
definition of a qualified business, an early stage business, or a
strategic investment business, as applicable, and notify the
certified capital company of the determination and provide an
explanation of the determination; or
             (2)  notify the company that an additional 15 days will
be needed to review the request and make the determination.
       (c)  If the comptroller fails to notify the certified capital
company with respect to the proposed investment within the period
specified by Subsection (b), the business in which the company
proposes to invest is considered to be a qualified business, an
early stage business, or a strategic investment business, as
appropriate. (V.T.I.C. Art. 4.57.)
       Sec.228.204.CONTINUATION OF CLASSIFICATION AS QUALIFIED BUSINESS; FOLLOW-ON INVESTMENTS AUTHORIZED
BUSINESS; FOLLOW-ON INVESTMENTS AUTHORIZED
is classified as a qualified business at the time of the first
investment in the business by a certified capital company:
             (1)  remains classified as a qualified business; and
             (2)  may receive follow-on investments from any
certified capital company.
       (b)  Except as provided by Subsection (c), a follow-on
investment made under Subsection (a) is a qualified investment even
though the business may not meet the definition of a qualified
business at the time of the follow-on investment.
       (c)  A follow-on investment does not qualify as a qualified
investment if, at the time of the follow-on investment, the
qualified business no longer has the business's principal business
operations in this state. (V.T.I.C. Art. 4.56, Sec. (e).)
[Sections 228.205-228.250 reserved for expansion]
SUBCHAPTER F.  PREMIUM TAX CREDIT
       Sec.228.251.PREMIUM TAX CREDIT.  (a)  A certified investor
who makes an investment of certified capital shall earn in the year
of investment a vested credit against state premium tax liability
equal to 100 percent of the certified investor's investment of
certified capital, subject to the limits imposed by this chapter.
       (b)  Beginning with the tax report due March 1, 2009, for the
2008 tax year, a certified investor may take up to 25 percent of the
vested premium tax credit in any taxable year of the certified
investor.  The credit may not be applied to estimated payments due
in 2008. (V.T.I.C. Art. 4.65, Sec. (a).)
       Sec.228.252.LIMIT ON PREMIUM TAX CREDIT. (a)  The credit
to be applied against state premium tax liability of a certified
investor in any one year may not exceed the state premium tax
liability of the investor for the taxable year.
       (b)  A certified investor may carry forward any unused credit
against state premium tax liability indefinitely until the premium
tax credits are used. (V.T.I.C. Art. 4.65, Sec. (b).)
       Sec.228.253.PREMIUM TAX CREDIT ALLOCATION CLAIM REQUIRED.  
(a)  A certified investor must prepare and execute a premium tax
credit allocation claim on a form provided by the comptroller.
       (b)  The certified capital company must have filed the claim
with the comptroller on the date on which the comptroller accepted
premium tax credit allocation claims on behalf of certified
investors under the comptroller's rules.
       (c)  The premium tax credit allocation claim form must
include an affidavit of the certified investor under which the
certified investor becomes legally bound and irrevocably committed
to make an investment of certified capital in a certified capital
company in the amount allocated even if the amount allocated is less
than the amount of the claim, subject only to the receipt of an
allocation under Section 228.255.
       (d)  A certified investor may not claim a premium tax credit
under Section 228.251 for an investment that has not been funded,
without regard to whether the certified investor has committed to
fund the investment. (V.T.I.C. Art. 4.66.)
       Sec.228.254.TOTAL LIMIT ON PREMIUM TAX CREDITS.  (a)  The
total amount of certified capital for which premium tax credits may
be allowed under this chapter for all years in which premium tax
credits are allowed is $200 million.
       (b)  The total amount of certified capital for which premium
tax credits may be allowed for all certified investors under this
chapter may not exceed the amount that would entitle all certified
investors in certified capital companies to take total credits of
$50 million in a year.
       (c)  A certified capital company and the company's
affiliates may not file premium tax credit allocation claims in
excess of the maximum amount of certified capital for which premium
tax credits may be allowed as provided by this section. (V.T.I.C.
Art. 4.67.)
       Sec.228.255.ALLOCATION OF PREMIUM TAX CREDIT.  (a)  If the
total premium tax credits claimed by all certified investors
exceeds the total limits on premium tax credits established by
Section 228.254(a), the comptroller shall allocate the total amount
of premium tax credits allowed under this chapter to certified
investors in certified capital companies on a pro rata basis in
accordance with this section.
       (b)  The pro rata allocation for each certified investor
shall be the product of:
             (1)  a fraction, the numerator of which is the amount of
the premium tax credit allocation claim filed on behalf of the
investor and the denominator of which is the total amount of all
premium tax credit allocation claims filed on behalf of all
certified investors; and
             (2)  the total amount of certified capital for which
premium tax credits may be allowed under this chapter.
       (c)  The maximum amount of certified capital for which
premium tax credit allocation may be allowed on behalf of a single
certified investor and the investor's affiliates, whether by one or
more certified capital companies, may not exceed the greater of:
             (1)  $10 million; or
             (2)  15 percent of the maximum aggregate amount
available under Section 228.254(a). (V.T.I.C. Art. 4.68, Secs.
(a), (b), (e).)
       Sec.228.256.TREATMENT OF CREDITS AND CAPITAL.  In any case
under this code or another insurance law of this state in which the
assets of a certified investor are examined or considered, the
certified capital may be treated as an admitted asset, subject to
the applicable statutory valuation procedures. (V.T.I.C. Art.
4.69.)
       Sec.228.257.TRANSFERABILITY OF CREDIT.  (a) A certified
investor may transfer or assign premium tax credits only in
compliance with the rules adopted under Section 228.052.
       (b)  The transfer or assignment of a premium tax credit does
not affect the schedule for taking the premium tax credit under this
chapter. (V.T.I.C. Art. 4.71, Secs. (a) (part), (b).)
       Sec.228.258.IMPACT OF PREMIUM TAX CREDIT ON INSURANCE RATEMAKING
RATEMAKING
amount of premium tax included by the investor in connection with
ratemaking for an insurance contract written in this state because
of a reduction in the investor's Texas premium tax derived from
premium tax credits granted under this chapter. (V.T.I.C. Art.
4.70.)
       Sec.228.259.RETALIATORY TAX.  A certified investor
claiming a credit against state premium tax liability earned
through an investment in a company is not required to pay any
additional retaliatory tax levied under Chapter 281 as a result of
claiming that credit. (V.T.I.C. Art. 4.65, Sec. (c) (part).)
[Sections 228.260-228.300 reserved for expansion]
SUBCHAPTER G.  ENFORCEMENT
       Sec.228.301.ANNUAL REVIEW BY COMPTROLLER.  (a)  The
comptroller shall conduct an annual review of each certified
capital company to:
             (1)  ensure that the company:
                   (A)  continues to satisfy the requirements of this
chapter; and
                   (B)  has not made any investment in violation of
this chapter; and
             (2)  determine the eligibility status of the company's
qualified investments.
       (b)  Each certified capital company shall pay the cost of the
annual review according to a reasonable fee schedule adopted by the
comptroller. (V.T.I.C. Art. 4.61, Secs. (a), (b).)
       Sec.228.302.DECERTIFICATION OF CERTIFIED CAPITAL COMPANY
COMPANY
228.107, 228.151, 228.152, 228.153, 228.154, 228.155, 228.156,
228.202, or 228.204 is grounds for decertification of a certified
capital company.
       (b)  If the comptroller determines that a certified capital
company is not in compliance with a law listed in Subsection (a),
the comptroller shall notify the company's officers in writing that
the company may be subject to decertification after the 120th day
after the date the notice is mailed unless the company:
             (1)  corrects the deficiencies; and
             (2)  returns to compliance with the law.
       (c)  The comptroller may decertify a certified capital
company, after opportunity for hearing, if the comptroller finds
that the company is not in compliance with a law listed in
Subsection (a) at the end of the period established by Subsection
(b).
       (d)  Decertification under this section is effective on
receipt of notice of decertification by the certified capital
company.
       (e)  The comptroller shall notify any appropriate state
agency of a decertification of a certified capital company. 
(V.T.I.C. Art. 4.61, Secs. (c), (d).)
       Sec.228.303.ADMINISTRATIVE PENALTY.  (a)  The comptroller
may impose an administrative penalty on a certified capital company
that violates this chapter.
       (b)  The amount of the penalty may not exceed $25,000. Each
day a violation continues or occurs is a separate violation for the
purpose of imposing the penalty. The amount of the penalty shall be
based on:
             (1)  the seriousness of the violation, including the
nature, circumstances, extent, and gravity of the violation;
             (2)  the economic harm caused by the violation;
             (3)  the history of previous violations;
             (4)  the amount necessary to deter a future violation;
             (5)  efforts to correct the violation; and
             (6)  any other matter that justice may require.
       (c)  A certified capital company assessed a penalty under
this chapter may request a redetermination as provided by Chapter
111, Tax Code.
       (d)  The attorney general may sue to collect the penalty.
       (e)  A proceeding to impose the penalty is a contested case
under Chapter 2001, Government Code. (V.T.I.C. Art. 4.62.)
[Sections 228.304-228.350 reserved for expansion]
SUBCHAPTER H.  RECAPTURE AND FORFEITURE OF PREMIUM TAX CREDITS
       Sec.228.351.RECAPTURE AND FORFEITURE OF PREMIUM TAX CREDIT FOLLOWING DECERTIFICATION
CREDIT FOLLOWING DECERTIFICATION
certified capital company may, in accordance with this section,
cause:
             (1)  the recapture of premium tax credits previously
claimed by the company's certified investors; and
             (2)  the forfeiture of future premium tax credits to be
claimed by the investors.
       (b)  Decertification of a certified capital company on or
before the third anniversary of the company's allocation date
causes the recapture of any premium tax credits previously claimed
and the forfeiture of any future premium tax credits to be claimed
by a certified investor with respect to the company.
       (c)  For a certified capital company that meets the
requirements for continued certification under Section 228.151(a)
and subsequently fails to meet the requirements for continued
certification under Subsection (b) of that section:
             (1)  any premium tax credit that has been or will be
taken by a certified investor on or before the third anniversary of
the allocation date is not subject to recapture or forfeiture; and
             (2)  any premium tax credit that has been or will be
taken by a certified investor after the third anniversary of the
company's allocation date is subject to recapture or forfeiture.
       (d)  For a certified capital company that has met the
requirements for continued certification under Section 228.151 and
is subsequently decertified:
             (1)  any premium tax credit that has been or will be
taken by a certified investor on or before the fifth anniversary of
the allocation date is not subject to recapture or forfeiture; and
             (2)  any premium tax credit to be taken after the fifth
anniversary of the allocation date is subject to forfeiture only if
the company is decertified on or before the fifth anniversary of the
company's allocation date.
       (e)  For a certified capital company that has invested an
amount cumulatively equal to 100 percent of the company's certified
capital in qualified investments, any premium tax credit claimed or
to be claimed by a certified investor is not subject to recapture or
forfeiture under this section. (V.T.I.C. Art. 4.63, Sec. (a).)
       Sec.228.352.NOTICE OF RECAPTURE AND FORFEITURE OF PREMIUM TAX CREDIT
TAX CREDIT
address of each certified investor whose premium tax credit is
subject to recapture or forfeiture, using the address shown on the
investor's last premium tax filing. (V.T.I.C. Art. 4.63, Sec.
(b).)
       Sec.228.353.INDEMNITY AGREEMENTS AND INSURANCE AUTHORIZED
AUTHORIZED
indemnify, or purchase insurance for the benefit of, a certified
investor for losses resulting from the recapture or forfeiture of
premium tax credits under Section 228.351.
       (b)  Any guaranty, indemnity, bond, insurance policy, or
other payment undertaking made under this section may not be
provided by more than one certified investor of the certified
capital company or affiliate of the certified investor. (V.T.I.C.
Art. 4.64.)
PART C.  ADDITIONS TO TITLE 4, INSURANCE CODE
       SECTION 1C.001.  ADDITION.  Subtitle A, Title 4, Insurance
Code, is amended by adding Chapter 406 to read as follows:
CHAPTER 406. SPECIAL DEPOSITS REQUIRED UNDER POTENTIALLY
HAZARDOUS CONDITIONS
       Sec.406.001.DEFINITION. In this chapter, "insurer"
includes:
             (1)  a capital stock insurance company;
             (2)  a reciprocal or interinsurance exchange;
             (3)  a Lloyd's plan;
             (4)  a fraternal benefit society;
             (5)  a mutual company, including a mutual assessment
company;
             (6)  a statewide mutual assessment company;
             (7)  a local mutual aid association;
             (8)  a burial association;
             (9)  a county mutual insurance company;
             (10)  a farm mutual insurance company;
             (11)  a fidelity, guaranty, or surety company;
             (12)  a title insurance company;
             (13)  a stipulated premium company;
             (14)  a group hospital service corporation;
             (15)  a health maintenance organization;
             (16)  a risk retention group; and
             (17)  any other organization or person engaged in the
business of insurance. (V.T.I.C. Art. 1.33, Sec. 1.)
       Sec.406.002.APPLICABILITY OF CHAPTER. This chapter
applies to a person or organization engaged in the business of
insurance without regard to whether the person or organization is
listed in Section 406.001, unless another statute specifically
cites this chapter and exempts the person or organization from this
chapter. (V.T.I.C. Art. 1.33, Sec. 2.)
       Sec.406.003.REQUIRED DEPOSIT: STANDARDS AND CRITERIA.
The commissioner, in the commissioner's sole discretion, may
require an insurer to make a deposit under this chapter if the
commissioner determines that one of the following conditions, if
not rectified, may potentially be hazardous to the insurer's
policyholders, enrollees, or creditors, or to the public:
             (1)  the insurer's financial or operating condition,
reviewed in conjunction with the kinds and nature of risks insured;
             (2)  the insurer's method of operation;
             (3)  the insurer's relationship with affiliates;
             (4)  the nature and amount of the insurer's
investments;
             (5)  the insurer's contracts that may lead to a
contingent liability; or
             (6)  the insurer's agreements with respect to guaranty
and surety. (V.T.I.C. Art. 1.33, Sec. 3.)
       Sec.406.004.REQUIRED DEPOSIT: FORM OF SECURITY. A
deposit required under Section 406.003 must be made with the
comptroller and approved by the commissioner. The deposit must be
made in:
             (1)  cash;
             (2)  securities authorized under this code to be a
legal investment for the insurer that:
                   (A)  are readily marketable over a national
exchange with a maturity date of not more than one year, are listed
by the Securities Valuation Office of the National Association of
Insurance Commissioners, and qualify as admitted assets; or
                   (B)  are clean, irrevocable, and unconditional
letters of credit issued or confirmed by a financial institution
organized and licensed under the laws of the United States or a
state of the United States; or
             (3)  another form of security acceptable to the
commissioner. (V.T.I.C. Art. 1.33, Sec. 4.)
       Sec.406.005.DURATION OF DEPOSIT. Subject to Section
406.006, the comptroller shall hold a deposit required under this
chapter until the commissioner issues a written order finding that
the condition for which the deposit was required no longer exists.
(V.T.I.C. Art. 1.33, Sec. 5.)
       Sec.406.006.SUBSTITUTION OR WITHDRAWAL OF DEPOSIT. (a)
An insurer may file a written application with the commissioner
requesting:
             (1)  withdrawal of all or part of the deposit held by
the comptroller under this chapter; or
             (2)  substitution of all or part of the deposited
securities held by the comptroller under this chapter.
       (b)  The application must state the basis for the request to
withdraw the deposit or to substitute the deposited security.
       (c)  An insurer's application for the substitution of a
deposited security must provide specific information regarding the
security to be deposited as a substitute for the security held by
the comptroller.
       (d)  The commissioner shall issue an order approving or
denying an application under this section not later than the 30th
day after the date the department receives the application. If the
commissioner does not approve or deny the application within that
period, the application is denied.
       (e)  The commissioner may, in the commissioner's sole
discretion, approve an application to withdraw a deposit or
substitute a deposited security if the commissioner determines that
the withdrawal or substitution will not be hazardous to the
insurer's policyholders, enrollees, or creditors, or to the public.
       (f)  The comptroller may not release a deposit made under
this chapter, or any part of the deposit, and may not accept a
substitute for a deposited security unless the commissioner issues
an order approving the withdrawal or substitution. (V.T.I.C. Art.
1.33, Sec. 6.)
       Sec.406.007.APPEAL. An insurer may appeal an action of
the commissioner under this chapter in accordance with Subchapter
D, Chapter 36. (V.T.I.C. Art. 1.33, Sec. 7.)
       Sec.406.008.CUMULATIVE OF OTHER DEPOSITS. A deposit
required to be made under this chapter is in addition to any other
deposit that the insurer is required or authorized to make under
this code. (V.T.I.C. Art. 1.33, Sec. 8.)
PART D.  ADDITIONS TO TITLE 5, INSURANCE CODE
       SECTION 1D.001. ADDITION. Chapter 542, Insurance Code, is
amended by adding Subchapter C-1 to read as follows:
SUBCHAPTER C-1. REQUEST FOR CLAIMS INFORMATION BY CERTAIN
OFFICIALS
       Sec. 542.131.  REQUEST BY CERTAIN OFFICIALS ENGAGED IN
CRIMINAL INVESTIGATION. (a)  This section applies only to a claim
for a burglary or robbery loss or a death claim seeking life
insurance proceeds that is filed with an insurance company on or
after September 1, 2001.
       (b)  In the course of a criminal investigation and subject to
Subsection (c), the state fire marshal, the fire marshal of a
political subdivision of this state, the chief of a fire department
in this state, a chief of police of a municipality in this state, or
a sheriff in this state may request in writing that an insurance
company investigating a claimed burglary or robbery loss or a death
claim seeking life insurance proceeds release information in the
company's possession that relates to that claimed loss. The
company shall release the information to any official authorized to
request the information under this subsection if the company has
reason to believe that the insurance claim is false or fraudulent.
       (c)  An official who requests information under this section
may not request anything other than:
             (1)  an insurance policy relevant to an insurance claim
under investigation and the application for that policy;
             (2)  policy premium payment records;
             (3)  the history of the insured's previous claims; and
             (4)  material relating to the investigation of the
insurance claim, including:
                   (A)  statements of any person;
                   (B)  proof of loss; or
                   (C)  other relevant evidence.
       (d)  This section does not authorize a public official or
agency to adopt or require any form of periodic report by an
insurance company.
       (e)  In the absence of fraud or malice, an insurance company
or a person who releases information on behalf of an insurance
company is not liable for damages in a civil action or subject to
criminal prosecution for an oral or written statement made, or any
other action taken, that relates to the information required to be
released under this section.
       (f)  An official or department employee receiving
information under this section shall maintain the confidentiality
of the information until the information is required to be released
during a criminal or civil proceeding.
       (g)  An insurance company or the company's representative
may not intentionally refuse to release to an official described by
Subsection (b) the information required to be released to that
official under this section. (V.T.I.C. Art. 21.49C.)
       SECTION 1D.002.  ADDITION.  Subtitle C, Title 5, Insurance
Code, is amended by adding Chapter 560 to read as follows:
CHAPTER 560.  PROHIBITED RATES
       Sec.560.001.DEFINITION OF INSURER. In this chapter,
"insurer" means an insurance company, reciprocal or interinsurance
exchange, mutual insurance company, farm mutual insurance company,
capital stock insurance company, county mutual insurance company,
Lloyd's plan, surplus lines insurer, or other legal entity engaged
in the business of insurance in this state. The term includes:
             (1)  an affiliate described by Section 823.003(a);
             (2)  the Texas Windstorm Insurance Association
established under Chapter 2210;
             (3)  the FAIR Plan Association established under
Chapter 2211; and
             (4)  the Texas Automobile Insurance Plan Association
established under Chapter 2151. (V.T.I.C. Art. 1.02, Sec. (a).)
       Sec.560.002.USE OF CERTAIN RATES PROHIBITED; RATE REQUIREMENTS
REQUIREMENTS
chapter.
       (b)  A rate used under this code:
             (1)  must be just, fair, reasonable, and adequate; and
             (2)  may not be:
                   (A)  confiscatory;
                   (B)  excessive for the risks to which the rate
applies; or
                   (C)  unfairly discriminatory.
       (c)  For purposes of this section, a rate is:
             (1)  inadequate if the rate is insufficient to sustain
projected losses and expenses to which the rate applies, and
continued use of the rate:
                   (A)  endangers the solvency of an insurer using
the rate; or
                   (B)  has the effect of substantially lessening
competition or creating a monopoly in any market;
             (2)  excessive if the rate is likely to produce a
long-term profit that is unreasonably high in relation to the
insurance coverage provided; or
             (3)  unfairly discriminatory if the rate:
                   (A)  is not based on sound actuarial principles;
                   (B)  does not bear a reasonable relationship to
the expected loss and expense experience among risks; or
                   (C)  is based wholly or partly on the race, creed,
color, ethnicity, or national origin of the policyholder or an
insured. (V.T.I.C. Art. 1.02, Secs. (b), (c).)
PART E.  ADDITIONS TO TITLE 6, INSURANCE CODE
       SECTION 1E.001. ADDITION. Subtitle H, Title 6, Insurance
Code, is amended by adding Chapter 963 to read as follows:
CHAPTER 963.  AUTOMOBILE CLUBS
       Sec.963.001.DEFINITION.  In this chapter, "automobile
club" has the meaning assigned by Section 722.002, Transportation
Code. (V.T.I.C. Art. 21.80, Sec. (a) (part).)
       Sec.963.002.PROVISION OF CERTAIN INSURANCE SERVICES BY AUTOMOBILE CLUB
AUTOMOBILE CLUB
services only as provided by this chapter.
       (b)  An automobile club may provide accidental injury and
death benefit insurance coverage to a member through purchase of a
group policy of insurance issued to the automobile club for the
benefit of its members. The coverage must be purchased from an
insurance company authorized to engage in the business of that type
of coverage in this state. (V.T.I.C. Art. 21.80, Secs. (a) (part),
(b) (part).)
       Sec.963.003.CERTIFICATE OF PARTICIPATION.  (a)  The
automobile club shall provide each member covered by insurance
described by Section 963.002 a certificate of participation.
       (b)  The certificate of participation must state on its face
in at least 14-point black boldfaced type that the certificate is
only a certificate of participation in a group accidental injury
and death policy and is not automobile liability insurance
coverage.  (V.T.I.C. Art. 21.80, Sec. (b) (part).)
       Sec.963.004.  CERTAIN ACTIVITIES PROHIBITED.  An automobile
club may endorse insurance products and refer members to agents or
insurers authorized to provide the insurance products in this
state. The automobile club or an agent of the automobile club may
not receive consideration for the referral.  (V.T.I.C. Art. 21.80,
Sec. (c).)
       Sec.963.005.CERTAIN TRANSPORTATION-RELATED SERVICES.  In
addition to reimbursement services described by Section
722.002(2), Transportation Code, an automobile club may contract
with a member to:
             (1)  reimburse the member for expenses the member
incurs for towing, emergency road service, and lockout or lost key
services; and
             (2)  provide immediate destination assistance and trip
interruption service.  (V.T.I.C. Art. 21.80, Sec. (f) (part).)
       Sec.963.006.APPLICABILITY OF INSURANCE LAWS.  (a)  Except
as provided by Subsection (b), an automobile club performing
services permitted by this chapter is not subject to regulation
under the insurance laws of this state because of the performance of
those services.
       (b)  An automobile club may sell insurance products to a
member for a consideration separate from the amount that the member
pays for membership in the automobile club if the automobile club is
properly licensed as an agent under the applicable provisions of
this code.
       (c)  The insurance laws of this state do not apply to
reimbursement provided under Section 963.005. (V.T.I.C. Art.
21.80, Secs. (d), (e), (f) (part).)
PART F.  ADDITIONS TO TITLE 7, INSURANCE CODE
       SECTION 1F.001.  ADDITION.  Subtitle A, Title 7, Insurance
Code, is amended by adding Chapters 1112 and 1113 to read as
follows:
CHAPTER 1112. CERTAIN GUARANTEES IN LIFE INSURANCE POLICIES
       Sec.1112.001.CERTAIN GUARANTEES NOT PROHIBITED. Section
841.253 does not prohibit the issuance of a life insurance policy
that guarantees, by coupons or otherwise, definite payments or
reductions in premiums. (V.T.I.C. Art. 3.11 (part).)
       Sec.1112.002.CERTAIN GUARANTEES CONSTITUTE DEFINITE CONTRACT BENEFIT; VALUATION OF BENEFIT
CONTRACT BENEFIT; VALUATION OF BENEFIT
Subsection (e), a guarantee described by Section 1112.001 that is
in a policy or coupon issued after September 5, 1955, shall be
treated as a definite contract benefit and valued according to this
section and the reserve requirements of Chapter 425.
       (b)  Except as provided by Subsection (c), for a policy or
coupon issued before the date determined under Section 1105.002(a)
or (b), as applicable to the company, a contract benefit described
by Subsection (a) shall be valued using the reserve valuation net
premium for the benefits that is a uniform percentage of the gross
premiums.
       (c)  A policy described by Subsection (b) that contains a
contract benefit described by Subsection (a) may be valued on a
basis that provides for not more than one year preliminary term
insurance.
       (d)  For a policy or coupon issued on or after the date
determined under Section 1105.002(a) or (b), as applicable to the
company, a contract benefit described by Subsection (a) shall be
valued using the commissioners reserve valuation method described
by Section 425.064.
       (e)  A provision of this section relating to reserves does
not apply to a policy issued before September 7, 1955. (V.T.I.C.
Art. 3.11 (part).)
CHAPTER 1113. MANAGEMENT, CONTROL, AND DISPOSITION OF CERTAIN LIFE
INSURANCE AND ANNUITY CONTRACTS
       Sec.1113.001.LIFE INSURANCE AND ANNUITY CONTRACTS OF SPOUSE
SPOUSE
spouse, has management, control, and disposition of any contract of
life insurance or annuity issued in the spouse's name or to the
extent provided by the contract or any assignment of the contract,
regardless of whether the contract was issued before, on, or after
January 1, 1968. (V.T.I.C. Art. 3.49-3.)
PART G.  ADDITIONS TO TITLE 8, INSURANCE CODE
SECTION 1G.001.  ADDITION.  Subtitle A, Title 8, Insurance
Code, is amended by adding Chapter 1214 to read as follows:
CHAPTER 1214. ADVERTISING FOR CERTAIN HEALTH BENEFITS
       Sec.1214.001.APPLICABILITY OF CHAPTER.  This chapter
applies only to a health benefit plan that provides benefits for
medical or surgical expenses incurred as a result of a health
condition, accident, or sickness, including an individual, group,
blanket, or franchise insurance policy or agreement, a group
hospital service contract, or an individual or group evidence of
coverage issued by:
             (1)  an insurance company;
             (2)  a group hospital service corporation operating
under Chapter 842;
             (3)  a health maintenance organization operating under
Section 1367.053, Subchapter A, Chapter 1452, Subchapter B, Chapter
1507, Chapter 222, 251, or 258, as applicable to a health
maintenance organization, Chapter 843, Chapter 1271, and Chapter
1272; or
             (4)  an approved nonprofit health corporation holding a
certificate of authority under Chapter 844.  (V.T.I.C.
Art. 21.20-2, Sec. 1(a).)
       Sec.1214.002.EXCEPTION.  This chapter does not apply to:
             (1)  a health benefit plan that provides coverage:
                   (A)  only for a specified disease;
                   (B)  only for accidental death or dismemberment;
or
                   (C)  for wages or payments in lieu of wages for a
period during which an employee is absent from work because of
sickness or injury; or
             (2)  a long-term care insurance policy, including a
nursing home fixed indemnity policy, unless the commissioner
determines that the policy provides benefits so comprehensive that
the policy is a health benefit plan as described by Section
1214.001. (V.T.I.C. Art. 21.20-2, Sec. 1(b).)
       Sec.1214.003.RATE INFORMATION DISCLAIMERS.  (a)  Subject
to Chapter 541 and Section 543.001, an advertisement for a health
benefit plan may include rate information without including
information about each benefit exclusion or limitation if the
advertisement includes prominent disclaimers clearly indicating
that:
             (1)  the rates are illustrative;
             (2)  a person should not send money to the health
benefit plan issuer in response to the advertisement;
             (3)  a person cannot obtain coverage under the plan
until the person completes an application for coverage; and
             (4)  benefit exclusions or limitations may apply to the
plan.
       (b)  An advertisement that states a rate must also indicate
the age, gender, and geographic location on which the rate is based.
(V.T.I.C. Art. 21.20-2, Sec. 2.)
       SECTION 1G.002.  ADDITION.  Subtitle H, Title 8, Insurance
Code, is amended by adding Chapter 1550 to read as follows:
CHAPTER 1550.  CERTAIN REQUIREMENTS FOR INSURERS CONTRACTING WITH
GOVERNMENTAL ENTITIES
SUBCHAPTER A. REPORTING REQUIREMENTS
       Sec.1550.001.DEFINITIONS. In this subchapter:
             (1)  "Governmental entity" means:
                   (A)  a state agency; or
                   (B)  a county, municipality, school district,
special purpose district, or other subdivision of state government
that has jurisdiction limited to a geographic portion of the state.
             (2)  "Insurer" means:
                   (A)  an insurance company;
                   (B)  a health maintenance organization operating
under Section 1367.053, Subchapter A, Chapter 1452, Subchapter B,
Chapter 1507, Chapter 222, 251, or 258, as applicable to a health
maintenance organization, Chapter 843, Chapter 1271, and Chapter
1272; or
                   (C)  an approved nonprofit health corporation
that holds a certificate of authority issued under Chapter 844.
(V.T.I.C. Art. 21.49-15, Sec. 1.)
       Sec.1550.002.REPORT REQUIRED. (a) This section applies
to a contract subject to competitive bidding under which an insurer
delivers, issues for delivery, or renews a health insurance policy
or contract or an evidence of coverage.
       (b)  An insurer that enters into a contract described by
Subsection (a) with a governmental entity shall provide to the
governmental entity a detailed report that includes:
             (1)  the claims experience of the governmental entity
during the preceding calendar year; and
             (2)  the dollar amount of each large claim, as defined
by the governmental entity, paid by the insurer under the contract
during the preceding calendar year. (V.T.I.C. Art. 21.49-15, Sec.
2(a).)
       Sec.1550.003.CLAIM INFORMATION. (a) An insurer
providing claim information to a governmental entity in the report
under Section 1550.002 shall provide the information in the
aggregate, without information through which a specific individual
covered by the health insurance or evidence of coverage may be
identified.
       (b)  Claim information provided by an insurer to a
governmental entity in the report under Section 1550.002:
             (1)  may be viewed or used only for contract bidding
purposes; and
             (2)  is confidential for purposes of Chapter 552,
Government Code. (V.T.I.C. Art. 21.49-15, Sec. 2(b).)
[Sections 1550.004-1550.050 reserved for expansion]
SUBCHAPTER B. CERTAIN CONTRACTS
WITH MUNICIPALITIES
       Sec.1550.051.DEFINITION OF INSURER. In this subchapter,
"insurer" means:
             (1)  an insurance company, including a company
providing stop-loss or excess loss insurance;
             (2)  a health maintenance organization operating under
Section 1367.053, Subchapter A, Chapter 1452, Subchapter B, Chapter
1507, Chapter 222, 251, or 258, as applicable to a health
maintenance organization, Chapter 843, Chapter 1271, and Chapter
1272;
             (3)  an approved nonprofit health corporation that
holds a certificate of authority issued under Chapter 844; or
             (4)  a third-party administrator that holds a
certificate of authority under Chapter 4151. (V.T.I.C. Art.
21.49-16, Sec. 1(1).)
       Sec.1550.052.BID REQUIREMENTS. (a)  Except as provided by
Section 1550.054, an insurer that bids on a contract subject to the
competitive bidding and competitive proposal requirements adopted
under Section 252.021, Local Government Code, may not submit a bid
for a contract to provide stop-loss or other insurance coverage
that is subject to any qualification imposed by the insurer that
permits the insurer to modify or limit the terms of insurance
coverage to be provided after the contract has been made.
       (b)  An insurer's bid submitted under Section 252.021, Local
Government Code, must contain the insurer's entire offer.
(V.T.I.C. Art. 21.49-16, Sec. 2(a).)
       Sec.1550.053.CERTAIN EXCLUSIONS AND INCREASED DEDUCTIBLES PROHIBITED
DEDUCTIBLES PROHIBITED
insurer that provides stop-loss or other insurance coverage for
health benefits under a contract subject to this subchapter may
not, based on an individual's prior medical history:
             (1)  exclude from coverage an individual who is
otherwise eligible for the health benefits coverage; or
             (2)  assign a higher deductible to the individual. 
(V.T.I.C. Art. 21.49-16, Sec. 2(b).)
       Sec.1550.054.EXCEPTION FOR WRITTEN WAIVER. By executing
a written waiver in favor of the insurer, a municipality as defined
by Section 1.005, Local Government Code, may waive a requirement of
Section 1550.052 or 1550.053(2). (V.T.I.C. Art. 21.49-16, Secs.
1(2), 2(c).)
       SECTION 1G.003.  ADDITION. Subchapter C, Chapter 1579,
Insurance Code, is amended by adding Sections 1579.106, 1579.107,
and 1579.108 to read as follows:
       Sec. 1579.106.  PRIOR AUTHORIZATION FOR CERTAIN DRUGS.  (a)  
In this section, "drug formulary" means a list of drugs preferred
for use and eligible for coverage by a health coverage plan.
       (b)  A health coverage plan provided under this chapter that
uses a drug formulary in providing a prescription drug benefit must
require prior authorization for coverage of the following
categories of prescribed drugs if the specific drug prescribed is
not included in the formulary:
             (1)  a gastrointestinal drug;
             (2)  a cholesterol-lowering drug;
             (3)  an anti-inflammatory drug;
             (4)  an antihistamine drug; and
             (5)  an antidepressant drug.
       (c)  Every six months the trustee shall submit to the
comptroller and the Legislative Budget Board a report regarding any
cost savings achieved in the program through implementation of the
prior authorization requirement of this section. The report must
cover the previous six-month period.  (V.T.I.C. Art. 3.50-7A, as
added Acts 78th Leg., R.S., Ch. 213.)
       Sec.1579.107.DISEASE MANAGEMENT SERVICES. (a)  In this
section, "disease management services" means services to assist an
individual manage a disease or other chronic health condition, such
as heart disease, diabetes, respiratory illness, end-stage renal
disease, HIV infection, or AIDS, and with respect to which the
trustee identifies populations requiring disease management.
       (b)  A health coverage plan provided under this chapter must
provide disease management services or coverage for disease
management services in the manner required by the trustee,
including:
             (1)  patient self-management education;
             (2)  provider education;
             (3)  evidence-based models and minimum standards of
care;
             (4)  standardized protocols and participation
criteria; and
             (5)  physician-directed or physician-supervised care.
(V.T.I.C. Art. 3.50-7B.)
       Sec.1579.108.LIMITATIONS. The trustee may not contract
for or provide a health coverage plan that excludes from
participation in the network a general hospital that:
             (1)  is located in the geographical service area or
areas of the health coverage plan that includes a county that:
                   (A)  has a population of at least 100,000 and not
more than 175,000; and
                   (B)  is located in the Texas-Louisiana border
region, as that term is defined in Section 2056.002(e), Government
Code; and
             (2)  agrees to provide medical and health care services
under the plan subject to the same terms as other hospital providers
under the plan. (V.T.I.C. Art. 3.50-7A, Sec. (b), as added Acts
78th Leg., R.S., Ch. 201.)
PART H.  ADDITIONS TO TITLE 10, INSURANCE CODE
       SECTION 1H.001.  ADDITION.  Subtitle C, Title 10, Insurance
Code, is amended by adding Chapter 1953 to read as follows:
CHAPTER 1953. RATE REGULATION AND RATEMAKING FOR AUTOMOBILE
INSURANCE
SUBCHAPTER A.  RATE REGULATION
       Sec.1953.001.EXCLUSION OF CERTAIN TYPES OR CLASSES OF INSURANCE FROM CERTAIN REGULATIONS
INSURANCE FROM CERTAIN REGULATIONS
to insurance against liability for damages arising out of the
ownership, operation, maintenance, or use of a motor vehicle
described by Article 5.01 or against loss of or damage to a motor
vehicle described by Article 5.01 that, in the judgment of the
commissioner, is a type or class of insurance that is also the
subject of or is more properly regulated under other insurance
rating laws that cover that type or class of insurance.
       (b)  A type or class of insurance to which this section
applies is excluded from regulation under this chapter and:
             (1)  Articles 5.01, 5.01B, 5.03, 5.04, 5.04-1, 5.06,
5.10, and 5.11;
             (2)  Chapters 251 and 254;
             (3)  Subchapters A and B, Chapter 1806; and
             (4)  Chapters 1951 and 1952.
       (c)  If the commissioner finds that a type or class of
insurance to which this section applies is also the subject of or is
more properly regulated under other insurance rating laws that
cover that type or class of insurance, the commissioner shall issue
an order declaring which other insurance rating laws apply to:
             (1)  the type or class of insurance; and
             (2)  any motor vehicle equipment described by Article
5.01. (V.T.I.C. Art. 5.02.)
[Sections 1953.002-1953.050 reserved for expansion]
SUBCHAPTER B. RATEMAKING
       Sec.1953.051.CERTAIN RATING PLANS PROHIBITED. A rating
plan regarding the writing of automobile insurance, other than
insurance written under Chapter 2151, may not:
             (1)  assign a rate consequence to a charge or
conviction for a violation of Subtitle C, Title 7, Transportation
Code; or
             (2)  otherwise cause premiums for automobile insurance
to be increased because of a charge or conviction described by
Subdivision (1). (V.T.I.C. Art. 5.01-1.)
       Sec.1953.052.PREMIUM SURCHARGE REQUIRED. (a) An insurer
described by Section 1952.001 shall assess a premium surcharge in
an amount prescribed by the department against an insured for no
more than three years immediately following the date the insured is
convicted of:
             (1)  an offense relating to the operating of a motor
vehicle while intoxicated in violation of Section 49.04 or 49.07,
Penal Code; or
             (2)  an offense under Section 49.08, Penal Code.
       (b)  An insurer may apply the premium surcharge described by
Subsection (a) only to a private passenger automobile policy, as
defined by the department.
       (c)  If an insured assessed a premium surcharge under
Subsection (a) is convicted of an offense under one of the statutes
listed in Subsection (a)(1) or (2) during the period the insured is
assessed the premium surcharge, the period for which the premium
surcharge is assessed is increased by three additional consecutive
years for each conviction. (V.T.I.C. Art. 5.03-1.)
[Sections 1953.053-1953.100 reserved for expansion]
SUBCHAPTER C.  LOSS AND EXPENSE EXPERIENCE
       Sec.1953.101.RECORDING AND REPORTING OF LOSS AND EXPENSE EXPERIENCE AND OTHER DATA
EXPERIENCE AND OTHER DATA
reasonable rules and statistical plans for the recording and
reporting of loss experience and other required data by insurers.
The rules and plans must ensure that each insurer's total loss and
expense experience is made available at least as frequently as
annually in the form and with the detail necessary to aid in
determining whether rates and rating systems in use under the
following provisions comply with the standards adopted under those
provisions:
             (1)  this chapter;
             (2)  Articles 5.01, 5.03, and 5.04, if applicable;
             (3)  Subchapters A and B, Chapter 1806; and
             (4)  Chapters 1951 and 1952.
       (b)  In adopting the rules, the commissioner shall adopt
rules that are as uniform as is practicable to the rules and forms
of statistical plans used in other states.
       (c)  Each insurer shall use the statistical plans adopted
under this section to record and report loss experience and other
required data in accordance with the rules adopted by the
commissioner.
       (d)  The commissioner may modify statistical plans adopted
under this section. (V.T.I.C. Art. 5.05, Sec. (a).)
       Sec.1953.102.RULES ALLOWING INTERCHANGE OF LOSS EXPERIENCE INFORMATION
EXPERIENCE INFORMATION
rules to allow the interchange of loss experience information as
necessary for the application of rating plans. (V.T.I.C. Art.
5.05, Sec. (b).)
       Sec.1953.103.EXCHANGE OF INFORMATION AND EXPERIENCE DATA WITH OTHER STATES
WITH OTHER STATES
laws, the department or an insurer may:
             (1)  exchange information and experience data with
insurance supervisory officials, insurers, and rating
organizations in other states; and
             (2)  consult and cooperate with the individuals or
entities described by Subdivision (1) with respect to ratemaking
and the application of rating systems. (V.T.I.C. Art. 5.05, Sec.
(c).)
       Sec.1953.104.SWORN STATEMENTS. (a)  The department may
require a sworn statement from an insurer affected by this
subchapter that shows:
             (1)  the insurer's experience on any classification or
classifications of risks; and
             (2)  other information that is necessary or helpful in
performing duties or exercising authority imposed by law.
       (b)  The department shall prescribe the necessary forms for
statements and reports required under Subsection (a) with due
regard for the rules, methods, and forms in use in other states for
similar purposes so that uniformity of statistics is not disturbed. 
(V.T.I.C. Art. 5.05, Sec. (d).)
       SECTION 1H.002.  ADDITION.  Subtitle D, Title 10, Insurance
Code, is amended by adding Chapter 2008 to read as follows:
CHAPTER 2008.  COVERAGE FOR CERTAIN DAMAGE
TO PROPERTY BUILT WHOLLY OR PARTIALLY OVER WATER
       Sec.2008.001.APPLICABILITY OF CHAPTER. This chapter
applies only to an insurer described by Section 2251.003(a).
(V.T.I.C. Art. 5.14, Sec. (a).)
       Sec.2008.002.COVERAGE; LIMITS AND DEDUCTIBLES. (a) An
insurance policy written by an insurer against loss or damage by
windstorm, hurricane, or hail may include coverage for:
             (1)  a building or other structure that is built wholly
or partially over water; and
             (2)  the corporeal movable property contained in a
building or structure described by Subdivision (1).
       (b)  An insurer that writes coverage described by Subsection
(a) may impose appropriate limits of coverage and deductibles for
the coverage. (V.T.I.C. Art. 5.14, Secs. (b), (c).)
PART I.  ADDITIONS TO TITLE 13, INSURANCE CODE
       SECTION 1I.001.  ADDITION.  Subtitle A, Title 13, Insurance
Code, is amended by adding Chapter 4007 to read as follows:
CHAPTER 4007.  NOTICE TO DEPARTMENT BY CERTAIN PROPERTY AND
CASUALTY INSURANCE COMPANIES REGARDING AGENTS
       Sec.4007.001.APPLICABILITY OF CHAPTER. This chapter
applies only to an insurance company authorized to engage in the
business of insurance in this state under:
             (1)  a provision of:
                   (A)  Chapter 5, 1805, or 2171; or
                   (B)  Subtitle B, C, D, E, F, H, or I, Title 10; or
             (2)  Chapter 861, 862, 883, 911, 912, 941, 942, 984, or
3503. (V.T.I.C. Art. 21.70, Sec. (a) (part).)
       Sec.4007.002.NOTICE TO DEPARTMENT REQUIRED. (a) On forms
prescribed by the commissioner, an insurance company shall notify
the department not later than the 30th day after the date on which:
             (1)  balances due from an insurance agent for more than
90 days exceed $1 million or 10 percent of the company's
policyholder surplus computed on December 31 of the preceding year
or the most recent quarter if a report is specifically required by
the department;
             (2)  an agent's authority to settle claims for the
company is withdrawn; or
             (3)  the contract with an agent is canceled or
terminated.
       (b)  An insurance company may comply with the notification
requirement of Subsection (a)(1) by submitting a single annual
report if:
             (1)  the company routinely operates above the limit
established by Subsection (a)(1); and
             (2)  the commissioner verifies that fact under a
procedure adopted by the commissioner. (V.T.I.C. Art. 21.70, Secs.
(a) (part), (b).)
PART J.  ADDITION OF TITLE 20, INSURANCE CODE
       SECTION 1J.001. TITLE 20.  The Insurance Code is amended by
adding Title 20 to read as follows:
TITLE 20.  REGULATION OF OTHER OCCUPATIONS
CHAPTER 6001. FIRE EXTINGUISHER SERVICE AND INSTALLATION
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 6001.001.  PURPOSE 
Sec. 6001.002.  DEFINITIONS 
[Sections 6001.003-6001.050 reserved for expansion]
SUBCHAPTER B. POWERS AND DUTIES OF COMMISSIONER,
DEPARTMENT, AND STATE FIRE MARSHAL
Sec. 6001.051.  ADMINISTRATION OF CHAPTER 
Sec. 6001.052.  ADOPTION OF RULES 
Sec. 6001.053.  RULES RESTRICTING ADVERTISING OR
                 COMPETITIVE BIDDING 
Sec. 6001.054.  GENERAL POWERS AND DUTIES OF DEPARTMENT 
Sec. 6001.055.  FEES 
Sec. 6001.056.  DEPOSIT IN OPERATING ACCOUNT 
[Sections 6001.057-6001.100 reserved for expansion]
SUBCHAPTER C. FIRE EXTINGUISHER ADVISORY COUNCIL
Sec. 6001.101.  ADVISORY COUNCIL; APPOINTMENT 
Sec. 6001.102.  ADVISORY COUNCIL DUTIES 
[Sections 6001.103-6001.150 reserved for expansion]
SUBCHAPTER D. REGISTRATION, LICENSE, AND PERMIT REQUIREMENTS
Sec. 6001.151.  FIRM REGISTRATION CERTIFICATE REQUIRED 
Sec. 6001.152.  BRANCH OFFICE REGISTRATION CERTIFICATE
                 REQUIRED 
Sec. 6001.153.  HYDROSTATIC TESTING; REGISTRATION
                 CERTIFICATE REQUIRED 
Sec. 6001.154.  REQUIRED INSURANCE COVERAGE FOR
                 REGISTRATION CERTIFICATE 
Sec. 6001.155.  EMPLOYEE LICENSE REQUIRED 
Sec. 6001.156.  ACTIVITIES NOT REGULATED BY CHAPTER 
Sec. 6001.157.  LICENSE EXAMINATION 
Sec. 6001.158.  EXAMINATION RESULTS 
Sec. 6001.159.  CONTINUING EDUCATION REQUIREMENTS 
Sec. 6001.160.  RECIPROCAL LICENSE 
Sec. 6001.161.  APPRENTICE PERMIT REQUIRED 
Sec. 6001.162.  NOT TRANSFERABLE 
[Sections 6001.163-6001.200 reserved for expansion]
SUBCHAPTER E. RENEWAL OF REGISTRATION, LICENSE, OR PERMIT
Sec. 6001.201.  RENEWAL REQUIRED; FEE 
Sec. 6001.202.  NOTICE OF EXPIRATION 
Sec. 6001.203.  RENEWAL PROCEDURES 
[Sections 6001.204-6001.250 reserved for expansion]
SUBCHAPTER F. PROHIBITED PRACTICES
AND DISCIPLINARY PROCEDURES
Sec. 6001.251.  PROHIBITED PRACTICES 
Sec. 6001.252.  DISCIPLINARY ACTIONS 
Sec. 6001.253.  DISCIPLINARY HEARING 
Sec. 6001.254.  REAPPLICATION REQUIREMENTS 
Sec. 6001.255.  REEXAMINATION AFTER REVOCATION 
[Sections 6001.256-6001.300 reserved for expansion]
SUBCHAPTER G. CRIMINAL PENALTY
Sec. 6001.301.  CRIMINAL PENALTY 
CHAPTER 6001. FIRE EXTINGUISHER SERVICE AND INSTALLATION
SUBCHAPTER A. GENERAL PROVISIONS
       Sec.6001.001.PURPOSE. The purpose of this chapter is to
safeguard lives and property by:
             (1)  regulating:
                   (A)  the leasing, selling, installing, and
servicing of portable fire extinguishers; and
                   (B)  the planning, certifying, installing, and
servicing of fixed fire extinguisher systems; and
             (2)  prohibiting portable fire extinguishers, fixed
fire extinguisher systems, or extinguisher equipment that is not
labeled or listed by a testing laboratory approved by the
department.  (V.T.I.C. Art. 5.43-1, Sec. 1.)
       Sec.6001.002.DEFINITIONS. In this chapter:
             (1)  "Firm" means an individual, partnership,
corporation, or association.
             (2)  "Fixed fire extinguisher system" means an assembly
of piping, conduits, or containers that convey liquid, powder, or
gases to dispersal openings or devices protecting one or more
hazards by suppressing or extinguishing fires.
             (3)  "Hydrostatic testing" means pressure testing by
hydrostatic methods.
             (4)  "Insurance agent" means:
                   (A)  an individual, firm, or corporation licensed
under:
                         (i)  Subchapter E, Chapter 981; or
                         (ii)  Subchapter A, B, C, D, E, or G, Chapter
4051; or
                   (B)  an individual authorized to represent an
insurance fund or pool created by a municipality, county, or other
political subdivision of this state under Chapter 791, Government
Code.
             (5)  "Portable fire extinguisher" means any device that
contains liquid, powder, or gases for suppressing or extinguishing
fires.
             (6)  "Registered firm" means a firm that holds a
registration certificate.
             (7)  "Service" and "servicing" mean servicing a
portable fire extinguisher or a fixed fire extinguisher system by
inspecting, charging, filling, maintaining, recharging, refilling,
repairing, or testing. (V.T.I.C. Art. 5.43-1, Sec. 3.)
       [Sections 6001.003-6001.050 reserved for expansion]
SUBCHAPTER B. POWERS AND DUTIES OF COMMISSIONER,
DEPARTMENT, AND STATE FIRE MARSHAL
       Sec.6001.051.ADMINISTRATION OF CHAPTER. (a)  The
department shall administer this chapter.
       (b)  The commissioner may issue rules the commissioner
considers necessary to administer this chapter through the state
fire marshal. (V.T.I.C. Art. 5.43-1, Sec. 2 (part).)
       Sec.6001.052.ADOPTION OF RULES. (a) In adopting
necessary rules, the commissioner may use recognized standards,
including standards:
             (1)  published by the National Fire Protection
Association;
             (2)  recognized by federal law or regulation;
             (3)  published by any nationally recognized
standards-making organization; or
             (4)  contained in the manufacturer's installation
manuals.
       (b)  The commissioner shall adopt and administer rules
determined essentially necessary for the protection and
preservation of life and property regarding:
             (1)  registration of firms engaged in the business of:
                   (A)  installing or servicing portable fire
extinguishers or planning, certifying, installing, or servicing
fixed fire extinguisher systems; or
                   (B)  hydrostatic testing of fire extinguisher
cylinders;
             (2)  the examination and licensing of individuals to:
                   (A)  install or service portable fire
extinguishers; and
                   (B)  plan, certify, install, or service fixed fire
extinguisher systems; and
             (3)  requirements for:
                   (A)  installing or servicing portable fire
extinguishers; and
                   (B)  planning, certifying, installing, or
servicing fixed fire extinguisher systems.
       (c)  The commissioner by rule shall prescribe requirements
for applications and qualifications for licenses, permits, and
certificates issued under this chapter. (V.T.I.C. Art. 5.43-1,
Secs. 2 (part), 7(a), 8 (part).)
       Sec. 6001.053.  RULES RESTRICTING ADVERTISING OR
COMPETITIVE BIDDING. (a)  The commissioner may not adopt rules
restricting advertising or competitive bidding by the holder of a
license, permit, certificate, or approval issued under this chapter
except to prohibit false, misleading, or deceptive practices.
       (b)  In the commissioner's rules to prohibit false,
misleading, or deceptive practices, the commissioner may not
include a rule that:
             (1)  restricts the use of any medium for advertising;
             (2)  restricts the use of a license, permit,
certificate, or approval holder's personal appearance or voice in
an advertisement;
             (3)  relates to the size or duration of an
advertisement by the license, permit, certificate, or approval
holder; or
             (4)  restricts the license, permit, certificate, or
approval holder's advertisement under a trade name. (V.T.I.C. Art.
5.43-1, Sec. 8A.)
       Sec.6001.054.GENERAL POWERS AND DUTIES OF DEPARTMENT.  
(a)  The department shall evaluate the qualifications of a firm:
             (1)  applying for a registration certificate to engage
in the business of installing or servicing portable fire
extinguishers or planning, certifying, installing, or servicing
fixed fire extinguisher systems; or
             (2)  seeking approval as a testing laboratory.
       (b)  The department shall issue:
             (1)  registration certificates for firms that qualify
under commissioner rules to engage in the business of installing or
servicing portable fire extinguishers or planning, certifying,
installing, or servicing fixed fire extinguisher systems; and
             (2)  licenses, apprentice permits, and authorizations
to perform hydrostatic testing to firms or individuals that
qualify. (V.T.I.C. Art. 5.43-1, Sec. 8 (part).)
       Sec.6001.055.FEES. (a) The commissioner shall set the
fee for:
             (1)  an initial firm registration certificate in an
amount not to exceed $450;
             (2)  the renewal of a firm registration certificate in
an amount not to exceed $300 annually;
             (3)  an initial branch office registration certificate
in an amount not to exceed $100;
             (4)  the renewal of a branch office registration
certificate in an amount not to exceed $100 annually;
             (5)  an initial registration certificate to perform
hydrostatic testing of fire extinguishers manufactured in
accordance with the specifications and procedures of the United
States Department of Transportation in an amount not to exceed
$250;
             (6)  the renewal of a registration certificate to
perform hydrostatic testing of fire extinguishers manufactured in
accordance with the specifications and procedures of the United
States Department of Transportation in an amount not to exceed $150
annually;
             (7)  an initial employee license fee in an amount not to
exceed $70;
             (8)  the annual renewal of an employee license in an
amount not to exceed $50; and
             (9)  an apprentice permit in an amount not to exceed
$30.
       (b)  Unless the examination or reexamination for an employee
license is administered by a testing service, the commissioner
shall set a nonrefundable fee for:
             (1)  the initial examination in an amount not to exceed
$30; and
             (2)  each reexamination in an amount not to exceed $20.
       (c)  The commissioner shall set a fee in an amount not to
exceed $20 for:
             (1)  a duplicate registration certificate, license, or
apprentice permit issued under this chapter; or
             (2)  any request requiring changes to a registration
certificate, license, or permit.
       (d)  On a change of ownership of a registered firm, the
department shall issue a new registration certificate with a new
number for a fee set by the commissioner in an amount not to exceed
$450.  On a change of ownership of a branch office, the commissioner
shall charge a fee in an amount not to exceed $100. (V.T.I.C. Art.
5.43-1, Secs. 4(a) (part), (b), (c-1), (d) (part), (e) (part),
(f).)
       Sec.6001.056.DEPOSIT IN OPERATING ACCOUNT. All money
collected under this chapter, other than penalties and monetary
forfeitures, shall be paid to the department and deposited in the
state treasury to the credit of the Texas Department of Insurance
operating account for use in administering this chapter.  (V.T.I.C.
Art. 5.43-1, Sec. 11.)
[Sections 6001.057-6001.100 reserved for expansion]
SUBCHAPTER C. FIRE EXTINGUISHER ADVISORY COUNCIL
       Sec.6001.101.ADVISORY COUNCIL; APPOINTMENT. (a)  The
commissioner may delegate the exercise of all or part of the
commissioner's functions, powers, and duties under this chapter,
other than the issuance of licenses, certificates, and permits, to
a fire extinguisher advisory council.
       (b)  The commissioner shall appoint the members of the
advisory council.  The members of the council must:
             (1)  be experienced and knowledgeable in one or more of
the following:
                   (A)  fire services;
                   (B)  fire extinguisher manufacturing;
                   (C)  fire insurance inspection or underwriting;
or
                   (D)  fire extinguisher servicing; or
             (2)  be members of a fire protection association or
industrial safety association. (V.T.I.C. Art. 5.43-1, Secs. 9(a)
(part), (b).)
       Sec.6001.102.ADVISORY COUNCIL DUTIES. (a) The fire
extinguisher advisory council shall assist in the formulation and
review of rules adopted under this chapter.
       (b)  The advisory council shall periodically:
             (1)  review rules implementing this chapter; and
             (2)  recommend rule changes to the commissioner.
(V.T.I.C. Art. 5.43-1, Sec. 9(a) (part).)
[Sections 6001.103-6001.150 reserved for expansion]
SUBCHAPTER D. REGISTRATION, LICENSE, AND PERMIT REQUIREMENTS
       Sec.6001.151.FIRM REGISTRATION CERTIFICATE REQUIRED.  
Unless the firm holds a registration certificate issued by the
department, a firm may not engage in the business of:
             (1)  installing or servicing portable fire
extinguishers; or
             (2)  planning, certifying, installing, or servicing
fixed fire extinguisher systems. (V.T.I.C. Art. 5.43-1, Sec. 4(a)
(part).)
       Sec. 6001.152.  BRANCH OFFICE REGISTRATION CERTIFICATE
REQUIRED.  (a)  Each separate office location of a firm holding a
registration certificate, other than the location identified on the
firm's certificate, must have a branch office registration
certificate issued by the department.
       (b)  Before issuing a branch office registration
certificate, the department must determine that the branch office
location is part of a registered firm. (V.T.I.C. Art. 5.43-1, Sec.
4(a) (part).)
       Sec. 6001.153.  HYDROSTATIC TESTING; REGISTRATION
CERTIFICATE REQUIRED. (a)  A firm may not perform hydrostatic
testing of fire extinguishers manufactured in accordance with the
specifications and procedures of the United States Department of
Transportation unless the firm:
             (1)  complies with the procedures specified by that
department for compressed gas cylinders; and
             (2)  holds a registration certificate issued by the
state fire marshal authorizing hydrostatic testing.
       (b)  The license of an individual qualified to do work
described by Subsection (a) must indicate the authority of the
individual to perform that work.
       (c)  Hydrostatic testing of fire extinguishers that is not
performed under the specifications of the United States Department
of Transportation must be performed in the manner recommended by
the National Fire Protection Association.  (V.T.I.C. Art. 5.43-1,
Sec. 4(e) (part).)
       Sec. 6001.154.  REQUIRED INSURANCE COVERAGE FOR
REGISTRATION CERTIFICATE. (a)  The department may not issue a
registration certificate under this chapter unless the applicant
files with the department evidence of a general liability insurance
policy that includes products and completed operations coverage.
The policy must be conditioned to pay on behalf of the insured those
amounts that the insured becomes legally obligated to pay as
damages because of bodily injury and property damage caused by an
occurrence involving the insured or the insured's officer, agent,
or employee in the conduct of any activity that requires a
registration certificate or license under this chapter.
       (b)  Unless the commissioner, after notice and an
opportunity for a hearing, increases or decreases the limits, the
limits of insurance coverage required by Subsection (a) must be at
least:
             (1)  $100,000 combined single limits for bodily injury
and property damage for each occurrence; and
             (2)  $300,000 aggregate for all occurrences for each
policy year.
       (c)  The evidence of insurance required by this section must
be in the form of a certificate of insurance executed by an insurer
authorized to engage in the business of insurance in this state and
countersigned by an insurance agent licensed in this state. A
certificate of insurance for surplus lines coverage procured in
compliance with Chapter 981 through a surplus lines agent that is
licensed under Subchapter E, Chapter 981, and resident in this
state may be filed with the department as evidence of the coverage
required by this section.
       (d)  An insurance certificate executed and filed with the
department under this section remains in force until the insurer
has terminated future liability by the notice required by the
department.
       (e)  Failure to maintain the liability insurance required by
this section constitutes grounds for the denial, suspension, or
revocation, after notice and opportunity for hearing, of a
registration certificate issued under this chapter. (V.T.I.C. Art.
5.43-1, Secs. 4A, 8 (part).)
       Sec.6001.155.EMPLOYEE LICENSE REQUIRED. (a) Except as
provided by Section 6001.156, an individual, other than an
apprentice, must hold a license issued by the department before:
             (1)  installing or servicing portable fire
extinguishers;
             (2)  installing, servicing, or certifying
preengineered fixed fire extinguisher systems; or
             (3)  planning, supervising, servicing, or certifying
the installation of fixed fire extinguisher systems other than
preengineered systems.
       (b)  An individual who holds a license to install or service
portable fire extinguishers or install and service fixed fire
extinguisher systems must be an employee or agent of a registered
firm. (V.T.I.C. Art. 5.43-1, Secs. 4(c), 5(c).)
       Sec.6001.156.ACTIVITIES NOT REGULATED BY CHAPTER. (a)
The licensing provisions of this chapter do not apply to:
             (1)  the filling or charging of a portable fire
extinguisher by the manufacturer before initial sale of the fire
extinguisher;
             (2)  the servicing by a firm of the firm's portable fire
extinguishers or fixed systems by the firm's personnel who are
specially trained for that servicing;
             (3)  the installation of portable fire extinguishers in
a building by the building owner, the owner's managing agent, or an
employee of the building owner or the owner's managing agent;
             (4)  the installation or servicing of water sprinkler
systems installed in compliance with the National Fire Protection
Association's Standards for the Installation of Sprinkler Systems;
             (5)  a firm that is engaged in the retail or wholesale
sale of portable fire extinguishers that carry an approval label or
listing of a testing laboratory approved by the department, but
that is not engaged in the installation or servicing of those
extinguishers;
             (6)  a fire department that services portable fire
extinguishers as a public service without charge, if the members of
the fire department are trained in the proper servicing of the fire
extinguishers;
             (7)  a firm that is a party to a contract under which:
                   (A)  the installation of portable fire
extinguishers or a fixed fire extinguisher system is performed
under the direct supervision of and certified by a firm
appropriately registered to install and certify portable
extinguishers or fixed systems; and
                   (B)  the registered firm assumes full
responsibility for the installation; or
             (8)  an engineer licensed under Chapter 1001,
Occupations Code, while acting solely in the engineer's
professional capacity.
       (b)  Except as provided by Subsection (a), only the holder of
a license or an apprentice permit issued under this chapter may:
             (1)  install or service portable fire extinguishers; or
             (2)  install and maintain fixed fire extinguisher
systems. (V.T.I.C. Art. 5.43-1, Secs. 5(b), 6.)
       Sec.6001.157.LICENSE EXAMINATION. (a) The state fire
marshal shall:
             (1)  establish the scope and type of an examination
required by this chapter; and
             (2)  examine each applicant for a license under this
chapter.
       (b)  The state fire marshal may administer the examination or
may enter into an agreement with a testing service.
       (c)  If a testing service is used, the state fire marshal may
contract with the testing service regarding requirements for the
examination, including:
             (1)  examination development;
             (2)  scheduling;
             (3)  site arrangements;
             (4)  grading;
             (5)  reporting;
             (6)  analysis; or
             (7)  other administrative duties.
       (d)  The state fire marshal may require the testing service
to:
             (1)  correspond directly with a license applicant
regarding the administration of the examination;
             (2)  collect a reasonable fee from an applicant for
administering the examination; or
             (3)  administer the examination at a specific location
or time.
       (e)  The state fire marshal shall adopt rules as necessary to
implement examination requirements under this chapter.  (V.T.I.C.
Art. 5.43-1, Secs. 7(e), (f), (j), 8 (part).)
       Sec.6001.158.EXAMINATION RESULTS.  (a)  Not later than
the 30th day after the date on which a licensing examination is
administered under this chapter, the state fire marshal shall send
notice to each examinee of the results of the examination.
       (b)  If an examination is conducted, graded, or reviewed by a
testing service, the state fire marshal shall send notice to the
examinees of the results of the examination not later than the 14th
day after the date on which the state fire marshal receives the
results from the testing service.
       (c)  If the notice of the examination results will be delayed
for more than 90 days after the examination date, the state fire
marshal, before the 90th day, shall send notice to the examinee of
the reason for the delay.
       (d)  The state fire marshal may require a testing service to
notify an examinee of the results of the examinee's examination
under Subsections (a) and (b).
       (e)  If requested in writing by an individual who fails the
licensing examination administered under this chapter, the state
fire marshal shall send to the individual an analysis of the
individual's performance on the examination.  (V.T.I.C. Art.
5.43-1, Secs. 7(g), (g-1).)
       Sec.6001.159.CONTINUING EDUCATION REQUIREMENTS. (a) The
commissioner may adopt procedures for certifying and may certify
continuing education programs for individuals licensed under this
chapter.
       (b)  Participation in the continuing education programs is
voluntary. (V.T.I.C. Art. 5.43-1, Sec. 7(h).)
       Sec.6001.160.RECIPROCAL LICENSE. The department may waive
any license requirement for an applicant who holds a license issued
by another state that has license requirements substantially
equivalent to the license requirements of this state. (V.T.I.C.
Art. 5.43-1, Sec. 7(i).)
       Sec.6001.161.APPRENTICE PERMIT REQUIRED. (a)  An
individual may not install or service portable fire extinguishers
or fixed fire extinguisher systems as an apprentice unless the
individual holds an apprentice permit issued by the department.
       (b)  An apprentice may perform a service described by
Subsection (a) only under the direct supervision of an individual
who holds a license issued under this chapter and who works for the
same firm as the apprentice.  (V.T.I.C. Art. 5.43-1, Secs. 4(d)
(part), 5(b) (part).)
       Sec.6001.162.NOT TRANSFERABLE. A registration
certificate, license, or permit issued under this chapter is not
transferable. (V.T.I.C. Art. 5.43-1, Sec. 5(d).)
[Sections 6001.163-6001.200 reserved for expansion]
SUBCHAPTER E. RENEWAL OF REGISTRATION, LICENSE, OR PERMIT
       Sec.6001.201.RENEWAL REQUIRED; FEE. (a) A renewal of a
registration certificate or license issued under this chapter is
valid for a period of two years. The license or registration fee
for each year of the two-year period is payable on renewal.
       (b)  An apprentice permit expires on the first anniversary of
the date of issuance.
       (c)  The commissioner by rule may adopt a system under which
registration certificates, licenses, and permits expire on various
dates during the year. For the year in which an expiration date of a
registration certificate, license, or permit is less than one year
from its issuance or anniversary date, the fee shall be prorated on
a monthly basis so that each holder of a registration certificate,
license, or permit pays only that portion of the renewal fee that is
allocable to the number of months during which the registration
certificate, license, or permit is valid. On each subsequent
renewal, the total renewal fee is payable. (V.T.I.C. Art. 5.43-1,
Secs. 4(d) (part), 7A(a), (c).)
       Sec.6001.202.NOTICE OF EXPIRATION. At least 30 days
before the expiration date of a registration certificate or
license, the state fire marshal shall send written notice of the
impending expiration to the holder of the registration certificate
or license at the holder's last known address. (V.T.I.C. Art.
5.43-1, Sec. 7A(b) (part).)
       Sec.6001.203.RENEWAL PROCEDURES. (a)  The holder of an
unexpired registration certificate or license may renew the
certificate or license by paying the required renewal fee to the
department before the expiration date of the certificate or
license.
       (b)  A firm or individual whose registration certificate or
license has been expired for 90 days or less may renew the
certificate or license by paying to the department:
             (1)  the required renewal fee; and
             (2)  a fee equal to one-half of the initial fee for the
certificate or license.
       (c)  A firm or individual whose registration certificate or
license has been expired for more than 90 days but less than two
years may renew the certificate or license by paying to the
department:
             (1)  all unpaid renewal fees; and
             (2)  a fee that is equal to the initial fee for the
certificate or license.
       (d)  A firm or individual whose registration certificate or
license has been expired for two years or longer may not renew the
certificate or license. The firm or individual may obtain a new
registration certificate or license by complying with the
requirements and procedures for obtaining an initial registration
certificate or license.
       (e)  This section may not be construed to prevent the
department from denying or refusing to renew a license under
applicable law or commissioner rules. (V.T.I.C. Art. 5.43-1, Sec.
7A(b) (part).)
[Sections 6001.204-6001.250 reserved for expansion]
SUBCHAPTER F. PROHIBITED PRACTICES
AND DISCIPLINARY PROCEDURES
       Sec.6001.251.PROHIBITED PRACTICES. (a)  An individual or
firm may not:
             (1)  engage in the business of installing or servicing
portable fire extinguishers without holding a registration
certificate;
             (2)  engage in the business of planning, certifying,
installing, or servicing fixed fire extinguisher systems without
holding a registration certificate;
             (3)  install, service, or certify the servicing of
portable fire extinguishers or plan, certify, service, or install
fixed fire extinguisher systems without holding a license;
             (4)  perform hydrostatic testing of fire extinguisher
cylinders manufactured in accordance with the specifications and
requirements of the United States Department of Transportation
without holding a hydrostatic testing registration certificate;
             (5)  obtain or attempt to obtain a registration
certificate or license by fraudulent representation;
             (6)  install or service portable fire extinguishers or
plan, certify, service, or install fixed fire extinguisher systems
in violation of this chapter or the rules adopted and administered
under this chapter;
             (7)  except as provided by Subsection (b), install,
service, or hydrostatically test a fire extinguisher that does not
have the proper identifying labels;
             (8)  sell, install, service, or recharge a carbon
tetrachloride fire extinguisher; or
             (9)  except as provided by Subsection (b), lease, sell,
service, or install a portable fire extinguisher, a fixed fire
extinguisher system, or extinguisher equipment unless it carries an
approval label or listing label issued by a testing laboratory
approved by the department.
       (b)  The commissioner by rule shall permit an individual or
firm to service a portable fire extinguisher regardless of whether
the extinguisher carries a label described by Subsection (a).  
(V.T.I.C. Art. 5.43-1, Secs. 5(a), (e), 10.)
       Sec.6001.252.DISCIPLINARY ACTIONS. (a)  The state fire
marshal may suspend, revoke, or refuse to issue or renew a
registration certificate, license, or permit if, after notice and
hearing, the state fire marshal finds that the applicant,
registrant, license holder, or permit holder has engaged in acts
that:
             (1)  violate this chapter;
             (2)  violate rules or standards adopted under this
chapter; or
             (3)  constitute misrepresentation made in connection
with:
                   (A)  the sale of products; or
                   (B)  services rendered.
       (b)  Subject to Section 6001.253, the commissioner may
suspend, revoke, or refuse to issue or renew a certificate,
license, permit, or approval.  (V.T.I.C. Art. 5.43-1, Secs. 7(b),
12(a).)
       Sec.6001.253.DISCIPLINARY HEARING. (a) If the state fire
marshal proposes to suspend, revoke, or refuse to renew a license,
permit, certificate, or approval issued under this chapter, the
holder of the license, permit, certificate, or approval is entitled
to a hearing conducted by the State Office of Administrative
Hearings.
       (b)  Proceedings for a disciplinary action are governed by
Chapter 2001, Government Code.
       (c)  Rules of practice adopted by the commissioner
applicable to the proceedings for a disciplinary action may not
conflict with rules adopted by the State Office of Administrative
Hearings. (V.T.I.C. Art. 5.43-1, Sec. 13.)
       Sec.6001.254.REAPPLICATION REQUIREMENTS. (a)  An
applicant or holder of a registration certificate, license, or
permit whose certificate, license, or permit has been refused or
revoked under this chapter, other than for failure to pass a
required written examination, may not file another application for
a registration certificate, license, or permit before the first
anniversary of the effective date of the refusal or revocation.
       (b)  After the first anniversary of the effective date of the
refusal or revocation, the applicant may:
             (1)  reapply; and
             (2)  in a public hearing, show good cause why the
issuance of the registration certificate, license, or permit is not
against the public safety and welfare. (V.T.I.C. Art. 5.43-1, Sec.
7(c).)
       Sec.6001.255.REEXAMINATION AFTER REVOCATION.  An
individual whose license to service portable fire extinguishers or
to install or service fixed fire extinguisher systems has been
revoked must retake and pass the required written examination
before a new license may be issued.  (V.T.I.C. Art. 5.43-1, Sec.
7(d).)
[Sections 6001.256-6001.300 reserved for expansion]
SUBCHAPTER G. CRIMINAL PENALTY
       Sec.6001.301.CRIMINAL PENALTY. (a) A person commits an
offense if the person knowingly violates Section 6001.251(a).
       (b)  An offense under this section is a Class B misdemeanor.
       (c)  Venue for an offense under this section is in Travis
County or the county in which the offense is committed. (V.T.I.C.
Art. 5.43-1, Secs. 12(b), (c); New.)
CHAPTER 6002.  FIRE DETECTION AND ALARM DEVICE INSTALLATION
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 6002.001.  PURPOSE
Sec. 6002.002.  DEFINITIONS
Sec. 6002.003.  EFFECT ON LOCAL REGULATION
Sec. 6002.004.  PROVISION OF CERTAIN SERVICES BY
                 POLITICAL SUBDIVISION
[Sections 6002.005-6002.050 reserved for expansion]
SUBCHAPTER B. POWERS AND DUTIES OF COMMISSIONER, DEPARTMENT,
AND STATE FIRE MARSHAL
Sec. 6002.051.  ADMINISTRATION OF CHAPTER; RULES
Sec. 6002.052.  ADOPTION OF RULES; STANDARDS
Sec. 6002.053.  RULES RESTRICTING ADVERTISING OR
                 COMPETITIVE BIDDING
Sec. 6002.054.  FEES
Sec. 6002.055.  DEPOSIT IN OPERATING ACCOUNT
[Sections 6002.056-6002.100 reserved for expansion]
SUBCHAPTER C. FIRE DETECTION AND ALARM DEVICES ADVISORY COUNCIL
Sec. 6002.101.  ADVISORY COUNCIL; APPOINTMENT
Sec. 6002.102.  ADVISORY COUNCIL DUTIES
[Sections 6002.103-6002.150 reserved for expansion]
SUBCHAPTER D. REGISTRATION, LICENSE, AND APPROVAL REQUIREMENTS
Sec. 6002.151.  FIRM REGISTRATION CERTIFICATE REQUIRED;
                 LIMITED CERTIFICATE
Sec. 6002.152.  BRANCH OFFICE REGISTRATION CERTIFICATE
                 REQUIRED
Sec. 6002.153.  REQUIRED INSURANCE COVERAGE FOR
                 REGISTRATION CERTIFICATE
Sec. 6002.154.  FIRE ALARM TECHNICIAN, RESIDENTIAL FIRE
                 ALARM SUPERINTENDENT, AND FIRE ALARM
                 PLANNING SUPERINTENDENT
Sec. 6002.155.  ACTIVITIES NOT REGULATED BY CHAPTER
Sec. 6002.156.  LICENSE EXAMINATION
Sec. 6002.157.  EXAMINATION RESULTS
Sec. 6002.158.  TRAINING SCHOOLS AND INSTRUCTORS;
                 APPROVAL
Sec. 6002.159.  CONTINUING EDUCATION PROGRAMS
Sec. 6002.160.  RECIPROCAL LICENSE
Sec. 6002.161.  NOT TRANSFERABLE
[Sections 6002.162-6002.200 reserved for expansion]
SUBCHAPTER E. RENEWAL OF REGISTRATION CERTIFICATE OR LICENSE
Sec. 6002.201.  RENEWAL REQUIRED; FEE
Sec. 6002.202.  NOTICE OF EXPIRATION
Sec. 6002.203.  RENEWAL PROCEDURES
Sec. 6002.204.  RENEWAL OF CERTAIN LICENSES
[Sections 6002.205-6002.250 reserved for expansion]
SUBCHAPTER F. SELLING OR LEASING OF FIRE ALARM
OR FIRE DETECTION DEVICES
Sec. 6002.251.  REQUIRED LABEL; EXCEPTIONS
Sec. 6002.252.  REQUIRED PURCHASE AND INSTALLATION
                 INFORMATION
Sec. 6002.253.  TRAINING AND SUPERVISION OF CERTAIN
                 EXEMPT EMPLOYEES
[Sections 6002.254-6002.300 reserved for expansion]
SUBCHAPTER G. PROHIBITED PRACTICES AND DISCIPLINARY PROCEDURES
Sec. 6002.301.  PROHIBITED PRACTICES
Sec. 6002.302.  DISCIPLINARY ACTIONS
Sec. 6002.303.  DISCIPLINARY HEARING
Sec. 6002.304.  REAPPLICATION REQUIREMENTS
[Sections 6002.305-6002.350 reserved for expansion]
SUBCHAPTER H.  CRIMINAL PENALTY
Sec. 6002.351.  CRIMINAL PENALTY
CHAPTER 6002.  FIRE DETECTION AND ALARM DEVICE INSTALLATION
SUBCHAPTER A. GENERAL PROVISIONS
       Sec.6002.001.PURPOSE. The purpose of this chapter is to
safeguard lives and property by:
             (1)  regulating the planning, certifying, leasing,
selling, servicing, installing, monitoring, and maintaining of
fire detection and fire alarm devices and systems; and
             (2)  except as provided by rules adopted under Section
6002.051 or 6002.052, prohibiting fire detection and fire alarm
devices, equipment, and systems not labeled or listed by a
nationally recognized testing laboratory.  (V.T.I.C. Art. 5.43-2,
Sec. 1.)
       Sec.6002.002.DEFINITIONS. Except as otherwise provided
by this chapter, in this chapter:
             (1)  "Fire alarm device" means any device capable,
through audible or visible means, of warning that fire or
combustion has occurred or is occurring.
             (2)  "Fire alarm planning superintendent" means a
licensed individual designated by a registered firm to:
                   (A)  plan a fire alarm or detection system that
conforms to applicable adopted National Fire Protection
Association standards or other adopted standards; and
                   (B)  certify that each fire alarm or detection
system as planned meets the standards as provided by law.
             (3)  "Fire alarm technician" means a licensed
individual designated by a registered firm to:
                   (A)  inspect and certify that each fire alarm or
detection system as installed meets the standards provided by law;
or
                   (B)  perform or directly supervise the servicing
or maintaining of a previously installed fire alarm device or
system and certify that service or maintenance.
             (4)  "Fire detection device" means any arrangement of
materials, the sole function of which is to indicate the existence
of fire, smoke, or combustion in its incipient stages.
             (5)  "Individual" means a natural person, including an
owner, manager, officer, employee, occupant, or other individual.
             (6)  "Installation" means:
                   (A)  the initial placement of equipment; or
                   (B)  the extension, modification, or alteration
of equipment already in place.
             (7)  "Insurance agent" means:
                   (A)  an individual, firm, or corporation licensed
under:
                         (i)  Subchapter E, Chapter 981; or
                         (ii)  Subchapter A, B, C, D, E, or G, Chapter
4051; or
                   (B)  an individual authorized to represent an
insurance fund or pool created by a municipality, county, or other
political subdivision of this state under Chapter 791, Government
Code.
             (8)  "Maintenance" means the maintenance of a fire
alarm device or a fire detection device in a condition of repair
that provides performance as originally designed or intended.
             (9)  "Monitoring" means the receipt of fire alarm and
supervisory signals and the retransmission or communication of
those signals to a fire service communications center in this state
or serving property in this state.
             (10)  "Organization" means a corporation, a government
or a governmental subdivision or agency, a business trust, an
estate, a trust, a partnership, a firm or association, two or more
individuals with a joint or common interest, or any other legal or
commercial entity.
             (11)  "Registered firm" means an individual or
organization that holds a registration certificate.
             (12)  "Residential fire alarm superintendent" means a
licensed individual designated by a registered firm to:
                   (A)  plan a residential single-family or
two-family fire alarm or detection system that conforms to
applicable adopted National Fire Protection Association standards
or other adopted standards; and
                   (B)  certify that each fire alarm or detection
system as planned meets the standards as provided by law.
             (13)  "Sale" means the sale or offer for sale, lease, or
rent of any merchandise, equipment, or service at wholesale or
retail, to the public or any individual, for an agreed sum of money
or other consideration.
             (14)  "Service" or "servicing" means inspection,
maintenance, repair, or testing of a fire alarm device or a fire
detection device. (V.T.I.C. Art. 5.43-2, Secs. 2(1), (2), (5),
(6), (7), (8), (9), (10), (11), (12) (part), (13) (part), (14),
(15), (16) (part).)
       Sec.6002.003.EFFECT ON LOCAL REGULATION. (a) This
chapter and the rules adopted under this chapter have uniform force
and effect throughout this state. A municipality or county may not
enact an ordinance or rule inconsistent with this chapter or rules
adopted under this chapter. An inconsistent ordinance or rule is
void and has no effect.
       (b)  Notwithstanding Subsection (a), a municipality or
county may:
             (1)  mandate that a fire alarm or detection system be
installed in certain facilities, if the installation conforms to
applicable state law;
             (2)  require a better type of alarm or detection system
or otherwise safer condition than the minimum required by state
law; and
             (3)  require regular inspections by local officials of
smoke detectors in dwelling units, as that term is defined by
Section 92.251, Property Code, and require the smoke detectors to
be operational at the time of inspection.
       (c)  A municipality, county, or other political subdivision
of this state may not require, as a condition of engaging in
business or performing any activity authorized under this chapter,
that a registered firm, a license holder, or an employee of a
license holder:
             (1)  obtain a registration, franchise, or license from
the political subdivision;
             (2)  pay any fee or franchise tax to the political
subdivision; or
             (3)  post a bond.
       (d)  Notwithstanding any other provision of this section or
Section 6002.155, a municipality or county may require a registered
firm to obtain a permit and pay a permit fee for the installation of
a fire alarm or fire detection device or system and require that the
installation of such a system be in conformance with the building
code or other construction requirements of the municipality or
county and state law.
       (e)  Notwithstanding Subsection (d), a municipality or
county may not impose qualification or financial responsibility
requirements other than proof of a registration certificate.
(V.T.I.C. Art. 5.43-2, Secs. 3(a), (c).)
       Sec. 6002.004.  PROVISION OF CERTAIN SERVICES BY POLITICAL
SUBDIVISION. (a) In this section, "monitoring" means the receipt
of fire alarm or supervisory signals or retransmission or
communication of those signals to a fire service communications
center that is located in this state or serves property in this
state.
       (b)  Except as provided by Subsection (c), a political
subdivision may not offer residential alarm system sales, service,
installation, or monitoring unless the political subdivision has
been providing monitoring services to residences within the
boundaries of the political subdivision as of September 1, 1999.
Any fee charged by the political subdivision under this subsection
may not exceed the cost of the monitoring.
       (c)  A political subdivision may:
             (1)  offer service, installation, or monitoring for
property owned by the political subdivision or another political
subdivision;
             (2)  allow for the response to an alarm or detection
device by:
                   (A)  a law enforcement agency or fire department;
or
                   (B)  a law enforcement officer or firefighter
acting in an official capacity; or
             (3)  offer monitoring to a financial institution, as
defined by Section 59.301, Finance Code, that requests, in writing,
that the political subdivision provide monitoring service to the
financial institution.
       (d)  Subsection (b) does not apply to a political
subdivision:
             (1)  in a county with a population of less than 80,000;
or
             (2)  in which monitoring is not otherwise provided or
available.
       (e)  This section is not intended to require a political
subdivision to hold a license under this chapter. (V.T.I.C. Art.
5.43-2, Secs. 7(b), (c), (d), (e).)
[Sections 6002.005-6002.050 reserved for expansion]
SUBCHAPTER B. POWERS AND DUTIES OF COMMISSIONER, DEPARTMENT,
AND STATE FIRE MARSHAL
       Sec.6002.051.ADMINISTRATION OF CHAPTER; RULES. (a)  The
department shall administer this chapter.
       (b)  The commissioner may adopt rules as necessary to
administer this chapter, including rules the commissioner
considers necessary to administer this chapter through the state
fire marshal. (V.T.I.C. Art. 5.43-2, Secs. 4 (part), 6(a) (part).)
       Sec.6002.052.ADOPTION OF RULES; STANDARDS. (a) In
adopting necessary rules, the commissioner may use:
             (1)  recognized standards, such as, but not limited to:
                   (A)  standards of the National Fire Protection
Association;
                   (B)  standards recognized by federal law or
regulation; or
                   (C)  standards published by a nationally
recognized standards-making organization;
             (2)  the National Electrical Code; or
             (3)  information provided by individual manufacturers.
       (b)  Under rules adopted under Section 6002.051, the
department may create specialized licenses or registration
certificates for an organization or individual engaged in the
business of planning, certifying, leasing, selling, servicing,
installing, monitoring, or maintaining fire alarm or fire detection
devices or systems. The rules must establish appropriate training
and qualification standards for each kind of license and
certificate.
       (c)  The commissioner shall also adopt standards applicable
to fire alarm devices, equipment, or systems regulated under this
chapter. In adopting standards under this subsection, the
commissioner may allow the operation of a fire alarm monitoring
station that relies on fire alarm devices or equipment approved or
listed by a nationally recognized testing laboratory without regard
to whether the monitoring station is approved or listed by a
nationally recognized testing laboratory if the operator of the
station demonstrates that the station operating standards are
substantially equivalent to those required to be approved or
listed. (V.T.I.C. Art. 5.43-2, Secs. 4 (part), 6(a) (part), (b).)
       Sec. 6002.053.  RULES RESTRICTING ADVERTISING OR
COMPETITIVE BIDDING. (a)  The commissioner may not adopt rules
restricting advertising or competitive bidding by the holder of a
license or registration certificate issued under this chapter
except to prohibit false, misleading, or deceptive practices.
       (b)  In the commissioner's rules to prohibit false,
misleading, or deceptive practices, the commissioner may not
include a rule that:
             (1)  restricts the use of any medium for advertising;
             (2)  restricts the use of a license or registration
certificate holder's personal appearance or voice in an
advertisement;
             (3)  relates to the size or duration of an
advertisement by the license or registration certificate holder; or
             (4)  restricts the license or registration certificate
holder's advertisement under a trade name. (V.T.I.C. Art. 5.43-2,
Sec. 6A.)
       Sec.6002.054.FEES. (a) The commissioner shall set the
fee for:
             (1)  an initial registration certificate in an amount
not to exceed $500;
             (2)  the renewal of a registration certificate for each
year in an amount not to exceed $500;
             (3)  the renewal of a registration certificate for an
individual or organization engaged in the business of planning,
certifying, leasing, selling, servicing, installing, monitoring,
or maintaining exclusively single station devices in an amount not
to exceed $250 annually;
             (4)  an initial branch office registration certificate
in an amount not to exceed $150;
             (5)  the renewal of a branch office registration
certificate for each year in an amount not to exceed $150;
             (6)  an initial or renewal training school approval in
an amount not to exceed $500 annually;
             (7)  an initial or renewal of a training school
instructor approval in an amount not to exceed $50 annually;
             (8)  an initial license in an amount not to exceed $120;
and
             (9)  the renewal of a license for each year in an amount
not to exceed $100.
       (b)  Unless the examination or reexamination for a license is
administered by a testing service, the commissioner shall set a
nonrefundable fee for:
             (1)  the initial examination in an amount not to exceed
$30; and
             (2)  each reexamination in an amount not to exceed $20.
       (c)  The commissioner shall set a fee in an amount not to
exceed $20 for:
             (1)  a duplicate registration certificate or license
issued under this chapter; and
             (2)  any request requiring changes to a registration
certificate or license. (V.T.I.C. Art. 5.43-2, Secs. 5(a) (part),
(b) (part), (c) (part), (d), (i), 5D(b) (part), (c) (part).)
       Sec.6002.055.DEPOSIT IN OPERATING ACCOUNT. The fees
collected under this chapter shall be deposited in the state
treasury to the credit of the Texas Department of Insurance
operating account.  (V.T.I.C. Art. 5.43-2, Sec. 8.)
[Sections 6002.056-6002.100 reserved for expansion]
SUBCHAPTER C. FIRE DETECTION AND ALARM DEVICES ADVISORY COUNCIL
       Sec.6002.101.ADVISORY COUNCIL; APPOINTMENT. The
commissioner shall appoint an advisory council consisting of seven
individuals as follows:
             (1)  three individuals who are employed by a registered
firm in the fire protection industry and who have at least three
years' experience in the sale, installation, maintenance, or
manufacture of fire alarm or fire detection devices;
             (2)  two individuals who:
                   (A)  are experienced in the engineering of fire
prevention services; or
                   (B)  are members of a fire protection association;
             (3)  one individual who is an experienced fire
prevention officer employed by a municipality or county; and
             (4)  one individual who:
                   (A)  is employed by a registered firm; and
                   (B)  has at least three years' experience in the
operation of a central fire alarm monitoring station.  (V.T.I.C.
Art. 5.43-2, Sec. 6(d).)
       Sec.6002.102.ADVISORY COUNCIL DUTIES. The advisory
council shall periodically:
             (1)  review rules implementing this chapter; and
             (2)  recommend rule changes to the commissioner.  
(V.T.I.C. Art. 5.43-2, Sec. 6(c).)
[Sections 6002.103-6002.150 reserved for expansion]
SUBCHAPTER D. REGISTRATION, LICENSE, AND APPROVAL REQUIREMENTS
       Sec. 6002.151.  FIRM REGISTRATION CERTIFICATE REQUIRED;
LIMITED CERTIFICATE.  (a)  An individual or organization may not
engage in the business of planning, certifying, leasing, selling,
installing, servicing, monitoring, or maintaining fire alarm or
fire detection devices or systems unless the individual or
organization holds a registration certificate issued by the
department.
       (b)  The department may issue a limited registration
certificate to an individual or organization whose business is
restricted to monitoring.
       (c)  Applications for registration certificates and
qualifications for those certificates are subject to rules adopted
by the commissioner.  (V.T.I.C. Art. 5.43-2, Secs. 5(a) (part),
7(a) (part), 10(a) (part).)
       Sec. 6002.152.  BRANCH OFFICE REGISTRATION CERTIFICATE
REQUIRED.  (a)  Except as provided by Subsection (c), each separate
office location of a registered firm, other than the location
identified on the firm's registration certificate, must have a
branch office registration certificate issued by the department.
       (b)  Before issuing a branch office registration
certificate, the department must determine that the branch office
location is part of a registered firm.
       (c)  A registered firm that is engaged in the business of
planning, certifying, leasing, selling, servicing, installing,
monitoring, or maintaining exclusively single station devices is
not required to apply for or obtain a branch office registration
certificate for a separate office or location of the firm.  
(V.T.I.C. Art. 5.43-2, Sec. 5(b) (part).)
       Sec. 6002.153.  REQUIRED INSURANCE COVERAGE FOR
REGISTRATION CERTIFICATE. (a)  The department may not issue a
registration certificate under this chapter unless the applicant
files with the department evidence of a general liability insurance
policy that includes products and completed operations coverage.
The policy must be conditioned to pay on behalf of the insured those
amounts that the insured becomes legally obligated to pay as
damages because of bodily injury and property damage caused by an
occurrence involving the insured or the insured's officer, agent,
or employee in the conduct of any business that requires a
registration certificate or license under this chapter.
       (b)  Unless the commissioner increases or decreases the
limits under rules adopted under Section 6002.051(b), the limits of
insurance coverage required by Subsection (a) must be at least:
             (1)  $100,000 combined single limits for bodily injury
and property damage for each occurrence; and
             (2)  $300,000 aggregate for all occurrences for each
policy year.
       (c)  The evidence of insurance required by this section must
be in the form of a certificate of insurance executed by an insurer
authorized to engage in the business of insurance in this state and
countersigned by an insurance agent licensed in this state. A
certificate of insurance for surplus lines coverage procured in
compliance with Chapter 981 through a surplus lines agent that is
licensed under Subchapter E, Chapter 981, and resident in this
state may be filed with the department as evidence of the coverage
required by this section.
       (d)  An insurance certificate executed and filed with the
department under this section remains in force until the insurer
has terminated future liability by the notice required by the
department.
       (e)  Failure to maintain the liability insurance required by
this section constitutes grounds for the denial, suspension, or
revocation, after notice and opportunity for hearing, of a
registration certificate issued under this chapter.
       (f)  For an individual or organization licensed to install or
service burglar alarms under Chapter 1702, Occupations Code,
compliance with the insurance requirements of that chapter
constitutes compliance with the insurance requirements of this
section if the insurance held by the individual or organization
complies with the requirements of this section in amounts and types
of coverage.
       (g)  This section does not affect the rights of the insured
to negotiate or contract for limitations of liability with a third
party, including a customer of the insured.  (V.T.I.C. Art. 5.43-2,
Secs. 5B(a), (b), (c), (d), (e), (g).)
       Sec. 6002.154.  FIRE ALARM TECHNICIAN, RESIDENTIAL FIRE
ALARM SUPERINTENDENT, AND FIRE ALARM PLANNING SUPERINTENDENT. (a)  
Each registered firm, including a firm engaged in the business of
planning, certifying, leasing, selling, servicing, installing,
monitoring, or maintaining exclusively single station devices,
must employ at least one employee who is a fire alarm technician,
residential fire alarm superintendent, or fire alarm planning
superintendent.
       (b)  A fire alarm technician, residential fire alarm
superintendent, or fire alarm planning superintendent must hold a
license issued by the department, conditioned on the successful
completion of a written license examination.
       (c)  To engage in the activity for which the license is
granted, an individual licensed under this chapter must be an
employee or agent of an individual or entity that holds a
registration certificate.
       (d)  A fire alarm technician may perform or supervise
monitoring. A fire alarm planning superintendent may act as a fire
alarm technician or a residential fire alarm superintendent. A
residential fire alarm superintendent may act as a fire alarm
technician.
       (e)  Applications for licenses and qualifications for those
licenses are subject to rules adopted by the commissioner.
(V.T.I.C. Art. 5.43-2, Secs. 2(12) (part), (13) (part), (16)
(part), 5(a) (part), (c) (part), (f), 5D(a) (part), 10(a) (part).)
       Sec.6002.155.ACTIVITIES NOT REGULATED BY CHAPTER.  The
licensing provisions of this chapter do not apply to:
             (1)  an individual or organization in the business of
building construction that installs electrical wiring and devices
that may include, in part, the installation of a fire alarm or
detection system if:
                   (A)  the individual or organization is a party to
a contract that provides that:
                         (i)  the installation will be performed
under the direct supervision of and certified by a licensed
employee or agent of a firm registered to install and certify such
an alarm or detection device; and
                         (ii)  the registered firm assumes full
responsibility for the installation of the alarm or detection
device; and
                   (B)  the individual or organization does not plan,
certify, lease, sell, service, or maintain fire alarms or detection
devices or systems;
             (2)  an individual or organization that:
                   (A)  owns and installs a fire detection or fire
alarm device on the individual's or organization's own property; or
                   (B)  if the individual or organization does not
charge for the device or its installation, installs the device for
the protection of the individual's or organization's personal
property located on another's property and does not install the
device as a normal business practice on the property of another;
             (3)  an individual who holds a license or other
authority issued by a municipality to practice as an electrician
and who installs fire or smoke detection and alarm devices only in a
single family or multifamily residence if:
                   (A)  the devices installed are:
                         (i)  single station detectors; or
                         (ii)  multiple station detectors capable of
being connected in a manner that actuation of one detector causes
all integral or separate alarms to operate if the detectors are not
connected to a control panel or to an outside alarm, do not transmit
a signal off the premises, and do not use more than 120 volts; and
                   (B)  all installations comply with the adopted
edition of Household Fire Warning Equipment, National Fire
Protection Association Standard No. 74;
             (4)  an individual or organization that:
                   (A)  sells fire detection or fire alarm devices
exclusively over-the-counter or by mail order; and
                   (B)  does not plan, certify, install, service, or
maintain the devices;
             (5)  a law enforcement agency or fire department or a
law enforcement officer or firefighter acting in an official
capacity that responds to a fire alarm or detection device;
             (6)  an engineer licensed under Chapter 1001,
Occupations Code, acting solely in the engineer's professional
capacity;
             (7)  an individual or organization that provides and
installs at no charge to the property owners or residents a
battery-powered smoke detector in a single-family or two-family
residence if:
                   (A)  the smoke detector bears a label of listing
or approval by a testing laboratory approved by the department;
                   (B)  the installation complies with the adopted
edition of National Fire Protection Association Standard No. 74;
                   (C)  the installers are knowledgeable in fire
protection and the proper use of smoke detectors; and
                   (D)  the detector is a single station installation
and not a part of or connected to any other detection device or
system;
             (8)  a regular employee of a registered firm who is
under the direct supervision of a license holder;
             (9)  a building owner, the owner's managing agent, or an
employee of the owner or agent who installs battery-operated single
station smoke detectors or monitor fire alarm or fire detection
devices or systems in the owner's building, and in which the
monitoring:
                   (A)  is performed at the owner's property at no
charge to the occupants of the building;
                   (B)  complies with applicable standards of the
National Fire Protection Association as may be adopted by rule
under this chapter; and
                   (C)  uses equipment approved by a testing
laboratory approved by the department for fire alarm monitoring;
             (10)  an individual employed by a registered firm that
sells and installs a smoke or heat detector in a single-family or
two-family residence if:
                   (A)  the detector bears a label of listing or
approval by a testing laboratory approved by the department;
                   (B)  the installation complies with the adopted
edition of National Fire Protection Association Standard No. 74;
                   (C)  the installers are knowledgeable in fire
protection and the proper use and placement of detectors; and
                   (D)  the detector is a single station installation
and not a part of or connected to any other detection device or
system; or
             (11)  an individual or organization licensed to install
or service burglar alarms under Chapter 1702, Occupations Code,
that provides and installs in a single-family or two-family
residence a combination keypad that includes a panic button to
initiate a fire alarm signal if the fire alarm signal:
                   (A)  is monitored by a fire alarm firm registered
under this chapter; and
                   (B)  is not initiated by a fire or smoke detection
device. (V.T.I.C. Art. 5.43-2, Sec. 3(b).)
       Sec.6002.156.LICENSE EXAMINATION. (a) The state fire
marshal shall establish the scope and type of an examination
required by this chapter.  The examination must cover this chapter
and commissioner rules and include specific testing of all license
categories.
       (b)  The state fire marshal may administer the examination or
may enter into an agreement with a testing service.
       (c)  If a testing service is used, the state fire marshal may
contract with the testing service regarding requirements for the
examination, including:
             (1)  examination development;
             (2)  scheduling;
             (3)  site arrangements;
             (4)  grading;
             (5)  reporting;
             (6)  analysis; or
             (7)  other administrative duties.
       (d)  The state fire marshal may require the testing service
to:
             (1)  correspond directly with an applicant regarding
the administration of the examination;
             (2)  collect a reasonable fee from an applicant for
administering the examination; or
             (3)  administer the examination at a specific location
or time.
       (e)  Approval for a testing service is valid for one year.
       (f)  The state fire marshal shall adopt rules as necessary to
implement examination requirements under this chapter.  (V.T.I.C.
Art. 5.43-2, Secs. 5D(a) (part), (b) (part), (f), (g), (h).)
       Sec.6002.157.EXAMINATION RESULTS.  (a)  Not later than the
30th day after the date on which an examination is administered
under this chapter, the state fire marshal shall send notice to each
examinee of the results of the examination.
       (b)  If an examination is conducted, graded, or reviewed by a
testing service, the state fire marshal shall send notice to each
examinee of the results of the examination within two weeks after
the date on which the state fire marshal receives the results from
the testing service.
       (c)  If the notice of the examination results will be delayed
for more than 90 days after the examination date, the state fire
marshal shall send notice to the examinee of the reason for the
delay before the 90th day.
       (d)  The state fire marshal may require a testing service to
notify an examinee of the results of the examinee's examination
under this section.
       (e)  If requested in writing by an individual who fails the
examination administered under this chapter, the state fire marshal
shall send to the individual an analysis of the individual's
performance on the examination.  (V.T.I.C. Art. 5.43-2, Secs. 5D(a)
(part), (a-1).)
       Sec.6002.158.TRAINING SCHOOLS AND INSTRUCTORS; APPROVAL.
(a)  An applicant for approval as a training school must submit an
application to the state fire marshal, accompanied by the
applicant's complete course or testing curriculum. A registered
firm, or an affiliate of a registered firm, is not eligible for
approval as a training school.
       (b)  The state fire marshal shall review the materials
submitted for course approval and shall approve or deny approval in
a letter provided not later than the 60th day after the date of
receipt of the application. A denial of approval must disclose
specific reasons for the denial. An applicant whose approval is
denied may reapply at any time.
       (c)  Training school instructors must be approved by the
state fire marshal. To be eligible for approval, an instructor must
hold a fire alarm planning superintendent license and have at least
three years of experience in fire alarm installation, service, or
monitoring.
       (d)  Approval for a training school or instructor is valid
for one year.
       (e)  The curriculum for a fire alarm technician course or a
residential fire alarm superintendent course must consist of 16
hours of classroom instruction for each license category.
       (f)  After approval, each training school must annually
conduct, within 125 miles of each county with a population greater
than 500,000, at least two classes that are open to the public.
(V.T.I.C. Art. 5.43-2, Secs. 5D(b) (part), (c) (part), (d), (e);
New.)
       Sec.6002.159.CONTINUING EDUCATION PROGRAMS. (a) The
commissioner may adopt procedures for certifying and may certify
continuing education programs.
       (b)  Participation in the continuing education programs is
voluntary. (V.T.I.C. Art. 5.43-2, Sec. 5E.)
       Sec.6002.160.RECIPROCAL LICENSE.  The department may
waive any license requirement for an applicant who holds a license
issued by another state that has license requirements substantially
equivalent to the license requirements of this state. (V.T.I.C.
Art. 5.43-2, Sec. 5F.)
       Sec.6002.161.NOT TRANSFERABLE. A registration
certificate or license issued under this chapter is not
transferable. (V.T.I.C. Art. 5.43-2, Sec. 5(h).)
[Sections 6002.162-6002.200 reserved for expansion]
SUBCHAPTER E. RENEWAL OF REGISTRATION CERTIFICATE OR LICENSE
       Sec.6002.201.RENEWAL REQUIRED; FEE. (a) A renewal of a
registration certificate or license issued under this chapter is
valid for a period of two years. The license or registration
renewal fee for each year of the two-year period is payable on
renewal.
       (b)  The commissioner by rule may adopt a system under which
registration certificates and licenses expire on various dates
during the year. For the year in which an expiration date of a
registration certificate or license is less than one year from its
issuance or anniversary date, the fee shall be prorated on a monthly
basis so that each holder of a registration certificate or license
pays only that portion of the renewal fee that is allocable to the
number of months during which the registration certificate or
license is valid. The total renewal fee is payable on renewal on
the new expiration date. (V.T.I.C. Art. 5.43-2, Secs. 5A, 5C(b).)
       Sec.6002.202.NOTICE OF EXPIRATION. At least 30 days
before the expiration date of a registration certificate or
license, the state fire marshal shall send written notice of the
impending expiration to the holder of the registration certificate
or license at the holder's last known address. (V.T.I.C. Art.
5.43-2, Sec. 5C(a) (part).)
       Sec.6002.203.RENEWAL PROCEDURES. (a)  The holder of an
unexpired registration certificate or license may renew the
certificate or license by paying the required renewal fee to the
department before the expiration date of the certificate or
license.
       (b)  An individual or organization whose registration
certificate or license has been expired for 90 days or less may
renew the certificate or license by paying to the department:
             (1)  the required renewal fee; and
             (2)  a fee that does not exceed one-fourth of the
initial fee for the certificate or license.
       (c)  An individual or organization whose registration
certificate or license has been expired for more than 90 days but
less than two years may renew the certificate or license by paying
to the department:
             (1)  all unpaid renewal fees; and
             (2)  a fee that does not exceed the initial fee for the
certificate or license.
       (d)  An individual or organization whose registration
certificate or license has been expired for two years or longer may
not renew the certificate or license. The individual or
organization may obtain a new registration certificate or license
by complying with the requirements and procedures for obtaining an
initial registration certificate or license.
       (e)  This section may not be construed to prevent the
department from denying or refusing to renew a license under
applicable law or commissioner rules.
       (f)  A license or registration certificate issued under this
chapter expires at midnight on the date printed on the license or
certificate. A renewal application and fee for the license or
registration certificate must be postmarked on or before the
expiration date to be accepted as timely.
       (g)  If a renewal application is not complete but there has
been no lapse in the required insurance, the applicant is entitled
to 30 days from the date that the applicant is notified by the
department of the deficiencies in the renewal application to comply
with any additional requirement. If an applicant fails to respond
and correct all deficiencies in the renewal application within the
30-day period, the department may charge a late fee.  (V.T.I.C. Art.
5.43-2, Secs. 5C(a) (part), (c).)
       Sec.6002.204.RENEWAL OF CERTAIN LICENSES. A license
holder with an unexpired license who is not employed by a registered
firm at the time of the license renewal may renew that license, but
the license holder may not engage in any activity for which the
license was granted until the license holder is employed by a
registered firm. (V.T.I.C. Art. 5.43-2, Sec. 5C(a) (part).)
[Sections 6002.205-6002.250 reserved for expansion]
SUBCHAPTER F. SELLING OR LEASING OF FIRE ALARM
OR FIRE DETECTION DEVICES
       Sec.6002.251.REQUIRED LABEL; EXCEPTIONS. (a)  Except as
provided by Subsections (b) and (c), a detection or alarm device,
alarm system, or item of monitoring equipment, a purpose of which is
to detect or give alarm of fire, may not be sold, offered for sale,
leased, installed, or used to monitor property in this state unless
the device, system, or item of equipment carries a label of approval
or listing of a testing laboratory approved by the department.
       (b)  Except as provided by Subsection (c), a detection or
alarm device, alarm system, or item of monitoring equipment in a
one-family or two-family residence, a purpose of which is to detect
or give alarm of fire, may not be sold, offered for sale, leased,
installed, or used to monitor property in this state after April 14,
1989, unless the device, system, or equipment carries a label of
approval or listing of a testing laboratory approved by the
department.
       (c)  Subsections (a) and (b) do not prohibit the continued
use or monitoring of equipment in place if the equipment:
             (1)  complied with the law applicable on the date of the
equipment's original placement; and
             (2)  has not been extended, modified, or altered.
       (d)  Fire alarm devices that are not required by this chapter
or rules adopted under this chapter and that do not impair the
operation of fire alarm or fire detection devices required by this
chapter or the rules adopted under this chapter are exempt from the
label and listing requirements described by Subsections (a) and (b)
if the devices are approved by the local authority with
jurisdiction.  (V.T.I.C. Art. 5.43-2, Secs. 9(a), (b), (c).)
       Sec. 6002.252.  REQUIRED PURCHASE AND INSTALLATION
INFORMATION. A fire detection or fire alarm device may not be sold
or installed in this state unless the device is accompanied by
printed information that:
             (1)  is supplied to the owner by the supplier or
installing contractor; and
             (2)  concerns:
                   (A)  instructions describing the installation,
operation, testing, and proper maintenance of the device;
                   (B)  information to aid in establishing an
emergency evacuation plan for the protected premises; and
                   (C)  the telephone number and location, including
notification procedures, of the nearest fire department. (V.T.I.C.
Art. 5.43-2, Sec. 9(d).)
       Sec. 6002.253.  TRAINING AND SUPERVISION OF CERTAIN EXEMPT
EMPLOYEES. Each registered firm that employs an individual who is
exempt from the licensing requirements of this chapter under
Section 6002.155(10) shall appropriately train and supervise the
individual to ensure that:
             (1)  each installation complies with the adopted
provisions of National Fire Protection Standard No. 74 or other
adopted standards;
             (2)  each smoke or heat detector installed or sold
carries a label or listing of approval by a testing laboratory
approved by the department; and
             (3)  the individual is knowledgeable in fire protection
and the proper use and placement of detectors. (V.T.I.C. Art.
5.43-2, Sec. 9(e).)
[Sections 6002.254-6002.300 reserved for expansion]
SUBCHAPTER G. PROHIBITED PRACTICES AND DISCIPLINARY PROCEDURES
       Sec.6002.301.PROHIBITED PRACTICES. An individual or
organization may not:
             (1)  plan, certify, lease, sell, service, install,
monitor, or maintain a fire alarm or fire detection device or system
without a license or registration certificate;
             (2)  obtain or attempt to obtain a registration
certificate or license by fraudulent representation; or
             (3)  plan, certify, lease, sell, service, install,
monitor, or maintain a fire alarm or fire detection device or system
in violation of this chapter or the rules adopted under this
chapter.  (V.T.I.C. Art. 5.43-2, Sec. 7(a).)
       Sec.6002.302.DISCIPLINARY ACTIONS. (a)  The state fire
marshal may suspend, revoke, or refuse to issue or renew a
registration certificate or license if, after notice and hearing,
the state fire marshal finds that the applicant, registrant, or
license holder has engaged in acts that:
             (1)  violate this chapter;
             (2)  violate rules or standards adopted under this
chapter; or
             (3)  constitute misrepresentation made in connection
with the sale of products or services rendered.
       (b)  An original or renewal registration certificate,
license, or testing laboratory approval may be denied, suspended,
or revoked, if after notice and public hearing the commissioner,
through the state fire marshal, determines from the evidence
presented at the hearing that this chapter or a rule adopted under
this chapter has been violated.  (V.T.I.C. Art. 5.43-2, Secs.
10(b), (c).)
       Sec.6002.303.DISCIPLINARY HEARING. (a) If the state fire
marshal proposes to suspend, revoke, or refuse to renew a license or
registration certificate issued under this chapter, the holder of
the license or certificate is entitled to a hearing conducted by the
State Office of Administrative Hearings.
       (b)  Proceedings for a disciplinary action are governed by
Chapter 2001, Government Code.
       (c)  Rules of practice adopted by the commissioner
applicable to the proceedings for a disciplinary action may not
conflict with rules adopted by the State Office of Administrative
Hearings.  (V.T.I.C. Art. 5.43-2, Sec. 10A.)
       Sec.6002.304.REAPPLICATION REQUIREMENTS. (a)  A holder
of a registration certificate, license, or testing laboratory
approval that has been revoked under this chapter may not file
another application for a registration certificate, license, or
approval before the first anniversary of the effective date of the
revocation.
       (b)  An individual or organization reapplying under this
section must request a public hearing to show cause why the issuance
of a new registration certificate, license, or approval should not
be denied. (V.T.I.C. Art. 5.43-2, Sec. 10(d).)
[Sections 6002.305-6002.350 reserved for expansion]
SUBCHAPTER H.  CRIMINAL PENALTY
       Sec.6002.351.CRIMINAL PENALTY. (a)  An individual or
organization commits an offense if the individual or organization
violates Section 6002.151, 6002.152, or 6002.154.
       (b)  An offense under this section is a Class B misdemeanor.
       (c)  Venue for an offense under this section is in Travis
County or the county in which the offense is committed. (V.T.I.C. Art. 5.43-2, Sec. 11.)
CHAPTER 6003. FIRE PROTECTION SPRINKLER SYSTEM SERVICE AND
INSTALLATION
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 6003.001.  DEFINITIONS
Sec. 6003.002.  APPLICABILITY OF CHAPTER
Sec. 6003.003.  EFFECT ON LOCAL REGULATION
[Sections 6003.004-6003.050 reserved for expansion]
SUBCHAPTER B. POWERS AND DUTIES OF COMMISSIONER,
DEPARTMENT, AND STATE FIRE MARSHAL
Sec. 6003.051.  ADMINISTRATION OF CHAPTER
Sec. 6003.052.  ADOPTION OF RULES
Sec. 6003.053.  RULES RESTRICTING ADVERTISING OR
                 COMPETITIVE BIDDING
Sec. 6003.054.  GENERAL POWERS AND DUTIES OF
                 COMMISSIONER, STATE FIRE MARSHAL, AND
                 DEPARTMENT
Sec. 6003.055.  FEES
Sec. 6003.056.  DEPOSIT IN OPERATING ACCOUNT
[Sections 6003.057-6003.100 reserved for expansion]
SUBCHAPTER C. FIRE PROTECTION ADVISORY COUNCIL
Sec. 6003.101.  ADVISORY COUNCIL; APPOINTMENT
Sec. 6003.102.  ADVISORY COUNCIL DUTIES
[Sections 6003.103-6003.150 reserved for expansion]
SUBCHAPTER D. REGISTRATION AND LICENSE REQUIREMENTS
Sec. 6003.151.  FIRE PROTECTION SPRINKLER SYSTEM
                 CONTRACTOR; REGISTRATION CERTIFICATE
                 REQUIRED
Sec. 6003.152.  REQUIRED INSURANCE COVERAGE FOR
                 REGISTRATION CERTIFICATE
Sec. 6003.153.  RESPONSIBLE MANAGING EMPLOYEE: LICENSE
                 REQUIRED
Sec. 6003.154.  POSTING OF LICENSE OR CERTIFICATE
                 REQUIRED
Sec. 6003.155.  DISPLAY OF REGISTRATION CERTIFICATE
                 NUMBER ON CERTAIN DOCUMENTS REQUIRED
Sec. 6003.156.  LICENSE EXAMINATION
Sec. 6003.157.  EXAMINATION RESULTS
Sec. 6003.158.  CONTINUING EDUCATION REQUIREMENTS
Sec. 6003.159.  RECIPROCAL LICENSE
Sec. 6003.160.  NOT TRANSFERABLE
[Sections 6003.161-6003.200 reserved for expansion]
SUBCHAPTER E. RENEWAL OF REGISTRATION CERTIFICATE OR LICENSE
Sec. 6003.201.  RENEWAL REQUIRED; FEE
Sec. 6003.202.  NOTICE OF EXPIRATION
Sec. 6003.203.  RENEWAL PROCEDURES
[Sections 6003.204-6003.250 reserved for expansion]
SUBCHAPTER F. PROHIBITED PRACTICES
AND DISCIPLINARY PROCEDURES
Sec. 6003.251.  PROHIBITED PRACTICES
Sec. 6003.252.  DISCIPLINARY ACTIONS
Sec. 6003.253.  DISCIPLINARY HEARING
Sec. 6003.254.  APPLICABILITY OF ADMINISTRATIVE
                 PROCEDURE ACT
Sec. 6003.255.  REAPPLICATION REQUIREMENTS
[Sections 6003.256-6003.300 reserved for expansion]
SUBCHAPTER G. CRIMINAL PENALTY
Sec. 6003.301.  CRIMINAL PENALTY
CHAPTER 6003. FIRE PROTECTION SPRINKLER SYSTEM SERVICE AND
INSTALLATION
SUBCHAPTER A. GENERAL PROVISIONS
       Sec.6003.001.DEFINITIONS. In this chapter:
             (1)  "Fire protection sprinkler system" means an
assembly of underground or overhead piping or conduits that conveys
water with or without other agents to dispersal openings or devices
to:
                   (A)  extinguish, control, or contain fire; and
                   (B)  provide protection from exposure to fire or
the products of combustion.
             (2)  "Fire protection sprinkler system contractor"
means an individual or organization that offers to undertake,
represents itself as being able to undertake, or undertakes the
plan, sale, installation, maintenance, or servicing of:
                   (A)  a fire protection sprinkler system; or
                   (B)  any part of a fire protection sprinkler
system.
             (3)  "Individual" means a natural person, including an
owner, manager, officer, employee, or occupant.
             (4)  "Installation" means:
                   (A)  the initial placement of equipment; or
                   (B)  the extension, modification, or alteration
of equipment after initial placement.
             (5)  "Insurance agent" means:
                   (A)  an individual, firm, or corporation licensed
under:
                         (i)  Subchapter E, Chapter 981; or
                         (ii)  Subchapter A, B, C, D, E, or G, Chapter
4051; or
                   (B)  an individual authorized to represent an
insurance fund or pool created by a municipality, county, or other
political subdivision of this state under Chapter 791, Government
Code.
             (6)  "License" means the document issued to a
responsible managing employee authorizing the employee to engage in
the fire protection sprinkler system business in this state.
             (7)  "Maintenance" means the maintenance of a fire
protection sprinkler system or any part of a fire protection
sprinkler system in the condition of repair that provides
performance as originally planned.
             (8)  "Organization" means a corporation, a partnership
or other business association, a governmental entity, or any other
legal or commercial entity.
             (9)  "Registration certificate" means the document
issued to a fire protection sprinkler system contractor authorizing
the contractor to engage in business in this state.
             (10)  "Responsible managing employee" means an
individual designated by a company that plans, sells, installs,
maintains, or services fire protection sprinkler systems to ensure
that each fire protection sprinkler system, as installed,
maintained, or serviced, meets the standards for the system as
provided by law.
             (11)  "Service" means maintenance, repair, or testing.
(V.T.I.C. Art. 5.43-3, Secs. 1(1), (2), (5), (6), (7), (8), (9),
(10), (11), (12), (13) as added Acts 71st Leg., R.S., Ch. 823.)
       Sec.6003.002.APPLICABILITY OF CHAPTER. (a) This chapter
does not apply to:
             (1)  an employee of the United States, this state, or
any political subdivision of this state who acts as a fire
protection sprinkler system contractor for the employing
governmental entity;
             (2)  the plan, sale, installation, maintenance, or
servicing of a fire protection sprinkler system in any property
owned by the United States or this state;
             (3)  an individual or organization acting under court
order as authorization;
             (4)  an individual or organization that sells or
supplies products or materials to a registered fire protection
sprinkler system contractor;
             (5)  an installation, maintenance, or service project
for which the total contract price for labor, materials, and all
other services is less than $100, if:
                   (A)  the project is not a part of a complete or
more costly project, whether the complete project is to be
undertaken by one or more fire protection sprinkler system
contractors; or
                   (B)  the project is not divided into contracts of
less than $100 for the purpose of evading this chapter;
             (6)  an engineer licensed under Chapter 1001,
Occupations Code, acting solely in the engineer's professional
capacity;
             (7)  a regular employee of a registered fire protection
sprinkler system contractor; or
             (8)  an owner or lessee of property that:
                   (A)  installs a fire protection sprinkler system
on the owned or leased property for the owner's or lessee's own use
or for family members' use; and
                   (B)  does not offer the property for sale or lease
before the first anniversary of the date of installation of the fire
protection sprinkler system.
       (b)  This chapter does not authorize an individual or
organization to practice professional engineering other than in
compliance with Chapter 1001, Occupations Code. (V.T.I.C. Art.
5.43-3, Secs. 2(b), 11.)
       Sec.6003.003.EFFECT ON LOCAL REGULATION. (a) This
chapter and the rules adopted under this chapter have uniform force
and effect throughout this state. A municipality or county may not
enact an order, ordinance, or rule requiring a fire protection
sprinkler system contractor to obtain a registration certificate
from the municipality or county.  A municipality or county may not
impose on a fire protection sprinkler system contractor
qualification or financial responsibility requirements other than
proof of a registration certificate.
       (b)  Notwithstanding any other provision of this chapter, a
municipality or county may require a fire protection sprinkler
system contractor to obtain a permit and pay a permit fee for the
installation of a fire protection sprinkler system and require the
installation of a fire protection sprinkler system to conform to
the building code or other construction requirements of the
municipality or county.
       (c)  A municipal or county order, ordinance, or rule in
effect on September 1, 1983, is not invalidated because of any
provision of this chapter. (V.T.I.C. Art. 5.43-3, Sec. 2(a).)
       [Sections 6003.004-6003.050 reserved for expansion]
SUBCHAPTER B. POWERS AND DUTIES OF COMMISSIONER,
DEPARTMENT, AND STATE FIRE MARSHAL
       Sec.6003.051.ADMINISTRATION OF CHAPTER. (a)  The
department shall administer this chapter.
       (b)  The commissioner may issue rules necessary to
administer this chapter through the state fire marshal. (V.T.I.C.
Art. 5.43-3, Sec. 3(a) (part).)
       Sec.6003.052.ADOPTION OF RULES. (a) In adopting
necessary rules, the commissioner may use recognized standards,
including standards:
             (1)  adopted by federal law or regulation;
             (2)  published by a nationally recognized
standards-making organization; or
             (3)  developed by individual manufacturers.
       (b)  Under rules adopted under Section 6003.051(b), the
department may create a specialized licensing or registration
program for fire protection sprinkler system contractors.
(V.T.I.C. Art. 5.43-3, Secs. 3(a) (part), (b).)
       Sec. 6003.053.  RULES RESTRICTING ADVERTISING OR
COMPETITIVE BIDDING. (a)  The commissioner may not adopt rules
restricting advertising or competitive bidding by the holder of a
license or registration certificate issued under this chapter
except to prohibit false, misleading, or deceptive practices.
       (b)  In the commissioner's rules to prohibit false,
misleading, or deceptive practices, the commissioner may not
include a rule that:
             (1)  restricts the use of any medium for advertising;
             (2)  restricts the use of a license or registration
certificate holder's personal appearance or voice in an
advertisement;
             (3)  relates to the size or duration of an
advertisement by the license or registration certificate holder; or
             (4)  restricts the license or registration certificate
holder's advertisement under a trade name. (V.T.I.C. Art. 5.43-3,
Sec. 7A.)
       Sec. 6003.054.  GENERAL POWERS AND DUTIES OF COMMISSIONER,
STATE FIRE MARSHAL, AND DEPARTMENT.  (a)  The commissioner may
delegate authority to exercise all or part of the commissioner's
functions, powers, and duties under this chapter, including the
issuance of licenses and registration certificates, to the state
fire marshal.  The state fire marshal shall implement the rules
adopted by the commissioner for the protection and preservation of
life and property in controlling:
             (1)  the registration of an individual or an
organization engaged in the business of planning, selling,
installing, maintaining, or servicing fire protection sprinkler
systems; and
             (2)  the requirements for the plan, sale, installation,
maintenance, or servicing of fire protection sprinkler systems by:
                   (A)  determining the criteria and qualifications
for registration certificate and license holders;
                   (B)  evaluating the qualifications of an
applicant for a registration certificate to engage in the business
of planning, selling, installing, maintaining, or servicing fire
protection sprinkler systems;
                   (C)  conducting examinations and evaluating the
qualifications of a license applicant; and
                   (D)  issuing registration certificates and
licenses to qualified applicants.
       (b)  The commissioner shall establish a procedure for
reporting and processing complaints relating to the business of
planning, selling, installing, maintaining, or servicing fire
protection sprinkler systems in this state. (V.T.I.C. Art. 5.43-3,
Secs. 7(a), (b).)
       Sec.6003.055.FEES. (a) The commissioner shall set the
fee for:
             (1)  a registration certificate application in an
amount not to exceed $100;
             (2)  an initial or renewal registration certificate in
an amount not to exceed $1,200 annually; and
             (3)  an initial or renewal responsible managing
employee license fee in an amount not to exceed $200 annually.
       (b)  Unless the examination for a responsible managing
employee license is administered by a testing service, the
commissioner shall set a nonrefundable fee for each examination in
an amount not to exceed $100.
       (c)  The commissioner shall set a fee in an amount not to
exceed $70 for:
             (1)  a duplicate registration certificate or license
issued under this chapter; or
             (2)  any request requiring changes to a registration
certificate or license.  (V.T.I.C. Art. 5.43-3, Secs. 4(a) (part),
(c) (part), (d) (part), (e), (i) (part), 5A(a) (part).)
       Sec.6003.056.DEPOSIT IN OPERATING ACCOUNT. All fees
collected under this chapter shall be deposited in the state
treasury to the credit of the Texas Department of Insurance
operating account for use in administering this chapter.  (V.T.I.C.
Art. 5.43-3, Sec. 4(i) (part).)
[Sections 6003.057-6003.100 reserved for expansion]
SUBCHAPTER C. FIRE PROTECTION ADVISORY COUNCIL
       Sec.6003.101.ADVISORY COUNCIL; APPOINTMENT. (a)  The
commissioner shall appoint the members of the fire protection
advisory council, who serve at the pleasure of the commissioner.
       (b)  The advisory council is composed of seven members as
follows:
             (1)  three members who have been actively engaged in
the management of a fire protection sprinkler system business for
not less than five years preceding appointment;
             (2)  one member who represents the engineering section
of the department's property and casualty program;
             (3)  one member who is a volunteer firefighter; and
             (4)  two members who each represent a different
municipal fire department in this state.
       (c)  The State Firemen's and Fire Marshals' Association of
Texas, on the commissioner's request, may recommend a volunteer
firefighter for appointment to the advisory council.  (V.T.I.C.
Art. 5.43-3, Secs. 6(a) (part), (c), (e).)
       Sec.6003.102.ADVISORY COUNCIL DUTIES. (a) In addition to
other duties delegated by the commissioner, the fire protection
advisory council shall:
             (1)  advise the state fire marshal regarding practices
in the fire protection sprinkler system industry and the rules
necessary to implement and administer this chapter; and
             (2)  make recommendations to the state fire marshal
regarding forms and procedures for registration certificates and
licenses.
       (b)  The advisory council shall periodically:
             (1)  review rules implementing this chapter; and
             (2)  recommend rule changes to the commissioner.  
(V.T.I.C. Art. 5.43-3, Secs. 6(b), (d).)
[Sections 6003.103-6003.150 reserved for expansion]
SUBCHAPTER D. REGISTRATION AND LICENSE REQUIREMENTS
       Sec. 6003.151.  FIRE PROTECTION SPRINKLER SYSTEM
CONTRACTOR; REGISTRATION CERTIFICATE REQUIRED.  (a)  Unless the
individual or organization holds a registration certificate issued
by the department, an individual or organization may not plan,
sell, install, maintain, or service a fire protection sprinkler
system.
       (b)  An applicant for a registration certificate must apply
to the department on a form prescribed by the commissioner.
       (c)  An organization that is a partnership or joint venture
is not required to register under the name of the organization if
each partner or joint venturer holds a registration certificate.
(V.T.I.C. Art. 5.43-3, Secs. 4(a) (part), 8 (part).)
       Sec. 6003.152.  REQUIRED INSURANCE COVERAGE FOR
REGISTRATION CERTIFICATE. (a)  The department may not issue a
registration certificate under this chapter unless the applicant
files with the department evidence of a general liability insurance
policy that includes products and completed operations coverage.
The policy must be conditioned to pay on behalf of the insured those
amounts that the insured becomes legally obligated to pay as
damages because of bodily injury and property damage caused by an
occurrence involving the insured or the insured's officer, agent,
or employee in the conduct of any activity that requires a
registration certificate or license under this chapter.
       (b)  Unless the commissioner, after notice and an
opportunity for a hearing, increases or decreases the limits, the
limits of insurance coverage required by Subsection (a) must be at
least:
             (1)  $100,000 combined single limits for bodily injury
and property damage for each occurrence; and
             (2)  $300,000 aggregate for all occurrences for each
policy year.
       (c)  The evidence of insurance required by this section must
be in the form of a certificate of insurance executed by an insurer
authorized to engage in the business of insurance in this state and
countersigned by an insurance agent licensed in this state. A
certificate of insurance for surplus lines coverage procured in
compliance with Chapter 981 through a surplus lines agent that is
licensed under Subchapter E, Chapter 981, and resident in this
state may be filed with the department as evidence of the coverage
required by this section.
       (d)  An insurance certificate executed and filed with the
department under this section remains in force until the insurer
has terminated future liability by the notice required by the
department.
       (e)  Failure to maintain the liability insurance required by
this section constitutes grounds for the denial, suspension, or
revocation, after notice and opportunity for hearing, of a
registration certificate issued under this chapter. (V.T.I.C. Art.
5.43-3, Secs. 5, 7(c).)
       Sec. 6003.153.  RESPONSIBLE MANAGING EMPLOYEE: LICENSE
REQUIRED. (a)  Each fire protection sprinkler system contractor
must employ at least one licensed responsible managing employee on
a full-time basis.
       (b)  A person may not act as a responsible managing employee
unless the person holds a license issued by the department,
conditioned on the successful completion of the license examination
and compliance with the requirements of the rules adopted under
this chapter.
       (c)  Notwithstanding Subsection (a), an individual or
organization with a current registration certificate may act as a
fire protection sprinkler system contractor for 30 days after the
death or dissociation of its licensed responsible managing employee
or for a longer period approved by the commissioner under the rules
adopted under this chapter. (V.T.I.C. Art. 5.43-3, Secs. 4(b), (c)
(part), 8 (part).)
       Sec.6003.154.POSTING OF LICENSE OR CERTIFICATE REQUIRED.
Each registration certificate and license issued under this chapter
must be posted in a conspicuous place in the fire protection
sprinkler system contractor's place of business. (V.T.I.C. Art.
5.43-3, Sec. 4(f).)
       Sec. 6003.155.  DISPLAY OF REGISTRATION CERTIFICATE NUMBER
ON CERTAIN DOCUMENTS REQUIRED. Each bid, proposal, offer, and
installation drawing for a fire protection sprinkler system must
prominently display the registration certificate number of the fire
protection sprinkler system contractor. (V.T.I.C. Art. 5.43-3,
Sec. 4(g).)
       Sec.6003.156.LICENSE EXAMINATION. (a) The state fire
marshal shall establish the scope and type of an examination
required by this chapter.
       (b)  The state fire marshal may administer the examination or
may enter into an agreement with a testing service.
       (c)  If a testing service is used, the state fire marshal may
contract with the testing service regarding requirements for the
examination, including:
             (1)  examination development;
             (2)  scheduling;
             (3)  site arrangements;
             (4)  grading;
             (5)  reporting;
             (6)  analysis; or
             (7)  other administrative duties.
       (d)  The state fire marshal may require the testing service
to:
             (1)  correspond directly with an applicant regarding
the administration of the examination;
             (2)  collect a reasonable fee from an applicant for
administering the examination; or
             (3)  administer the examination at a specific location
or time.
       (e)  The state fire marshal shall adopt rules as necessary to
implement examination requirements under this chapter.  (V.T.I.C.
Art. 5.43-3, Secs. 5B(a), (b), (e).)
       Sec.6003.157.EXAMINATION RESULTS.  (a)  Not later than the
30th day after the date on which an examination is administered
under this chapter, the state fire marshal shall send notice to each
examinee of the results of the examination.
       (b)  If an examination is graded or reviewed by a testing
service, the state fire marshal shall send notice to each examinee
of the results of the examination not later than the 14th day after
the date on which the state fire marshal receives the results from
the testing service.
       (c)  If the notice of the examination results will be delayed
for more than 90 days after the examination date, the state fire
marshal, before the 90th day, shall send notice to the examinee of
the reason for the delay.
       (d)  The state fire marshal may require a testing service to
notify an examinee of the results of the examinee's examination.
       (e)  If requested in writing by an individual who fails the
examination administered under this chapter, the state fire marshal
shall send to the individual an analysis of the individual's
performance on the examination.  (V.T.I.C. Art. 5.43-3, Secs.
5B(c), (d).)
       Sec.6003.158.CONTINUING EDUCATION REQUIREMENTS. (a) The
commissioner may adopt procedures for certifying and may certify
continuing education programs.
       (b)  Participation in the continuing education programs is
voluntary. (V.T.I.C. Art. 5.43-3, Sec. 5C.)
       Sec.6003.159.RECIPROCAL LICENSE. The department may waive
any license requirement for an applicant who holds a license issued
by another state that has license requirements substantially
equivalent to the license requirements of this state. (V.T.I.C.
Art. 5.43-3, Sec. 5D.)
       Sec.6003.160.NOT TRANSFERABLE. A registration
certificate or license issued under this chapter is not
transferable. (V.T.I.C. Art. 5.43-3, Sec. 4(h).)
[Sections 6003.161-6003.200 reserved for expansion]
SUBCHAPTER E. RENEWAL OF REGISTRATION CERTIFICATE OR LICENSE
       Sec.6003.201.RENEWAL REQUIRED; FEE.  (a)  Except as
otherwise provided by this subsection, an initial registration
certificate or license is valid for a period of one year from the
date of issue and is renewable on payment of the renewal fee. An
initial registration certificate or license issued on or after
September 1, 1983, may be issued for a period of less than one year
and the renewal fee shall be prorated proportionally.
       (b)  A renewal of a registration certificate or license
issued under this chapter is valid for a period of two years. The
license or registration fee for each year of the two-year period is
payable on renewal.
       (c)  The commissioner by rule may adopt a system under which
registration certificates and licenses expire on various dates
during the year. For the year in which an expiration date of a
registration certificate or license is less than one year from its
issuance or anniversary date, the fee shall be prorated on a monthly
basis so that each holder of a registration certificate or license
pays only that portion of the renewal fee that is allocable to the
number of months during which the registration certificate or
license is valid. On renewal on the new expiration date, the total
renewal fee is payable. (V.T.I.C. Art. 5.43-3, Secs. 4(d) (part),
5A(a), (c).)
       Sec.6003.202.NOTICE OF EXPIRATION. At least 30 days
before the expiration date of a registration certificate or
license, the department shall send written notice of the impending
expiration to the holder of the registration certificate or
license at the holder's last known address. (V.T.I.C. Art. 5.43-3,
Sec. 5A(b) (part).)
       Sec.6003.203.RENEWAL PROCEDURES. (a)  The holder of an
unexpired registration certificate or license may renew the
certificate or license by paying the required renewal fee to the
department before the expiration date of the certificate or
license.
       (b)  An individual or organization whose registration
certificate or license has been expired for 90 days or less may
renew the certificate or license by paying to the department:
             (1)  the required renewal fee; and
             (2)  a fee equal to one-half of the initial fee for the
certificate or license.
       (c)  An individual or organization whose registration
certificate or license has been expired for more than 90 days but
less than two years may renew the certificate or license by paying
to the department:
             (1)  all unpaid renewal fees; and
             (2)  a fee that is equal to the initial fee for the
certificate or license.
       (d)  An individual or organization whose registration
certificate or license has been expired for two years or longer may
not renew the certificate or license. The individual or
organization may obtain a new registration certificate or license
by complying with the requirements and procedures for obtaining an
initial registration certificate or license.
       (e)  This section may not be construed to prevent the
department from denying or refusing to renew a license under
applicable law or commissioner rules. (V.T.I.C. Art. 5.43-3, Sec.
5A(b) (part).)
[Sections 6003.204-6003.250 reserved for expansion]
SUBCHAPTER F. PROHIBITED PRACTICES
AND DISCIPLINARY PROCEDURES
       Sec.6003.251.PROHIBITED PRACTICES. An individual or
organization may not:
             (1)  obtain or attempt to obtain a registration
certificate or license by fraudulent representation; or
             (2)  plan, sell, install, maintain, or service a fire
protection sprinkler system in violation of this chapter or the
rules adopted under this chapter.  (V.T.I.C. Art. 5.43-3, Sec. 8
(part).)
       Sec.6003.252.DISCIPLINARY ACTIONS. The state fire
marshal may suspend, revoke, or refuse to issue or renew a
registration certificate or license if, after notice and hearing,
the state fire marshal finds that the applicant, registrant, or
license holder has engaged in acts that:
             (1)  violate this chapter;
             (2)  violate rules or standards adopted under this
chapter; or
             (3)  constitute misrepresentation made in connection
with:
                   (A)  the sale of products; or
                   (B)  services rendered.  (V.T.I.C. Art. 5.43-3,
Sec. 9(a).)
       Sec.6003.253.DISCIPLINARY HEARING. (a) If the state fire
marshal proposes to suspend, revoke, or refuse to renew a license or
registration certificate issued under this chapter, the holder of
the license or certificate is entitled to a hearing conducted by the
State Office of Administrative Hearings.
       (b)  Rules of practice adopted by the commissioner
applicable to the proceedings for a disciplinary action may not
conflict with rules adopted by the State Office of Administrative
Hearings.  (V.T.I.C. Art. 5.43-3, Sec. 9A (part).)
       Sec. 6003.254.  APPLICABILITY OF ADMINISTRATIVE PROCEDURE
ACT.  Proceedings for the denial, suspension, or revocation of a
registration certificate or license, appeals from those
proceedings, and any other proceedings for a disciplinary action
are governed by Chapter 2001, Government Code.  (V.T.I.C. Art.
5.43-3, Secs. 9(b), 9A (part).)
       Sec.6003.255.REAPPLICATION REQUIREMENTS. (a)  An
applicant or holder of a registration certificate or license whose
certificate or license has been denied, refused, or revoked under
this chapter, other than for failure to pass a required written
examination, may not file another application for a registration
certificate or license before:
             (1)  the first anniversary of the effective date of the
denial, refusal, or revocation; or
             (2)  if judicial review of the denial, refusal, or
revocation is sought, before the first anniversary of the date of
the final court order or decree affirming the action.
       (b)  The commissioner may deny an application described by
Subsection (a) unless the applicant shows good cause why the
denial, refusal, or revocation of the registration certificate or
license should not be considered a bar to the issuance of a new
registration certificate or license. (V.T.I.C. Art. 5.43-3, Sec.
9(c).)
[Sections 6003.256-6003.300 reserved for expansion]
SUBCHAPTER G. CRIMINAL PENALTY
       Sec.6003.301.CRIMINAL PENALTY. (a)  A person commits an
offense if the person knowingly violates Section 6003.151(a),
6003.153, or 6003.251.
       (b)  An offense under this section is a Class B misdemeanor.
       (c)  Venue for an offense under this section is in Travis
County or the county in which the offense is committed. (V.T.I.C.
Art. 5.43-3, Sec. 10; New.)
PART K.  ADDITIONS TO GOVERNMENT CODE AND LOCAL GOVERNMENT CODE
       SECTION 1K.001.  ADDITION.  Subchapter A, Chapter 533,
Government Code, is amended by adding Section 533.019 to read as
follows:
       Sec.533.019.MANAGED CARE ORGANIZATIONS: FISCAL SOLVENCY AND COMPLAINT SYSTEM GUIDELINES
AND COMPLAINT SYSTEM GUIDELINES
Insurance, in conjunction with the commission, shall establish
fiscal solvency standards and complaint system guidelines for
managed care organizations that serve Medicaid recipients.
       (b)  The guidelines must require that information regarding
a managed care organization's complaint process be made available
to a recipient in an appropriate communication format when the
recipient enrolls in the Medicaid managed care program. (V.T.I.C.
Art. 1.61.)
       SECTION 1K.002.  ADDITION.  Subtitle C, Title 5, Local
Government Code, is amended by adding Chapter 177 to read as
follows:
CHAPTER 177. LIFE, HEALTH, AND ACCIDENT INSURANCE FOR OFFICIALS,
EMPLOYEES, AND RETIREES OF POLITICAL SUBDIVISIONS
SUBCHAPTER A.  GENERAL PROVISIONS
       Sec.177.001.CERTAIN COVERAGE AUTHORIZED.  (a)  A county or
other political subdivision of this state may procure contracts
insuring the political subdivision's officials, employees, and
retirees or any class of the political subdivision's officials,
employees, and retirees under a policy of group life, group health,
accident, accidental death and dismemberment, or hospital,
surgical, or medical expense insurance.
       (b)  The dependents of those officials, employees, and
retirees may be insured under a group policy that provides:
             (1)  health insurance; or
             (2)  hospital, surgical, or medical expense insurance. 
(V.T.I.C. Art. 3.51-2, Sec. (a) (part).)
       Sec.177.002.PAYMENT OF PREMIUMS.  (a)  A county or other
political subdivision of this state that is authorized to procure a
contract insuring the political subdivision's officials,
employees, and retirees or any class of the political subdivision's
officials, employees, and retirees under a policy of group
insurance that covers one or more risks may pay from the local funds
of the political subdivision all or any portion of the premiums for
the policy.  The political subdivision may also pay all or any
portion of the premiums on group health, hospital, surgical, or
medical expense insurance for dependents of the political
subdivision's officials, employees, and retirees.
       (b)  If authorized by the official, employee, or retiree in
writing to make the deduction, the county or other political
subdivision may deduct from the person's salary an amount equal to
any required contribution by the person to the premiums for the
insurance issued under Section 177.001 to the political
subdivision as the policyholder. (V.T.I.C. Art. 3.51-2, Secs. (a)
(part), (b), (c) (part).)
       Sec.177.003.USE OF STATE FUNDS.  State funds may not be
used to procure a contract under this subchapter or pay premiums
under that contract. (V.T.I.C. Art. 3.51-2, Sec. (a) (part).)
[Sections 177.004-177.050 reserved for expansion]
SUBCHAPTER B. HEALTH AND INSURANCE FUND
       Sec.177.051.FUND AUTHORIZED.  (a)  A county or other
political subdivision of this state may establish a fund to provide
insurance authorized by Subchapter A.
       (b)  A fund established under Subsection (a) shall be known
as the "health and insurance fund--employees and dependents." 
(V.T.I.C. Art. 3.51-2, Sec. (c) (part).)
       Sec.177.052.PAYMENT OF MONEY INTO FUND.  There shall be
credited to a fund established under this subchapter:
             (1)  any salary deduction to which an official,
employee, or retiree agrees in writing; and
             (2)  contributions from the county or other political
subdivision. (V.T.I.C. Art. 3.51-2, Sec. (c) (part).)
       Sec.177.053.USE OF MONEY IN FUND.  Payment from a fund
established under this subchapter:
             (1)  is authorized only for the payment of premiums on
life, group health, accident, accidental death and dismemberment,
or hospital, surgical, or medical expense insurance for officials,
employees, retirees, and their dependents; and
             (2)  must be made in accordance with rules adopted by
the county or other political subdivision establishing the fund.
(V.T.I.C. Art. 3.51-2, Sec. (c) (part).)
       Sec.177.054.PAYMENT OF CLAIMS FROM FUND. A claim against
a fund established under this subchapter shall be payable in the
same manner as other claims of the county or other political
subdivision. (V.T.I.C. Art. 3.51-2, Sec. (c) (part).)
PART L.  REPEALER
       SECTION 1L.001.  REPEALER.  (a)  The following Acts and
articles as compiled in Vernon's Texas Insurance Code are repealed:
             (1)  1.01, 1.02, 1.10, 1.12, 1.13, 1.33, and 1.61;
             (2)  3.11, 3.38, 3.49-3, 3.50-7B, and 3.51-2;
             (3)  3.50-7A, as added by Chapter 201, Acts of the 78th
Legislature, Regular Session, 2003;
             (4)  3.50-7A, as added by Chapter 213, Acts of the 78th
Legislature, Regular Session, 2003;
             (5)  5.01-1, 5.02, 5.03-1, 5.05, 5.14, 5.43-1, 5.43-2,
5.43-3, and 5.66; and
             (6)  21.20-2, 21.49-15, 21.49-16, 21.49C, 21.70, and
21.80.
       (b)  Subsection (b), Article 1.09-1, Insurance Code, is
repealed.
       (c)  Subchapter B, Chapter 4, Insurance Code, is repealed.
PART M.  LEGISLATIVE INTENT
       SECTION 1M.001.  LEGISLATIVE INTENT.  This article is
enacted under Section 43, Article III, Texas Constitution.  This
article is intended as a recodification only, and no substantive
change in law is intended by this article.
PART N.  EFFECTIVE DATE
       SECTION 1N.001.  EFFECTIVE DATE.  This article takes effect
April 1, 2009.
ARTICLE 2.  UPDATES OF CROSS-REFERENCES IN TITLES 2, 3, 5, 6, 7, 8,
10, 11, AND 13, INSURANCE CODE
PART A.  GENERAL PROVISIONS
       SECTION 2A.001.  This article is enacted as part of the
state's continuing statutory revision program under Chapter 323,
Government Code.  This article is a revision for purposes of Section
43, Article III, Texas Constitution, and has the purpose of making
necessary corrections to enacted codifications of the Insurance
Code.
       SECTION 2A.002.  If any provision of this article conflicts
with a statute enacted by the 80th Legislature, Regular Session,
2007, the statute controls.
PART B.  CROSS-REFERENCE UPDATES:  TITLE 2, INSURANCE CODE
SECTION 2B.001.  Section 34.004(a), Insurance Code, is
amended to correct a cross-reference to read as follows:
       (a)  A person is not liable in a civil action, including an
action for libel or slander, for collecting, reviewing, analyzing,
disseminating, or reporting information collected from annual
statements filed under Chapter 802 [Article 1.11] if the person is:
             (1)  the department, the commissioner, or an employee
of the department;
             (2)  a member or employee of or delegate to the National
Association of Insurance Commissioners or an authorized committee,
subcommittee, or task force of that association; or
             (3)  another person who is responsible for collecting,
reviewing, analyzing, and disseminating information from filed
annual statement convention blanks.
       SECTION 2B.002.  Section 36.002, Insurance Code, is amended
to correct cross-references to read as follows:
       Sec. 36.002.  ADDITIONAL RULEMAKING AUTHORITY. The
commissioner may adopt reasonable rules that are:
             (1)  necessary to effect the purposes of a provision
of:
                   (A)  Subchapter B, Chapter 5;
                   (B)  Subchapter C, Chapter 1806;
                   (C)  Subchapter A, Chapter 2301;
                   (D)  Chapter 251, as that chapter relates to
casualty insurance and fidelity, guaranty, and surety bond
insurance;
                   (E)  Chapter 253;
                   (F)  Chapter 2008, 2251, or 2252; or
                   (G)  Subtitle B, Title 10; or
             (2)  appropriate to accomplish the purposes of a
provision of:
                   (A)  Section 37.051(a), 403.002, 492.051(b) or
(c), 501.159, 941.003(b)(1) [941.003(b)(3)] or (c), or
942.003(b)(1) [942.003(b)(3)] or (c);
                   (B)  Subchapter H, Chapter 544;
                   (C)  Chapter 251, as that chapter relates to:
                         (i)  automobile insurance;
                         (ii)  casualty insurance and fidelity,
guaranty, and surety bond insurance;
                         (iii)  fire insurance and allied lines;
                         (iv)  workers' compensation insurance; or
                         (v)  aircraft insurance;
                   (D)  Chapter 5, 252, 253, 254, 255, 256, 426, 493,
494, 1804, 1805, 1806, [or] 2171, 6001, 6002, or 6003;
                   (E)  Subtitle B, C, D, E, F, H, or I, Title 10;
                   (F)  Section 417.008, Government Code; or
                   (G)  [Chapter 406A, Labor Code; or
                   [(H)]  Chapter 2154, Occupations Code.
       SECTION 2B.003.  Section 36.106, Insurance Code, is amended
to correct cross-references to read as follows:
       Sec. 36.106.  WAIVER OF CERTAIN NOTICE REQUIREMENTS.  The
commissioner may, on written agreement or stipulation of each party
and any intervenor, waive or modify the notice publication
requirement of Section 822.059 [Article 2.01], 822.157 [2.03],
841.060 [3.04], or 884.058 [22.03].
       SECTION 2B.004.  Section 38.002(a)(1), Insurance Code, is
amended to correct a cross-reference to read as follows:
             (1)  "Insurer" means an insurance company, reciprocal
or interinsurance exchange, mutual insurance company, capital
stock company, county mutual insurance company, Lloyd's plan, or
other legal entity engaged in the business of personal automobile
insurance or residential property insurance in this state. The
term includes:
                   (A)  an affiliate as described by [Section 2,
Article 21.49-1, or] Section 823.003(a) if that affiliate is
authorized to write and is writing personal automobile insurance or
residential property insurance in this state;
                   (B)  the Texas Windstorm Insurance Association
created and operated under Chapter 2210 [Article 21.49];
                   (C)  the FAIR Plan Association under Chapter 2211
[Article 21.49A]; and
                   (D)  the Texas Automobile Insurance Plan
Association under Chapter 2151 [Article 21.81].
       SECTION 2B.005.  Section 38.003(b), Insurance Code, is
amended to correct a cross-reference to read as follows:
       (b)  For purposes of this section, "insurer" means a
reciprocal or interinsurance exchange, mutual insurance company,
capital stock company, county mutual insurance company, Lloyd's
plan, life, accident, or health or casualty insurance company,
health maintenance organization, mutual life insurance company,
mutual insurance company other than life, mutual, or natural
premium life insurance company, general casualty company,
fraternal benefit society, group hospital service company, or other
legal entity engaged in the business of insurance in this state.
The term includes an affiliate as described by [Section 2, Article
21.49-1, or] Section 823.003(a) if that affiliate is authorized to
write and is writing insurance in this state.
       SECTION 2B.006.  Section 38.051, Insurance Code, is amended
to correct cross-references to read as follows:
       Sec. 38.051.  DEFINITION.  In this subchapter, "health
benefit plan provider" means an insurance company, group hospital
service corporation, or health maintenance organization that
issues:
             (1)  an individual, group, blanket, or franchise
insurance policy, an insurance agreement, a group hospital service
contract, or an evidence of coverage, that provides benefits for
medical or surgical expenses incurred as a result of an accident or
sickness; or
             (2)  a long-term care benefit plan [insurance policy],
as defined by Section 1651.003 [2, Article 3.70-12].
       SECTION 2B.007.  Section 38.101(2), Insurance Code, is
amended to correct cross-references to read as follows:
             (2)  "Health benefit plan coverage" means a group
policy, contract, or certificate of health insurance or benefits
delivered, issued for delivery, or renewed in this state by:
                   (A)  an insurance company subject to a law
described by Section 841.002 [Chapter 3];
                   (B)  a group hospital service corporation under
Chapter 842 [20];
                   (C)  a health maintenance organization under
Section 1367.053, Subchapter A, Chapter 1452, Subchapter B, Chapter
1507, Chapters 222, 251, and 258, as applicable to a health
maintenance organization, and Chapters 843, 1271, and 1272 [the
Texas Health Maintenance Organization Act (Chapter 20A, Vernon's
Texas Insurance Code)]; or
                   (D)  a self-insurance trust or mechanism
providing health care benefits.
       SECTION 2B.008.  Section 38.152, Insurance Code, is amended
to correct a cross-reference to read as follows:
       Sec. 38.152.  EXEMPTION.  This subchapter does not apply to
a farm mutual insurance company or to a county mutual fire insurance
company writing exclusively industrial fire insurance as described
by Section 912.310 [Article 17.02].
       SECTION 2B.009.  Section 38.252(c), Insurance Code, is
amended to correct a cross-reference to read as follows:
       (c)  The commissioner shall not require reporting of data:
             (1)  that could reasonably be used to identify a
specific enrollee in a health benefit plan;
             (2)  in any way that violates confidentiality
requirements of state or federal law applicable to an enrollee in a
health benefit plan; or
             (3)  in which the health maintenance organization
operating under [the Texas Health Maintenance Organization Act (]
Section 1367.053, Subchapter A, Chapter 1452, Subchapter B, Chapter
1507, Chapter 222, 251, or 258, as applicable to a health
maintenance organization, Chapter 843, Chapter 1271, and Chapter
1272 [20A, Vernon's Texas Insurance Code)] does not directly
process the claim or does not receive complete and accurate
encounter data.
       SECTION 2B.010.  Section 82.002(a), Insurance Code, is
amended to correct cross-references to read as follows:
       (a)  This chapter applies to each company regulated by the
commissioner, including:
             (1)  a domestic or foreign, stock or mutual, life,
health, or accident insurance company;
             (2)  a domestic or foreign, stock or mutual, fire or
casualty insurance company;
             (3)  a Mexican casualty company;
             (4)  a domestic or foreign Lloyd's plan insurer;
             (5)  a domestic or foreign reciprocal or interinsurance
exchange;
             (6)  a domestic or foreign fraternal benefit society;
             (7)  a domestic or foreign title insurance company;
             (8)  an attorney's title insurance company;
             (9)  a stipulated premium insurance company;
             (10)  a nonprofit legal service corporation;
             (11)  a health maintenance organization;
             (12)  a statewide mutual assessment company;
             (13)  a local mutual aid association;
             (14)  a local mutual burial association;
             (15)  an association exempt under Section 887.102
[Article 14.17];
             (16)  a nonprofit hospital, medical, or dental service
corporation, including a company subject to Chapter 842 [20];
             (17)  a county mutual insurance company; and
             (18)  a farm mutual insurance company.
       SECTION 2B.011.  Section 83.001(4), Insurance Code, is
amended to correct cross-references to read as follows:
             (4)  "Unfair act" means an unfair method of
competition, an unfair or deceptive act or practice, or an unfair
claim settlement practice as defined under Chapter 541 [Article
21.21] or 542 [21.21-2] or a rule adopted under either chapter
[article].
       SECTION 2B.012.  Section 83.002(a), Insurance Code, is
amended to correct cross-references to read as follows:
       (a)  This chapter applies to each company regulated by the
commissioner, including:
             (1)  a domestic or foreign, stock or mutual, life,
health, or accident insurance company;
             (2)  a domestic or foreign, stock or mutual, fire or
casualty insurance company;
             (3)  a Mexican casualty company;
             (4)  a domestic or foreign Lloyd's plan insurer;
             (5)  a domestic or foreign reciprocal or interinsurance
exchange;
             (6)  a domestic or foreign fraternal benefit society;
             (7)  a domestic or foreign title insurance company;
             (8)  an attorney's title insurance company;
             (9)  a stipulated premium insurance company;
             (10)  a nonprofit legal service corporation;
             (11)  a statewide mutual assessment company;
             (12)  a local mutual aid association;
             (13)  a local mutual burial association;
             (14)  an association exempt under Section 887.102
[Article 14.17];
             (15)  a nonprofit hospital, medical, or dental service
corporation, including a company subject to Chapter 842 [20];
             (16)  a county mutual insurance company; and
             (17)  a farm mutual insurance company.
       SECTION 2B.013. Section 83.051(a), Insurance Code, is
amended to correct cross-references to read as follows:
       (a)  The commissioner ex parte may issue an emergency cease
and desist order if:
             (1)  the commissioner believes that:
                   (A)  an authorized person engaging in the business
of insurance is:
                         (i)  committing an unfair act; or
                         (ii)  in a hazardous condition or a
hazardous financial condition under Section 843.406 [19, Texas
Health Maintenance Organization Act (Article 20A.19, Vernon's
Texas Insurance Code),] or Subchapter A, Chapter 404 [Article
1.32], as determined by the commissioner; or
                   (B)  an unauthorized person:
                         (i)  is engaging in the business of
insurance in violation of Chapter 101 or in violation of a rule
adopted under that chapter; or
                         (ii)  is engaging in the business of
insurance in violation of Chapter 101 and is committing an unfair
act; and
             (2)  it appears to the commissioner that the alleged
conduct:
                   (A)  is fraudulent;
                   (B)  is hazardous or creates an immediate danger
to the public safety; or
                   (C)  is causing or can be reasonably expected to
cause public injury that:
                         (i)  is likely to occur at any moment;
                         (ii)  is incapable of being repaired or
rectified; and
                         (iii)  has or is likely to have influence or
effect.
       SECTION 2B.014. Section 101.001(a), Insurance Code, is
amended to correct a cross-reference to read as follows:
       (a)  It is a state concern that many residents of this state
hold insurance policies issued by persons or insurers who are not
authorized to do insurance business in this state and who are not
qualified as eligible surplus lines insurers under Chapter 981
[Article 1.14-2]. These residents face often insurmountable
obstacles in asserting legal rights under the policies in foreign
forums under unfamiliar laws and rules of practice.
       SECTION 2B.015. Section 101.002(2), Insurance Code, is
amended to correct a cross-reference to read as follows:
             (2)  "Unfair act" means an unfair method of competition
or an unfair or deceptive act or practice as defined under Chapter
541 [Article 21.21] or a rule adopted under that chapter [article].
       SECTION 2B.016. Section 101.052, Insurance Code, is amended
to correct cross-references to read as follows:
       Sec. 101.052.  ADVERTISING RELATING TO MEDICARE SUPPLEMENT
BENEFIT PLANS [POLICIES].  With respect to a Medicare supplement
benefit plan [policy] authorized under Chapter 1652 [Article 3.74],
the business of insurance in this state includes using, creating,
publishing, mailing, or disseminating in this state an
advertisement relating to an act that constitutes the business of
insurance under Section 101.051 unless the advertisement is used,
created, published, mailed, or disseminated on behalf of an insurer
or person who:
             (1)  is authorized under this code to engage in the
business of insurance in this state;
             (2)  has actual knowledge of the content of the
advertisement;
             (3)  has authorized the advertisement to be used,
created, published, mailed, or disseminated on that insurer's or
person's behalf; and
             (4)  is clearly identified by name in the advertisement
as the sponsor of the advertisement.
       SECTION 2B.017. Section 101.101, Insurance Code, is amended
to correct a cross-reference to read as follows:
       Sec. 101.101.  DEFINITION.  In this subchapter, "person"
means an individual or entity that is a person for purposes of
Section 541.002 [2(a), Article 21.21].
       SECTION 2B.018. Section 101.203(c), Insurance Code, is
amended to correct cross-references to read as follows:
       (c)  This section does not apply to:
             (1)  a transaction in this state that:
                   (A)  involves a policy that:
                         (i)  is lawfully solicited, negotiated,
written, and delivered outside this state; and
                         (ii)  covers, at the time the policy is
issued, only subjects of insurance that are not resident, located,
or expressly to be performed in this state; and
                   (B)  takes place after the policy is issued; or
             (2)  surplus lines insurance procured through eligible
surplus lines insurers [carriers] as defined by Section 981.002
[Article 1.14-2].
       SECTION 2B.019. Section 101.301(b), Insurance Code, is
amended to correct cross-references to read as follows:
       (b)  This section does not apply to:
             (1)  a transaction described by Section 101.053(b)(4);
or
             (2)  surplus lines insurance procured through eligible
surplus lines insurers [carriers] as defined by Section 981.002
[Article 1.14-2].
PART C.  CROSS-REFERENCE UPDATES:  TITLE 3, INSURANCE CODE
SECTION 2C.001.  Section 252.002(b), Insurance Code, is
amended to correct a cross-reference to read as follows:
       (b)  The commissioner shall annually adjust the rate of
assessment of the maintenance tax so that the tax imposed that year,
together with any unexpended funds produced by the tax, produces
the amount the commissioner determines is necessary to pay the
expenses during the succeeding year of regulating all classes of
insurance specified under:
             (1)  Chapters 1807, 2001-2006, 2171, 6001, 6002, and
6003;
             (2)  Subchapter C, Chapter 5;
             (3)  Subchapter H, Chapter 544;
             (4)  Subchapter D, Chapter 1806;
             (5)  Section 403.002;
             (6)  Sections 417.007, 417.008, and 417.009,
Government Code; and
             (7)  Chapter 2154, Occupations Code.
       SECTION 2C.002.  Section 252.003, Insurance Code, is amended
to correct a cross-reference to read as follows:
       Sec. 252.003.  PREMIUMS SUBJECT TO TAXATION. An insurer
shall pay maintenance taxes under this chapter on the correctly
reported gross premiums collected from writing insurance in this
state against loss or damage by:
             (1)  bombardment;
             (2)  civil war or commotion;
             (3)  cyclone;
             (4)  earthquake;
             (5)  excess or deficiency of moisture;
             (6)  explosion as defined by Section 2002.006(b)
[Article 5.52];
             (7)  fire;
             (8)  flood;
             (9)  frost and freeze;
             (10)  hail;
             (11)  insurrection;
             (12)  invasion;
             (13)  lightning;
             (14)  military or usurped power;
             (15)  an order of a civil authority made to prevent the
spread of a conflagration, epidemic, or catastrophe;
             (16)  rain;
             (17)  riot;
             (18)  the rising of the waters of the ocean or its
tributaries;
             (19)  smoke or smudge;
             (20)  strike or lockout;
             (21)  tornado;
             (22)  vandalism or malicious mischief;
             (23)  volcanic eruption;
             (24)  water or other fluid or substance resulting from
the breakage or leakage of sprinklers, pumps, or other apparatus
erected for extinguishing fires, water pipes, or other conduits or
containers;
             (25)  weather or climatic conditions; or
             (26)  windstorm.
       SECTION 2C.003.  Section 253.002(b), Insurance Code, is
amended to correct a cross-reference to read as follows:
       (b)  The commissioner shall annually adjust the rate of
assessment of the maintenance tax so that the tax imposed that year,
together with any unexpended funds produced by the tax, produces
the amount the commissioner determines is necessary to pay the
expenses during the succeeding year of regulating all classes of
insurance specified under Section 253.003 [Subchapter B, Chapter
5].
       SECTION 2C.004.  Section 253.003, Insurance Code, is amended
to correct a cross-reference to read as follows:
       Sec. 253.003.  PREMIUMS SUBJECT TO TAXATION. An insurer
shall pay maintenance taxes under this chapter on the correctly
reported gross premiums from writing a class of insurance specified
under:
             (1)  Chapters 2008, 2251, and 2252;
             (2)  Subchapter B, Chapter 5;
             (3)  Subchapter C, Chapter 1806;
             (4)  Subchapter A, Chapter 2301; and
             (5)  Subtitle B, Title 10.
       SECTION 2C.005.  Section 255.003(a), Insurance Code, is
amended to correct a cross-reference to read as follows:
       (a)  An insurer shall pay maintenance taxes under this
chapter on the correctly reported gross workers' compensation
insurance premiums from writing workers' compensation insurance in
this state, including the modified annual premium of a policyholder
that purchases an optional deductible plan under Subchapter E,
Chapter 2053 [Article 5.55C].
       SECTION 2C.006.  Section 256.002(b), Insurance Code, is
amended to correct a cross-reference to read as follows:
       (b)  The commissioner shall annually adjust the rate of
assessment of the maintenance tax so that the tax imposed that year,
together with any unexpended funds produced by the tax, produces
the amount the commissioner determines is necessary to pay the
expenses during the succeeding year of regulating all classes of
insurance specified under Chapter 2101 [Subchapter K, Chapter 5].
       SECTION 2C.007.  Section 256.003, Insurance Code, is amended
to correct a cross-reference to read as follows:
       Sec. 256.003.  PREMIUMS SUBJECT TO TAXATION. An insurer
shall pay maintenance taxes under this chapter on the correctly
reported gross premiums from writing a class of insurance specified
under Chapter 2101 [Subchapter K, Chapter 5].
       SECTION 2C.008.  Section 261.003(b), Insurance Code, is
amended to correct a cross-reference to read as follows:
       (b)  The commissioner shall annually adjust the rate of
assessment of the maintenance tax so that the tax imposed that year,
together with any unexpended funds produced by the tax, produces
the amount the commissioner determines is necessary to pay the
expenses during the succeeding year of regulating all classes of
insurance specified under Chapter 2204 [Article 1.14-3].
       SECTION 2C.009.  Section 261.004, Insurance Code, is amended
to correct a cross-reference to read as follows:
       Sec. 261.004.  PREMIUMS SUBJECT TO TAXATION. The exchange
shall pay maintenance taxes under this chapter on the correctly
reported gross premiums paid through the exchange on all classes of
insurance specified under Chapter 2204 [Article 1.14-3].
PART D.  CROSS-REFERENCE UPDATES:  TITLE 5, INSURANCE CODE
       SECTION 2D.001.  Section 501.158, Insurance Code, is amended
to correct cross-references to read as follows:
       Sec. 501.158.  CONFIDENTIALITY REQUIREMENTS.
Confidentiality requirements applicable to examination reports
under Sections 401.105 and 401.106 [Article 1.18] and to the
commissioner under Section 441.201 [3A, Article 21.28-A,] apply to
the public counsel.
       SECTION 2D.002.  Section 501.204(a), Insurance Code, is
amended to correct a cross-reference and to conform more closely to
the source law from which the section is derived to read as follows:
       (a)  This section applies to each insurer authorized to
engage in business in this state under:
             (1)  [Chapter 25;
             [(2)] Chapter 841;
             (2) [(3)]  Chapter 842;
             (3)  Section 1367.053, Subchapter A, Chapter 1452,
Subchapter B, Chapter 1507, Chapter 222, 251, or 258, as applicable
to a health maintenance organization, [(4)] Chapter 843, Chapter
1271, or Chapter 1272;
             (4) [(5)]  Chapter 882;
             (5) [(6)]  Chapter 884;
             (6) [(7)]  Chapter 885;
             (7) [(8)]  Chapter 887;
             (8) [(9)]  Chapter 888;
             (9) [(10)]  Chapter 961;
             (10)  Chapter 962;
             (11)  Chapter 982;
             (12)  Subchapter B, Chapter 1103;
             (13)  Subchapter A, Chapter 1104;
             (14)  Chapter 1201, or a provision listed in Section
1201.005;
             (15)  Chapter 1551;
             (16)  Chapter 1578; or
             (17)  Chapter 1601.
       SECTION 2D.003.  Sections 523.051(a) and (c), Insurance
Code, are amended to correct a cross-reference to read as follows:
       (a)  The market assistance program is a voluntary program
designed to assist applicants for insurance and insureds in this
state in obtaining residential property insurance coverage in
underserved areas. The commissioner by rule shall designate
underserved areas using the standards described by Section 2004.002
[1, Article 5.35-3].
       (c)  The market assistance program may not provide
assistance regarding windstorm and hail insurance coverage for a
risk eligible for that coverage under Chapter 2210 [Article 21.49].
       SECTION 2D.004.  Section 523.202(b), Insurance Code, is
amended to correct a cross-reference to read as follows:
       (b)  After each review, the executive committee shall report
to the commissioner regarding:
             (1)  the need to continue operating the voluntary
market assistance program;
             (2)  the need to establish a mandatory market
assistance program;
             (3)  the need to establish a FAIR (Fair Access to
Insurance Requirements) Plan under Chapter 2211 [Article 21.49A];
or
             (4)  other recommendations the executive committee
considers appropriate.
       SECTION 2D.005.  Section 541.005(a), Insurance Code, is
amended to correct cross-references to read as follows:
       (a)  A risk retention group or purchasing group described by
Subchapter B, Chapter 2201, or [, as those terms are defined by]
Section 2201.251 that is [2, Article 21.54,] not chartered in this
state may not engage in a trade practice in this state that is
defined as unlawful under this chapter.
       SECTION 2D.006.  Section 541.454(a), Insurance Code, is
amended to correct cross-references to read as follows:
       (a)  Civil penalties, premium refunds, judgments,
compensatory judgments, individual recoveries, orders, class
action awards, costs, damages, or attorney's fees assessed or
awarded under this chapter:
             (1)  may be paid only from the capital or surplus funds
of the offending insurer; and
             (2)  may not take precedence over, be in priority to, or
in any other manner apply to:
                   (A)  Chapter 462 or 463 [Article 21.28-C or
21.28-D] or any other insurance guaranty act; or
                   (B)  Chapter 422 [Article 21.39-A].
       SECTION 2D.007.  Section 542.052, Insurance Code, is amended
to correct a cross-reference to read as follows:
       Sec. 542.052.  APPLICABILITY OF SUBCHAPTER. This subchapter
applies to any insurer authorized to engage in business as an
insurance company or to provide insurance in this state, including:
             (1)  a stock life, health, or accident insurance
company;
             (2)  a mutual life, health, or accident insurance
company;
             (3)  a stock fire or casualty insurance company;
             (4)  a mutual fire or casualty insurance company;
             (5)  a Mexican casualty insurance company;
             (6)  a Lloyd's plan;
             (7)  a reciprocal or interinsurance exchange;
             (8)  a fraternal benefit society;
             (9)  a stipulated premium company;
             (10)  a nonprofit legal services corporation;
             (11)  a statewide mutual assessment company;
             (12)  a local mutual aid association;
             (13)  a local mutual burial association;
             (14)  an association exempt under Section 887.102;
             (15)  a nonprofit hospital, medical, or dental service
corporation, including a corporation subject to Chapter 842;
             (16)  a county mutual insurance company;
             (17)  a farm mutual insurance company;
             (18)  a risk retention group;
             (19)  a purchasing group;
             (20)  an eligible surplus lines insurer; and
             (21)  except as provided by Section 542.053(b), a
guaranty association operating under Chapter 462 or 463 [Article
21.28-C or 21.28-D].
       SECTION 2D.008.  Sections 542.053(a) and (b), Insurance
Code, are amended to correct cross-references to read as follows:
       (a)  This subchapter does not apply to:
             (1)  workers' compensation insurance;
             (2)  mortgage guaranty insurance;
             (3)  title insurance;
             (4)  fidelity, surety, or guaranty bonds;
             (5)  marine insurance as defined by Section 1807.001
[Article 5.53]; or
             (6)  a guaranty association created and operating under
Chapter 2602.
       (b)  A guaranty association operating under Chapter 462 or
463 [Article 21.28-C or 21.28-D] is not subject to the damage
provisions of Section 542.060.
       SECTION 2D.009.  Section 542.102(b), Insurance Code, is
amended to correct a cross-reference to read as follows:
       (b)  This section does not apply to a workers' compensation
insurance policy subject to Section 2051.151 [Article 5.65A].
       SECTION 2D.010.  Section 542.152, Insurance Code, is amended
to correct a cross-reference to read as follows:
       Sec. 542.152.  EXCEPTION. This subchapter does not apply
to:
             (1)  a casualty insurance policy that requires the
insured's consent to settle a claim against the insured;
             (2)  fidelity, surety, or guaranty bonds; or
             (3)  marine insurance as defined by Section 1807.001
[Article 5.53].
       SECTION 2D.011.  Section 544.301(1), Insurance Code, is
amended to correct cross-references to read as follows:
             (1)  "Insurer" means an insurance company, reciprocal
or interinsurance exchange, mutual insurance company, capital
stock company, county mutual insurance company, farm mutual
insurance company, Lloyd's plan, or other legal entity authorized
to write residential property insurance in this state. The term
includes an affiliate, as described by Section 823.003(a), if that
affiliate is authorized to write and is writing residential
property insurance in this state. The term does not include:
                   (A)  an eligible surplus lines insurer regulated
under Chapter 981;
                   (B)  the Texas Windstorm Insurance Association
under Chapter 2210 [Article 21.49]; or
                   (C)  the FAIR Plan Association under Chapter 2211
[Article 21.49A].
       SECTION 2D.012.  Section 551.001, Insurance Code, is amended
to correct cross-references by amending Subsection (a) and adding
Subsection (a-1) to read as follows:
       (a)  The commissioner may, as necessary, adopt and enforce
reasonable rules, including notice requirements, relating to the
cancellation and nonrenewal of any insurance policy regulated by
the department under:
             (1)  Chapter 5;
             (2)  Chapter 1804, 1805, 2171, or 2301; or
             (3)  Subtitle C, D, E, or F, Title 10[, other than:
             [(1)a policy subject to Subchapter B or C; or
             [(2)  a marine insurance policy other than inland
marine].
       (a-1)  Notwithstanding Subsection (a), Subsection (a) does
not apply to:
             (1)  an insurance policy subject to Subchapter B or C of
this chapter; or
             (2)  a marine insurance policy other than inland
marine.
       SECTION 2D.013.  Sections 551.107(b) and (e), Insurance
Code, are amended to correct cross-references to read as follows:
       (b)  A claim under this section does not include a claim:
             (1)  resulting from a loss caused by natural causes;
             (2)  that is filed but is not paid or payable under the
policy; or
             (3)  that an insurer is prohibited from using under
Section 544.353 [3, Article 5.35-4].
       (e)  An insurer may notify an insured who has filed two
claims in a period of less than three years that the insurer may
refuse to renew the policy if the insured files a third claim during
the three-year period. If the insurer does not notify the insured
in accordance with this subsection, the insurer may not refuse to
renew the policy because of claims. The notice form must:
             (1)  list the policyholder's claims; and
             (2)  contain the sentence: "The filing by you of
another claim, except for a claim resulting from a loss caused by
natural causes, a claim filed but not paid or payable under the
policy under which it was filed, or an appliance-related claim that
we are prohibited from using under Section 544.353 [3, Article
5.35-4], Texas Insurance Code, could cause us to refuse to renew
your policy."
       SECTION 2D.014.  Section 553.004(a), Insurance Code, is
amended to correct a cross-reference to read as follows:
       (a)  If the commissioner considers it necessary, the
commissioner may initiate an examination of an insurer under
Sections 401.051, 401.052, and 401.054-401.062 [Article 1.15].
       SECTION 2D.015.  Section 558.001, Insurance Code, is amended
to correct a cross-reference to read as follows:
       Sec. 558.001.  DEFINITION. In this chapter, "insurer" means
an insurance company or other entity authorized to engage in the
business of insurance in this state. The term includes:
             (1)  a stock life, health, or accident insurance
company;
             (2)  a mutual life, health, or accident insurance
company;
             (3)  a stock fire or casualty insurance company;
             (4)  a mutual fire or casualty insurance company;
             (5)  a Mexican casualty insurance company;
             (6)  a farm mutual insurance company;
             (7)  a county mutual insurance company;
             (8)  a Lloyd's plan;
             (9)  a reciprocal or insurance exchange;
             (10)  a fraternal benefit society;
             (11)  a stipulated premium company;
             (12)  a nonprofit legal services corporation;
             (13)  a statewide mutual assessment company;
             (14)  a local mutual aid association;
             (15)  a local mutual burial association;
             (16)  an association exempt under Section 887.102;
             (17)  a nonprofit hospital, medical, or dental service
corporation, including a corporation subject to Chapter 842;
             (18)  a risk retention group;
             (19)  a purchasing group;
             (20)  an eligible surplus lines insurer; and
             (21)  a guaranty association operating under Chapter
462 or 463 [Article 21.28-C or 21.28-D].
       SECTION 2D.016.  Section 558.002(c), Insurance Code, is
amended to correct cross-references to read as follows:
       (c)  A guaranty association shall promptly refund any
unearned premium as described by Subchapter E, Chapter 462 [Section
5(8), Article 21.28-C], or Sections 463.003(9) [5(10)] and 463.259
[8(n), Article 21.28-D].
       SECTION 2D.017.  Section 706.001(a), Insurance Code, is
amended to correct a cross-reference to read as follows:
       (a)  The definitions adopted under Sections 2251.002 and
2301.002 and the terms described by Sections 2251.003 and 2301.003
[Article 5.13-2] apply to this chapter.
       SECTION 2D.018.  Section 706.004, Insurance Code, is amended
to correct a cross-reference to read as follows:
       Sec. 706.004.  RATES AND FORMS. Notwithstanding any other
law, rates and forms for insurance coverage issued under this
chapter are governed by:
             (1)  Subchapters A-E, Chapter 2251;
             (2)  Subchapter A, Chapter 2301; and
             (3)  Article 5.13-2.
PART E.  CROSS-REFERENCE UPDATES:  TITLE 6, INSURANCE CODE
SECTION 2E.001.  Section 802.056, Insurance Code, is amended
to correct cross-references to read as follows:
       Sec. 802.056.  STATUS OF REPORTS AND OTHER INFORMATION.  A
report or any other information resulting from the collection,
review, analysis, and distribution of information developed from
the filing of annual statement convention blanks and provided to
the department by the National Association of Insurance
Commissioners is considered part of the process of examination of
insurance companies under this code, including Chapters 86 and 401 
[Articles 1.15-1.19].
       SECTION 2E.002.  Section 803.009, Insurance Code, is amended
to correct cross-references to read as follows:
       Sec. 803.009.  CONFLICTING PROVISIONS.  This chapter
prevails over a conflicting provision of any other law of this
state, including:
             (1)  Chapters 221, 222, and 223;
             (2)  Sections 401.151, 401.152, 401.155, and 401.156;
and
             (3)  Section 171.0525, Tax Code [Articles 1.16, 4.10,
4.11, and 9.59].
       SECTION 2E.003.  Section 804.104, Insurance Code, is amended
to correct a cross-reference to read as follows:
       Sec. 804.104.  RISK RETENTION GROUP NOT CHARTERED IN THIS
STATE.  A risk retention group that is not chartered but that is
registered in this state under Section 2201.152 [4(b)(3), Article
21.54], must designate the commissioner as its agent for service of
process and receipt of legal documents.
       SECTION 2E.004.  Section 804.201(a), Insurance Code, is
amended to correct a cross-reference to read as follows:
       (a)  Process served by serving the commissioner under this
chapter must be directed to the defendant and include:
             (1)  for an unauthorized person or insurer, the name
and address of the person or insurer to be served;
             (2)  for a risk retention group, the name and address of
the group to be served;
             (3)  for a surplus lines insurer, the name and address
of the insurer to be served;
             (4)  for an unincorporated association, trust, or other
organization formed under Chapter 1505 [Article 3.71], the name and
address of the association, trust, or organization; or
             (5)  for an authorized company, the name and address of
the company as it appears in the department records.
       SECTION 2E.005.  Section 822.056(e), Insurance Code, is
amended to correct a cross-reference to read as follows:
       (e)  If all of the authorized shares of stock without par
value are not subscribed and paid for when the charter is granted or
the amendment is filed, respectively, the insurance company shall
file with the department a certificate authenticated by a majority
of the directors stating the number of shares without par value
issued and the consideration received for those shares. An
insurance company may issue and dispose of those remaining
authorized shares for money or an instrument authorized for minimum
capital under:
             (1)  a provision of Subchapter B, Chapter 424, other
than Section 424.052, 424.072, or 424.073; and
             (2)  Section 822.204 [and Article 2.10].
       SECTION 2E.006.  Sections 822.061(a) and (b), Insurance
Code, are amended to correct a cross-reference to read as follows:
       (a)  On receipt of a charter fee in the amount determined
under Chapter 202 [Article 4.07], the commissioner shall examine
the articles of incorporation filed with the department under
Section 822.060 and any certificate filed under Section
822.057(a)(4).
       (b)  If the commissioner approves the articles of
incorporation and, if applicable, the certificate filed under
Section 822.057(a)(4), the commissioner shall certify and file the
approved documents with the department records and, on receipt of a
fee in the amount determined under Chapter 202 [Article 4.07], the
commissioner shall issue a certified copy of the charter to the
incorporators.
       SECTION 2E.007.  Section 822.155, Insurance Code, is amended
to correct a cross-reference to read as follows:
       Sec. 822.155.  APPLICATION FOR AMENDMENT OF CHARTER.  A
domestic insurance company may amend its charter by paying to the
commissioner a fee in the amount determined under Chapter 202 
[Article 4.07] and by filing with the department:
             (1)  an application for a charter amendment on the form
and containing the information prescribed by the commissioner; and
             (2)  the company's proposed amendment.
       SECTION 2E.008.  Sections 822.158(a) and (e), Insurance
Code, are amended to correct cross-references to read as follows:
       (a)  Not later than the 60th day after the date the
application under Section 822.155 is filed, the commissioner shall
determine whether:
             (1)  the proposed capital structure of the insurance
company meets the requirements of this code;
             (2)  the officers, directors, and managing head of the
insurance company have sufficient insurance experience, ability,
standing, and good record to make success of the company probable;
             (3)  the applicants are acting in good faith;
             (4)  if the proposed amendment relates to a diminution
of the insurance company's charter powers with respect to the kinds
of insurance business in which the company may be engaged, all
liabilities incidental to the exercise of the powers to be
eliminated have been terminated or wholly reinsured; and
             (5)  the property involved in an increase of capital or
surplus, or both, is:
                   (A)  properly valued; and
                   (B)  in the form authorized by the following
provisions [Section 822.204 and Article 2.10], to the extent those
provisions apply:
                         (i)  Subchapter B, Chapter 424, other than
Sections 424.052, 424.072, and 424.073; and
                         (ii)  Section 822.204.
       (e)  On approval of a certificate required under Section
822.156 and receipt of a fee in the amount determined under Chapter
202 [Article 4.07], the commissioner shall issue to the directors a
certified copy of an amendment authorizing the issuance of shares
of stock without par value that is filed under this section. The
amendment is effective on issuance of the certified copy of the
amendment.
       SECTION 2E.009.  Section 822.211, Insurance Code, is amended
to correct cross-references to read as follows:
       Sec. 822.211.  ACTION OF COMMISSIONER WHEN CAPITAL OR
SURPLUS REQUIREMENTS NOT SATISFIED.  If an insurance company does
not comply with the capital and surplus requirements of this
chapter, the commissioner may enter an order prohibiting the
company from writing new business and may:
             (1)  place the company under state supervision or
conservatorship;
             (2)  declare the company to be in a hazardous condition
as provided by Subchapter A, Chapter 404 [Article 1.32];
             (3)  declare the company to be impaired as provided by
Subchapter B, Chapter 404 [Section 5, Article 1.10]; or
             (4)  apply to the company any other applicable sanction
provided by this code.
       SECTION 2E.010.  Section 823.001(c), Insurance Code, is
amended to read as follows:
       (c)  The purpose of this chapter [article] is to promote the
public interest by:
             (1)  facilitating the achievement of the objectives
described by Subsection (a);
             (2)  requiring disclosure of pertinent information
relating to and approval of changes in control of an insurer;
             (3)  requiring disclosure and approval of material
transactions and relationships between the insurer and the
insurer's affiliates, including certain dividends to shareholders
paid by the insurer; and
             (4)  providing standards governing material
transactions between the insurer and the insurer's affiliates.
       SECTION 2E.011.  Section 823.353(a), Insurance Code, is
amended to correct a cross-reference to read as follows:
       (a)  Each registered insurer that complies with an order
under Section 823.351(a) shall pay the expense of the examination
in accordance with Sections 401.151, 401.152, 401.155, and 401.156 
[Article 1.16].
       SECTION 2E.012.  Section 823.451, Insurance Code, is amended
to correct cross-references to read as follows:
       Sec. 823.451.  RECEIVERSHIP.  If it appears to the
commissioner that a person's violation of this chapter so impairs
the financial condition of a domestic insurer as to threaten the
insurer's insolvency or make the further transaction of the
insurer's business hazardous to the insurer's policyholders or
creditors or the public, the commissioner may proceed under
Chapters 441 and 443 [Articles 21.28 and 21.28-A] to take
possession of the insurer's property and conduct the business of
the insurer.
       SECTION 2E.013.  Section 824.151(b), Insurance Code, is
amended to correct a cross-reference to read as follows:
       (b)  Except as provided by Section 824.152, the provisions of
Subchapter D, Chapter 425, [Article 3.39] that limit investments in
the corporate stock of another corporation do not apply to a
purchase made under this section.
       SECTION 2E.014.  Sections 824.152(d) and (g), Insurance
Code, are amended to correct a cross-reference to read as follows:
       (d)  A purchase, offer to purchase, tender offer, request to
purchase, or invitation to purchase shares in excess of the limits
imposed under Subchapter D, Chapter 425, [Article 3.39] may not be
made until it is filed with and approved by the commissioner in
accordance with Chapter 823.
       (g)  If the merger or consolidation does not take effect
within the period finally determined and extended by the
commissioner, the purchasing corporation must sell or otherwise
dispose of the purchased shares that exceed the investment
limitations imposed under Subchapter D, Chapter 425, [Article 3.39]
within six months of the final effective date.
       SECTION 2E.015.  Section 828.051, Insurance Code, is amended
to correct cross-references to read as follows:
       Sec. 828.051.  EXCEPTION TO LIMITATION ON PURCHASING SHARES
OF OTHER COMPANY.  Subchapters C and D, Chapter 425, [Articles 3.33
and 3.39] do not apply to a purchase or contract described by
Section 828.001 if all requirements of this subchapter are met.
       SECTION 2E.016.  Section 828.054, Insurance Code, is amended
to correct cross-references to read as follows:
       Sec. 828.054.  APPROVAL REQUIRED.  A purchase, offer to
purchase, tender offer, request to purchase, or invitation to
purchase shares in excess of the limits imposed under Subchapter C
or D, Chapter 425, [Article 3.33 or 3.39] may not be made until it is
filed with and approved by the commissioner in accordance with
Chapter 823.
       SECTION 2E.017.  Section 828.056(b), Insurance Code, is
amended to correct cross-references to read as follows:
       (b)  If the reinsurance agreement does not take effect within
the period finally determined and extended by the commissioner, the
purchasing company shall sell or otherwise dispose of the purchased
shares that exceed the investment limitations imposed under
Subchapter C or D, Chapter 425, [Article 3.33 or 3.39] within six
months of the final effective date.
       SECTION 2E.018.  Section 841.002, Insurance Code, is amended
to correct cross-references to read as follows:
       Sec. 841.002.  APPLICABILITY OF CHAPTER AND OTHER
LAW.  Except as otherwise expressly provided by this code, each
insurance company incorporated or engaging in business in this
state as a life insurance company, an accident insurance company, a
life and accident insurance company, a health and accident
insurance company, or a life, health, and accident insurance
company is subject to:
             (1)  this chapter;
             (2)  Chapter 3;
             (3)  Chapters 425 and 492; [and]
             (4) [(3)]  Title 7;
             (5)  Sections 1202.051, 1204.151, 1204.153, and
1204.154;
             (6)  Subchapter A, Chapter 1202, Subchapters A and F,
Chapter 1204, Subchapter A, Chapter 1273, Subchapters A, B, and D,
Chapter 1355, and Subchapter A, Chapter 1366;
             (7)  Subchapter A, Chapter 1507;
             (8)  Chapters 1203, 1210, 1251-1254, 1301, 1351, 1354,
1359, 1364, 1368, 1505, 1506, 1651, 1652, and 1701; and
             (9)  Chapter 177, Local Government Code.
       SECTION 2E.019.  Section 841.054(c), Insurance Code, is
amended to correct a cross-reference to read as follows:
       (c)  At the time of incorporation, the required capital and
surplus shall consist only of:
             (1)  United States currency;
             (2)  bonds of the United States, this state, or a county
or municipality of this state; or
             (3)  government insured mortgage loans that are
authorized by this chapter or Chapter 425 [3], with not more than 50
percent of the required capital invested in first mortgage real
property loans.
       SECTION 2E.020.  Section 841.058(a), Insurance Code, is
amended to correct a cross-reference to read as follows:
       (a)  To obtain a charter for a domestic insurance company,
the incorporators must pay to the department the charter fee in an
amount determined under Chapter 202 [Article 4.07] and file with
the department:
             (1)  an application for charter on the form and
containing the information prescribed by the commissioner;
             (2)  the company's articles of incorporation; and
             (3)  an affidavit made by two or more of the
incorporators that states that:
                   (A)  the minimum capital and surplus requirements
of Section 841.054 are satisfied;
                   (B)  the capital and surplus are the bona fide
property of the company; and
                   (C)  the information in the articles of
incorporation is true and correct.
       SECTION 2E.021.  Section 841.061(c), Insurance Code, is
amended to correct a cross-reference to read as follows:
       (c)  If the commissioner does not reject the application
under Subsection (b), the commissioner shall approve the
application. On approval of an application, the department shall
record the information required by Section 841.058 in records
maintained for that purpose. On receipt of a fee in the amount
determined under Chapter 202 [Article 4.07], the commissioner shall
provide to the incorporators a certified copy of the application,
articles of incorporation, and submitted affidavit.
       SECTION 2E.022.  Section 841.207, Insurance Code, is amended
to correct a cross-reference to read as follows:
       Sec. 841.207.  ACTIONS OF COMMISSIONER WHEN CAPITAL AND
SURPLUS REQUIREMENTS NOT SATISFIED.  If an insurance company does
not comply with the capital and surplus requirements of this
chapter, the commissioner may order the insurance company to cease
writing new business and may:
             (1)  place the insurance company under state
supervision or conservatorship;
             (2)  declare the insurance company to be in a hazardous
condition as provided by Subchapter A, Chapter 404 [Article 1.32];
             (3)  declare the insurance company to be impaired as
provided by Section 841.206; or
             (4)  apply to the insurance company any other
applicable sanction provided by this code.
       SECTION 2E.023.  Section 841.255(a), Insurance Code, is
amended to correct a cross-reference to read as follows:
       (a)  Not later than March 1 of each year, a domestic
insurance company shall:
             (1)  prepare a statement showing the condition of the
company on December 31 of the preceding year; and
             (2)  deliver the statement to the department
accompanied by a filing fee in the amount determined under Chapter
202 [Article 4.07].
       SECTION 2E.024.  Section 841.257, Insurance Code, is amended
to correct cross-references to read as follows:
       Sec. 841.257.  KINDS OF BUSINESS LIMITED.  An insurance
company authorized to engage in the business of insurance under
this chapter or in accordance with Section 982.051 may not accept a
risk or write an insurance policy in this state or any other state
or country other than:
             (1)  a life, accident, or health insurance policy;
             (2)  reinsurance under Sections 492.051(b) and (c) or
Chapter 493 [Article 5.75-1] by a life insurance company authorized
to engage in the business of insurance in this state; or
             (3)  reinsurance under Chapter 494 [Article 5.75-3] by
a domestic insurance company.
       SECTION 2E.025.  Section 842.201(c), Insurance Code, is
amended to correct a cross-reference to read as follows:
       (c)  The department shall charge a fee in an amount
determined under Chapter 202 [Article 4.07] for filing the
statement.
       SECTION 2E.026.  Section 842.209, Insurance Code, is amended
to correct cross-references to read as follows:
       Sec. 842.209.  EXAMINATIONS.  The following laws [Articles
1.15 and 1.16] apply to a group hospital service corporation:
             (1)  Subchapter A, Chapter 86; and
             (2)  Sections 401.051, 401.052, 401.054-401.062,
401.151, 401.152, 401.155, and 401.156.
       SECTION 2E.027.  Section 842.210, Insurance Code, is amended
to correct cross-references to read as follows:
       Sec. 842.210.  LIQUIDATION, REHABILITATION, OR CONSERVATION
OF GROUP HOSPITAL SERVICE CORPORATION.  The dissolution,
liquidation, rehabilitation, or conservation of a group hospital
service corporation is subject to Chapters 441 and 443 [Articles
21.28 and 21.28-A].
       SECTION 2E.028.  Section 842.253, Insurance Code, is amended
to correct a cross-reference to read as follows:
       Sec. 842.253.  POLICY, CERTIFICATE, AND APPLICATION
FORMS.  A policy, certificate, or application form used by a group
hospital service corporation is subject to Chapter 1701 [Article
3.42].
       SECTION 2E.029.  Sections 843.002(20), (28), and (30),
Insurance Code, are amended to correct cross-references to read as
follows:
             (20)  "Net worth" means the amount by which total
liabilities, excluding liability for subordinated debt issued in
compliance with Chapter 427 [Article 1.39], is exceeded by total
admitted assets.
             (28)  "Uncovered expenses" means the estimated amount
of administrative expenses and the estimated cost of health care
services that are not guaranteed, insured, or assumed by a person
other than the health maintenance organization. The term does not
include the cost of health care services if the physician or
provider agrees in writing that an enrollee is not liable,
assessable, or in any way subject to making payment for the services
except as described in the evidence of coverage issued to the
enrollee under Chapter 1271 [Article 20A.09]. The term includes
any amount due on loans in the next calendar year unless the amount
is specifically subordinated to uncovered medical and health care
expenses or the amount is guaranteed by a sponsoring organization.
             (30)  "Delegated entity" means an entity, other than a
health maintenance organization authorized to engage in business
under this chapter, that by itself, or through subcontracts with
one or more entities, undertakes to arrange for or provide medical
care or health care to an enrollee in exchange for a predetermined
payment on a prospective basis and that accepts responsibility for
performing on behalf of the health maintenance organization a
function regulated by this chapter, Section 1367.053, Subchapter A,
Chapter 1452, Subchapter B, Chapter 1507, Chapter 222, 251, or 258,
as applicable to a health maintenance organization, or Chapter 1271
or 1272 [or Chapter 20A]. The term does not include:
                   (A)  an individual physician; or
                   (B)  a group of employed physicians, practicing
medicine under one federal tax identification number, whose total
claims paid to providers not employed by the group constitute less
than 20 percent of the group's total collected revenue computed on a
calendar year basis.
       SECTION 2E.030.  Section 843.006(a), Insurance Code, is
amended to correct a cross-reference to read as follows:
       (a)  Except as provided by Subsection (b), each application,
filing, and report required under this chapter, Section 1367.053,
Subchapter A, Chapter 1452, Subchapter B, Chapter 1507, Chapter
222, 251, or 258, as applicable to a health maintenance
organization, or Chapter 1271 or 1272 [or Chapter 20A] is a public
document.
       SECTION 2E.031.  Section 843.007(a), Insurance Code, is
amended to correct a cross-reference to read as follows:
       (a)  Any information relating to the diagnosis, treatment,
or health of an enrollee or applicant obtained by a health
maintenance organization from the enrollee or applicant or from a
physician or provider shall be held in confidence and may not be
disclosed to any person except:
             (1)  to the extent necessary to accomplish the purposes
of this chapter or:
                   (A)  Section 1367.053;
                   (B)  Subchapter A, Chapter 1452;
                   (C)  Subchapter B, Chapter 1507;
                   (D)  Chapter 222, 251, or 258, as applicable to a
health maintenance organization; or
                   (E)  Chapter 1271 or 1272 [Chapter 20A];
             (2)  with the express consent of the enrollee or
applicant;
             (3)  in compliance with a statute or court order for the
production or discovery of evidence; or
             (4)  in the event of a claim or litigation between the
enrollee or applicant and the health maintenance organization in
which the information is pertinent.
       SECTION 2E.032.  Section 843.008, Insurance Code, is amended
to correct cross-references to read as follows:
       Sec. 843.008.  COSTS OF ADMINISTERING HEALTH MAINTENANCE
ORGANIZATION LAWS.  Money collected under this chapter and
Chapters 222, 251, and 258, as applicable to a health maintenance
organization, [Article 20A.33] must be sufficient to administer
this chapter and:
             (1)  Section 1367.053;
             (2)  Subchapter A, Chapter 1452;
             (3)  Subchapter B, Chapter 1507;
             (4)  Chapters 222, 251, and 258, as applicable to a
health maintenance organization; and
             (5)  Chapters 1271 and 1272 [Chapter 20A].
       SECTION 2E.033.  Sections 843.051(a), (b), and (e),
Insurance Code, are amended to correct cross-references to read as
follows:
       (a)  Except to the extent that the commissioner determines
that the nature of health maintenance organizations, health care
plans, or evidences of coverage renders a provision of the
following laws clearly inappropriate, Subchapter A, Chapter 542,
Subchapters D and E, Chapter 544, and Chapters 541, 543, and 547 
[Articles 21.21, 21.21A, 21.21-2, 21.21-5, and 21.21-6, as added by
Chapter 522, Acts of the 74th Legislature, Regular Session, 1995,
and the Unauthorized Insurers False Advertising Process Act
(Article 21.21-1, Vernon's Texas Insurance Code)] apply to:
             (1)  health maintenance organizations that offer
basic, limited, and single health care coverages;
             (2)  basic, limited, and single health care plans; and
             (3)  evidences of coverage under basic, limited, and
single health care plans.
       (b)  A health maintenance organization is subject to:
             (1)  Chapter 402 [Section 3B, Article 3.51-6];
             (2)  Chapter 827 and is an authorized insurer for
purposes of that chapter; and
             (3)  Subchapter G, Chapter 1251, and Section 1551.064 
[Article 21.49-8].
       (e)  Except for Chapter 251, as applicable to a third-party
administrator, and Chapters 259, 4151, and 4201 [Articles 21.07-6
and 21.58A], insurance laws and group hospital service corporation
laws do not apply to a physician or provider. Notwithstanding this
subsection, a physician or provider who conducts a utilization
review during the ordinary course of treatment of patients under a
joint or delegated review agreement with a health maintenance
organization on services provided by the physician or provider is
not required to obtain certification under Subchapter C, Chapter
4201 [Section 3, Article 21.58A].
       SECTION 2E.034.  Section 843.071(b), Insurance Code, is
amended to correct a cross-reference to read as follows:
       (b)  A person may not use "health maintenance organization"
or "HMO" in the course of operation unless the person:
             (1)  complies with this chapter and:
                   (A)  Section 1367.053;
                   (B)  Subchapter A, Chapter 1452;
                   (C)  Subchapter B, Chapter 1507;
                   (D)  Chapters 222, 251, and 258, as applicable to
a health maintenance organization; and
                   (E)  Chapters 1271 and 1272 [Chapter 20A]; and
             (2)  holds a certificate of authority under this
chapter.
       SECTION 2E.035.  Section 843.073(b), Insurance Code, is
amended to correct a cross-reference to read as follows:
       (b)  Except as provided by Section 843.101 or 843.318(a), a
physician or provider that employs or enters into a contractual
arrangement with a provider or group of providers to provide basic
or limited health care services or a single health care service is
subject to this chapter and the following provisions [Chapter 20A]
and is required to obtain a certificate of authority under this
chapter:
             (1)  Section 1367.053;
             (2)  Subchapter A, Chapter 1452;
             (3)  Subchapter B, Chapter 1507;
             (4)  Chapters 222, 251, and 258, as applicable to a
health maintenance organization; and
             (5)  Chapters 1271 and 1272.
       SECTION 2E.036.  Sections 843.078(j), (m), and (n),
Insurance Code, are amended to correct cross-references to read as
follows:
       (j)  An application for a certificate of authority must
include a description of the procedures and programs to be
implemented by the applicant to meet the quality of health care
requirements of this chapter and:
             (1)  Section 1367.053;
             (2)  Subchapter A, Chapter 1452;
             (3)  Subchapter B, Chapter 1507; and
             (4)  Chapters 1271 and 1272 [Chapter 20A].
       (m)  An application for a certificate of authority must
include documentation demonstrating that the applicant will comply
with Section 1271.005(c) [Article 20A.09Z].
       (n)  An application for a certificate of authority must
include any other information that the commissioner requires to
make the determinations required by this chapter and:
             (1)  Section 1367.053;
             (2)  Subchapter A, Chapter 1452;
             (3)  Subchapter B, Chapter 1507;
             (4)  Chapters 222, 251, and 258, as applicable to a
health maintenance organization; and
             (5)  Chapters 1271 and 1272 [Chapter 20A].
       SECTION 2E.037.  Section 843.084, Insurance Code, is amended
to correct a cross-reference to read as follows:
       Sec. 843.084.  DURATION OF CERTIFICATE OF AUTHORITY.  A
certificate of authority continues in effect:
             (1)  while the certificate holder meets the
requirements of this chapter and:
                   (A)  Section 1367.053;
                   (B)  Subchapter A, Chapter 1452;
                   (C)  Subchapter B, Chapter 1507;
                   (D)  Chapters 222, 251, and 258, as applicable to
a health maintenance organization; and
                   (E)  Chapters 1271 and 1272 [Chapter 20A]; or
             (2)  until the commissioner suspends or revokes the
certificate or the commissioner terminates the certificate at the
request of the certificate holder.
       SECTION 2E.038.  Section 843.107, Insurance Code, is amended
to correct a cross-reference to read as follows:
       Sec. 843.107.  INDEMNITY BENEFITS; POINT-OF-SERVICE
PROVISIONS.  A health maintenance organization may offer:
             (1)  indemnity benefits covering out-of-area emergency
care;
             (2)  indemnity benefits, in addition to those relating
to out-of-area and emergency care, provided through an insurer or
group hospital service corporation;
             (3)  a point-of-service plan under Subchapter A,
Chapter 1273 [Article 3.64]; or
             (4)  a point-of-service rider under Section 843.108.
       SECTION 2E.039.  Section 843.151, Insurance Code, is amended
to correct a cross-reference to read as follows:
       Sec. 843.151.  RULES.  The commissioner may adopt reasonable
rules as necessary and proper to:
             (1)  implement this chapter and Section 1367.053,
Subchapter A, Chapter 1452, Subchapter B, Chapter 1507, Chapters
222, 251, and 258, as applicable to a health maintenance
organization, and Chapters 1271 and 1272 [Chapter 20A], including
rules to:
                   (A)  prescribe authorized investments for a
health maintenance organization for all investments not otherwise
addressed in this chapter;
                   (B)  ensure that enrollees have adequate access to
health care services; and
                   (C)  establish minimum physician-to-patient
ratios, mileage requirements for primary and specialty care,
maximum travel time, and maximum waiting time for obtaining an
appointment; and
             (2)  meet the requirements of federal law and
regulations.
       SECTION 2E.040.  Section 843.152, Insurance Code, is amended
to correct a cross-reference to read as follows:
       Sec. 843.152.  SUBPOENA AUTHORITY.  In implementing this
chapter and the following provisions [Chapter 20A], the
commissioner may exercise subpoena authority in accordance with
Subchapter C, Chapter 36:
             (1)  Section 1367.053;
             (2)  Subchapter A, Chapter 1452;
             (3)  Subchapter B, Chapter 1507;
             (4)  Chapters 222, 251, and 258, as applicable to a
health maintenance organization; and
             (5)  Chapters 1271 and 1272.
       SECTION 2E.041.  Section 843.153, Insurance Code, is amended
to correct a cross-reference to read as follows:
       Sec. 843.153.  AUTHORITY TO CONTRACT.  In performing duties
under this chapter and the following provisions [Chapter 20A], the
commissioner may contract with a state agency or, after notice and
opportunity for hearing, with a qualified person to make
recommendations concerning determinations to be made by the
commissioner:
             (1)  Section 1367.053;
             (2)  Subchapter A, Chapter 1452;
             (3)  Subchapter B, Chapter 1507;
             (4)  Chapters 222, 251, and 258, as applicable to a
health maintenance organization; and
             (5)  Chapters 1271 and 1272.
       SECTION 2E.042.  Sections 843.155(b) and (c), Insurance
Code, are amended to correct cross-references to read as follows:
       (b)  The report shall:
             (1)  be verified by at least two principal officers;
             (2)  be in a form prescribed by the commissioner; and
             (3)  include:
                   (A)  a financial statement of the health
maintenance organization, including its balance sheet and receipts
and disbursements for the preceding calendar year, certified by an
independent public accountant;
                   (B)  the number of individuals enrolled during the
preceding calendar year, the number of enrollees as of the end of
that year, and the number of enrollments terminated during that
year;
                   (C)  updated financial projections for the next
calendar year of the type described in Section 843.078(e), until
the health maintenance organization has had a net income for 12
consecutive months; and
                   (D)  other information relating to the
performance of the health maintenance organization as necessary to
enable the commissioner to perform the commissioner's duties under:
                         (i)  this chapter;
                         (ii)  Section 1367.053;
                         (iii)  Subchapter A, Chapter 1452;
                         (iv)  Subchapter B, Chapter 1507;
                         (v)  Chapters 222, 251, and 258, as
applicable to a health maintenance organization; and
                         (vi)  Chapters 1271 and 1272 [and Chapter
20A].
       (c)  Sections 36.108 and 201.055 and Chapter 802 [and Article
1.11] apply to the annual report of a health maintenance
organization.
       SECTION 2E.043.  Sections 843.156(f), (h), and (i),
Insurance Code, are amended to correct cross-references to read as
follows:
       (f)  The commissioner may examine and use the records of a
health maintenance organization, including records of a quality of
care assurance program and records of a medical peer review
committee, as necessary to implement the purposes of this chapter,
Section 1367.053, Subchapter A, Chapter 1452, Subchapter B, Chapter
1507, Chapters 222, 251, and 258, as applicable to a health
maintenance organization, and Chapters 1271 and 1272 [and Chapter
20A], including commencement of an enforcement action under Section
843.461 or 843.462. Information obtained under this subsection is
confidential and privileged and is not subject to the public
information law, Chapter 552, Government Code, or to subpoena
except as necessary for the commissioner to enforce this chapter,
Section 1367.053, Subchapter A, Chapter 1452, Subchapter B, Chapter
1507, Chapter 222, 251, or 258, as applicable to a health
maintenance organization, or Chapter 1271 or 1272 [or Chapter 20A].
In this subsection, "medical peer review committee" has the meaning
assigned by Section 151.002, Occupations Code.
       (h)  Chapter 86, Section 401.101, and Subchapters B and D,
Chapter 401, [Articles 1.04A, 1.15, 1.16, and 1.19] apply to a
health maintenance organization, except to the extent that the
commissioner determines that the nature of the examination of a
health maintenance organization renders the applicability of those
provisions clearly inappropriate.
       (i)  Section 38.001, Section 81.003, and Chapter 82[, and
Article 1.12] apply to a health maintenance organization.
       SECTION 2E.044.  Section 843.157(a), Insurance Code, is
amended to correct cross-references to read as follows:
       (a)  The rehabilitation, liquidation, supervision, or
conservation of a health maintenance organization shall be treated
as the rehabilitation, liquidation, supervision, or conservation
of an insurer and be conducted under the supervision of the
commissioner under Chapter 441 or 443 [Article 21.28 or 21.28-A],
as appropriate.
       SECTION 2E.045.  Sections 843.204(b) and (c), Insurance
Code, are amended to correct cross-references to read as follows:
       (b)  In this chapter, Section 1367.053, Subchapter A,
Chapter 1452, Subchapter B, Chapter 1507, Chapters 222, 251, and
258, as applicable to a health maintenance organization, and
Chapters 1271 and 1272 [and Chapter 20A], a statement or item of
information is:
             (1)  considered to be untrue if the statement or item
does not conform to fact in any respect that is or may be
significant to an enrollee of, or person considering enrollment in,
a health care plan; and
             (2)  considered to be misleading, whether or not the
statement or item is literally untrue, if, in the total context in
which the statement is made or the item is communicated, the
statement or item may be reasonably understood by a reasonable
person who does not possess special knowledge regarding health care
coverage as indicating:
                   (A)  the inclusion of a benefit or advantage that
does not exist and that is of possible significance to an enrollee
of, or person considering enrollment in, a health care plan; or
                   (B)  the absence of an exclusion, limitation, or
disadvantage that does exist and that is of possible significance
to an enrollee of, or person considering enrollment in, a health
care plan.
       (c)  In this chapter, Section 1367.053, Subchapter A,
Chapter 1452, Subchapter B, Chapter 1507, Chapters 222, 251, and
258, as applicable to a health maintenance organization, and
Chapters 1271 and 1272 [and Chapter 20A], an evidence of coverage is
considered to be deceptive if the evidence of coverage, taken as a
whole and with consideration given to typography and format as well
as language, would cause a reasonable person who does not possess
special knowledge regarding health care plans and evidences of
coverage for health care plans to expect charges or benefits,
services, or other advantages that the evidence of coverage does
not provide or that the health care plan issuing the evidence of
coverage does not regularly make available for enrollees covered
under the evidence of coverage.
       SECTION 2E.046.  Sections 843.261(a), (c), and (d),
Insurance Code, are amended to correct cross-references to read as
follows:
       (a)  A health maintenance organization shall implement and
maintain an internal appeal system that:
             (1)  provides reasonable procedures for the resolution
of an oral or written appeal concerning dissatisfaction or
disagreement with an adverse determination; and
             (2)  includes procedures for notification, review, and
appeal of an adverse determination in accordance with Chapter 4201 
[Article 21.58A].
       (c)  When an enrollee, a person acting on behalf of an
enrollee, or an enrollee's provider of record expresses orally or
in writing any dissatisfaction or disagreement with an adverse
determination, the health maintenance organization or utilization
review agent shall:
             (1)  consider the expression of dissatisfaction or
disagreement as an appeal of the adverse determination; and
             (2)  review and resolve the appeal in accordance with
Chapter 4201 [Article 21.58A].
       (d)  A health maintenance organization may integrate its
appeal procedures related to adverse determinations with the
complaint and appeal procedures established by the health
maintenance organization under Section 843.251 and otherwise
governed by this subchapter only if the procedures related to
adverse determinations comply with this section and Chapter 4201 
[Article 21.58A].
       SECTION 2E.047.  Section 843.282(a), Insurance Code, is
amended to correct a cross-reference to read as follows:
       (a)  Any person, including a person who has attempted to
resolve a complaint through a health maintenance organization's
complaint system process and is dissatisfied with the resolution,
may submit a complaint to the department alleging a violation of:
             (1)  this chapter;
             (2)  Section 1367.053;
             (3)  Subchapter A, Chapter 1452;
             (4)  Subchapter B, Chapter 1507;
             (5)  Chapters 222, 251, and 258, as applicable to a  
health maintenance organization; or
             (6)  Chapter 1271 or 1272 [or Chapter 20A].
       SECTION 2E.048.  Section 843.301, Insurance Code, is amended
to correct a cross-reference to read as follows:
       Sec. 843.301.  PRACTICE OF MEDICINE NOT AFFECTED.  This
chapter, Section 1367.053, Subchapter A, Chapter 1452, Subchapter
B, Chapter 1507, Chapters 222, 251, and 258, as applicable to a
health maintenance organization, and Chapters 1271 and 1272 [and
Chapter 20A] do not:
             (1)  authorize any person, other than a licensed
physician or practitioner of the healing arts, acting within the
scope of the person's license, to engage directly or indirectly in
the practice of medicine or a healing art; or
             (2)  authorize any person to regulate, interfere with,
or intervene in any manner in the practice of medicine or a healing
art.
       SECTION 2E.049.  Section 843.337(e), Insurance Code, is
amended to correct a cross-reference to read as follows:
       (e)  Except as provided by Chapter 1213 [Article 21.52Z], a
physician or provider may, as appropriate:
             (1)  mail a claim by United States mail, first class, or
by overnight delivery service;
             (2)  submit the claim electronically;
             (3)  fax the claim; or
             (4)  hand deliver the claim.
       SECTION 2E.050.  Section 843.352, Insurance Code, is amended
to correct a cross-reference to read as follows:
       Sec. 843.352.  CONFLICT WITH OTHER LAW.  To the extent of
any conflict between this subchapter and Subchapter C, Chapter 1204 
[Article 21.52C], this subchapter controls.
       SECTION 2E.051.  Sections 843.407(a), (b), and (c),
Insurance Code, are amended to correct cross-references to read as
follows:
       (a)  In addition to all other remedies available by law, if
the commissioner believes that a health maintenance organization or
another person is insolvent or does not maintain the net worth
required under Sections 843.403, 843.4031, and 843.404, the
commissioner may bring an action in a Travis County district court
to be named receiver in accordance with Section 843.157 and Chapter
443 [Article 21.28].
       (b)  The court may:
             (1)  find that a receiver should take charge of the
assets of the health maintenance organization; and
             (2)  name the commissioner as the receiver of the
health maintenance organization in accordance with Section 843.157
and Chapter 443 [Article 21.28].
       (c)  The operations and business of a health maintenance
organization represent the business of insurance for purposes of
Section 843.157 and Chapters 441 and 443 [Articles 21.28 and
21.28-A].
       SECTION 2E.052.  Section 843.461(b), Insurance Code, is
amended to correct cross-references to read as follows:
       (b)  The commissioner may take an enforcement action listed
in Subsection (a) against a health maintenance organization if the
commissioner finds that the health maintenance organization:
             (1)  is operating in a manner that is:
                   (A)  significantly contrary to its basic
organizational documents or health care plan; or
                   (B)  contrary to the manner described in and
reasonably inferred from other information submitted under Section
843.078, 843.079, or 843.080;
             (2)  issues an evidence of coverage or uses a schedule
of charges for health care services that does not comply with the
requirements of Sections 843.346, 1271.001-1271.005, 1271.007,
1271.151, 1271.152, and 1271.156, and Subchapters B, C, E, F, and G,
Chapter 1271 [Article 20A.09];
             (3)  does not meet the requirements of Section
843.082(1);
             (4)  provides a health care plan that does not provide
or arrange for basic health care services, provides a limited
health care service plan that does not provide or arrange for the
plan's limited health care services, or provides a single health
care service plan that does not provide or arrange for a single
health care service;
             (5)  cannot fulfill its obligation to provide:
                   (A)  health care services as required under its
health care plan;
                   (B)  limited health care services as required
under its limited health care service plan; or
                   (C)  a single health care service as required
under its single health care service plan;
             (6)  is no longer financially responsible and may
reasonably be expected to be unable to meet its obligations to
enrollees or prospective enrollees;
             (7)  has not implemented the complaint system required
by Section 843.251 in a manner to resolve reasonably valid
complaints;
             (8)  has advertised or merchandised its services in an
untrue, misrepresentative, misleading, deceptive, or unfair manner
or a person on behalf of the health maintenance organization has
advertised or merchandised the health maintenance organization's
services in an untrue, misrepresentative, misleading, deceptive,
or untrue manner;
             (9)  would be hazardous to its enrollees if it
continued in operation;
             (10)  has not complied substantially with:
                   (A)  this chapter [or Chapter 20A] or a rule
adopted under this chapter; or
                   (B)  Section 1367.053, Subchapter A, Chapter
1452, Subchapter B, Chapter 1507, Chapter 222, 251, or 258, as
applicable to a health maintenance organization, or Chapter 1271 or
1272 or a rule adopted under one of those provisions [Chapter 20A];
or
             (11)  has not taken corrective action the commissioner
considers necessary to correct a failure to comply with this
chapter, any applicable provision of this code, or any applicable
rule or order of the commissioner not later than the 30th day after
the date of notice of the failure or within any longer period
specified in the notice and determined by the commissioner to be
reasonable.
       SECTION 2E.053.  Section 843.463, Insurance Code, is amended
to correct a cross-reference to read as follows:
       Sec. 843.463.  INJUNCTIONS.  If the commissioner believes
that a health maintenance organization or another person is
violating or has violated this chapter [or Chapter 20A] or a rule
adopted under this chapter or Section 1367.053, Subchapter A,
Chapter 1452, Subchapter B, Chapter 1507, Chapter 222, 251, or 258,
as applicable to a health maintenance organization, or Chapter 1271
or 1272 or a rule adopted under one of those provisions [Chapter
20A], the commissioner may bring an action in a Travis County
district court to enjoin the violation and obtain other relief the
court considers appropriate.
       SECTION 2E.054.  Section 843.464(a), Insurance Code, is
amended to correct a cross-reference to read as follows:
       (a)  A person, including an agent or officer of a health
maintenance organization, commits an offense if the person:
             (1)  wilfully violates this chapter or [Chapter 20A or]
a rule adopted under this chapter or Section 1367.053, Subchapter
A, Chapter 1452, Subchapter B, Chapter 1507, Chapter 222, 251, or
258, as applicable to a health maintenance organization, or Chapter
1271 or 1272 or a rule adopted under one of those provisions 
[Chapter 20A]; or
             (2)  knowingly makes a false statement with respect to
a report or statement required under this chapter or Section
1367.053, Subchapter A, Chapter 1452, Subchapter B, Chapter 1507,
Chapter 222, 251, or 258, as applicable to a health maintenance
organization, or Chapter 1271 or 1272 [Chapter 20A].
       SECTION 2E.055.  Section 845.051, Insurance Code, is amended
to correct a cross-reference to read as follows:
       Sec. 845.051.  STATEWIDE RURAL HEALTH CARE SYSTEM.  The
commissioner shall designate a single organization as the statewide
rural health care system. The system is authorized to sponsor,
arrange for the provision of, or provide health care services to
enrollees in programs in rural areas. The programs are not subject
to:
             (1)  a law requiring the coverage or the offer of
coverage for services by a particular health care provider under:
                   (A)  Chapter 62, Health and Safety Code;
                   (B)  Chapter 32, Human Resources Code;
                   (C)  a state-, county-, or local
government-sponsored indigent care initiative; or
                   (D)  a federal Medicare Plus Choice program; or
             (2)  Subchapters A-I, Chapter 1251, Subchapter A,
Chapter 1364, Subchapter A, Chapter 1366, or Section 1551.064 
[Article 3.51-6] under a state-, county-, or local
government-sponsored uninsured or indigent care initiative.
       SECTION 2E.056.  Section 846.003(b), Insurance Code, is
amended to correct cross-references to read as follows:
       (b)  A multiple employer welfare arrangement is subject to
the following laws:
             (1)  Subchapters C and D, Chapter 36;
             (2)  Section 38.001;
             (3)  Section 81.002;
             (4)  Chapter 82;
             (5)  Chapter 83;
             (6)  Chapter 86;
             (7)  Section 201.003;
             (8)  Sections 401.051, 401.052, 401.054-401.062,
401.151, 401.152, 401.155, and 401.156;
             (9)  Chapter 441;
             (10)  Chapter 443;
             (11)  Chapter 461;
             (12)  Section 521.005;
             (13)  Chapter 541;
             (14)  Chapter 701;
             (15)  Chapter 801;
             (16) [(7)]  Chapter 803;
             (17) [(8)]  Chapter 804;
             (18) [(9)]  Subchapter A, Chapter 805; and
             (19) [(10)]  Sections 841.259, 841.701-841.702, and
841.704-841.705[;
             [(11)Section 841.704;
             [(12)Section 841.259;
             [(13)Article 1.10D;
             [(14)Article 1.12;
             [(15)Article 1.13;
             [(16)Article 1.15;
             [(17)Article 1.16;
             [(18)Article 1.19;
             [(19)Article 1.35;
             [(20)Article 1.31;
             [(21)Article 3.56;
             [(22)Article 21.21;
             [(23)Article 21.28;
             [(24)Article 21.28A; and
             [(25)Article 21.28E].
       SECTION 2E.057.  Section 846.007(d), Insurance Code, is
amended to correct a cross-reference to read as follows:
       (d)  A multiple employer welfare arrangement may establish
premium discounts, rebates, or a reduction in otherwise applicable
copayments or deductibles in return for adherence to programs of
health promotion and disease prevention. A discount, rebate, or
reduction established under this subsection does not violate
Section 541.056(a) [4(8), Article 21.21].
       SECTION 2E.058.  Section 846.158(c), Insurance Code, is
amended to correct a cross-reference to read as follows:
       (c)  Each multiple employer welfare arrangement shall pay
the expenses of the examination as provided by Sections 401.151,
401.152, 401.155, and 401.156 [Article 1.16].
       SECTION 2E.059.  Section 846.202(a), Insurance Code, is
amended to correct a cross-reference to read as follows:
       (a)  In this section, "creditable coverage" has the meaning
assigned by Section 1205.004 [Section 3, Article 21.52G, as added
by Chapter 955, Acts of the 75th Legislature, Regular Session,
1997].
       SECTION 2E.060.  Sections 861.052(b) and (d), Insurance
Code, are amended to correct a cross-reference to read as follows:
       (b)  The incorporators shall file with the department:
             (1)  articles of incorporation for the general casualty
company;
             (2)  a charter fee in the amount determined under
Chapter 202 [Article 4.07]; and
             (3)  an affidavit, made by two or more of the
incorporators, that all of the general casualty company's stock is
subscribed in good faith and fully paid for.
       (d)  On receipt of a fee in the amount determined under
Chapter 202 [Article 4.07], the department shall provide the
incorporators with a certified copy of the articles of
incorporation.
       SECTION 2E.061.  Section 861.154, Insurance Code, is amended
to correct a cross-reference to read as follows:
       Sec. 861.154.  DIVIDENDS.  Except as authorized by Sections
403.001 and 403.051 [Article 21.31], the directors of a general
casualty company may not issue dividends.
       SECTION 2E.062.  Section 861.251(b), Insurance Code, is
amended to correct a cross-reference to read as follows:
       (b)  After incorporation and issuance of a certificate of
authority, a general casualty company shall invest the minimum
capital and surplus as provided by Section 822.204. The company
shall invest all other funds of the company in excess of the minimum
capital and surplus as provided by:
             (1)  a provision of Subchapter B, Chapter 424, other
than Section 424.052, 424.072, or 424.073; [Article 2.10] and
             (2)  Section 862.002.
       SECTION 2E.063.  Section 861.252(a), Insurance Code, is
amended to correct a cross-reference to read as follows:
       (a)  On granting of the charter to a general casualty
company, the company shall deposit with the comptroller $50,000 in:
             (1)  cash; or
             (2)  securities of the kind described by a provision of
Subchapter B, Chapter 424, other than Section 424.052, 424.072, or
424.073 [Article 2.10].
       SECTION 2E.064.  Section 861.254(h), Insurance Code, is
amended to correct a cross-reference to read as follows:
       (h)  Except as provided by Chapter 202 [Article 4.07], the
department shall charge a fee of $20 for filing the annual statement
required by this section. The comptroller shall collect the fee.
       SECTION 2E.065.  Section 861.257, Insurance Code, is amended
to correct cross-references to read as follows:
       Sec. 861.257.  EXAMINATION OF COMPANY.  A general casualty
company is subject to:
             (1)  Subchapter A, Chapter 86; and
             (2)  Sections 401.051, 401.052, 401.054-401.062,
401.151, 401.152, 401.155, and 401.156 [Articles 1.15 and 1.16].
       SECTION 2E.066.  Section 861.258(d), Insurance Code, is
amended to correct a cross-reference to read as follows:
       (d)  Subsection (b) does not apply to:
             (1)  real property occupied by buildings used in whole
or in part by a general casualty company in the transaction of
business;
             (2)  an interest in minerals or royalty reserved on the
sale of real property acquired under Sections 862.002(c)(1)-(3);
and
             (3)  investment real property acquired under Section
424.064 [Article 2.10(e)(11)].
       SECTION 2E.067.  Section 862.101(f), Insurance Code, is
amended to correct cross-references to read as follows:
       (f)  Reinsurance that is required or permitted by this
section must comply with:
             (1)  Subchapter A, Chapter 491;
             (2)  Sections 492.051(b) and (c); and
             (3)  Chapter 493 [Articles 5.75-1 and 21.72].
       SECTION 2E.068.  Section 862.151, Insurance Code, is amended
to correct a cross-reference to read as follows:
       Sec. 862.151.  REDUCTION OF CAPITAL STOCK AND PAR VALUE OF
SHARES.  (a)  If the minimum surplus of a fire, marine, or inland
marine insurance company is impaired in excess of the amount
permitted under Subchapter B, Chapter 404 [Section 5, Article
1.10], the commissioner may allow the company to amend its charter
as provided by Sections 822.157 and 822.158 to reduce the amount of
the company's capital stock and the par value of its shares in
proportion to the extent of the permitted amount of impairment.
       (b)  A company acting under Subsection (a):
             (1)  may not reduce the par value of its shares below
the sum computed under Section 822.055;
             (2)  may not deduct from the assets and property on hand
more than $125,000;
             (3)  shall retain the remainder of the assets and
property on hand as surplus assets;
             (4)  may not distribute any of the assets or property to
the shareholders; and
             (5)  may not reduce the capital stock or surplus of the
company to an amount less than the minimum capital and the minimum
surplus required by Sections 822.202, 822.210, and 822.211, subject
to Subchapter B, Chapter 404 [Section 5, Article 1.10].
       SECTION 2E.069.  Sections 862.152(a) and (b), Insurance
Code, are amended to correct a cross-reference to read as follows:
       (a)  This section applies to a fire, marine, or inland marine
insurance company that receives notice from the commissioner under
Subchapter B, Chapter 404 [Section 5, Article 1.10], to make good
within 60 days:
             (1)  any impairment of the company's required capital;
or
             (2)  the company's surplus.
       (b)  The company shall promptly call on its shareholders for
an amount necessary to make the company's capital and surplus equal
to the amount required by Sections 822.054 and 822.210, subject to
Subchapter B, Chapter 404 [Section 5, Article 1.10].
       SECTION 2E.070.  Section 862.153(a), Insurance Code, is
amended to correct a cross-reference to read as follows:
       (a)  If a shareholder of the insurance company who is given
notice under Section 862.152 does not pay the amount called for by
the company under that section, the company may:
             (1)  require the return of the original certificate of
stock held by the shareholder; and
             (2)  issue a new certificate for a number of shares that
the shareholder may be entitled to in the proportion that the value
of the funds of the company, computed without inclusion of any money
or other property paid by shareholders in response to the notice
under Section 862.152, bears to the total amount of the original
capital and the minimum surplus of the company required by Section
822.054 or 822.210, subject to Subchapter B, Chapter 404 [Section
5, Article 1.10].
       SECTION 2E.071.  Section 862.154(b), Insurance Code, is
amended to correct a cross-reference to read as follows:
       (b)  The insurance company shall sell any new stock created
under Subsection (a) for an amount sufficient to make up any
impairment of the company's required minimum capital and to make up
the surplus of the company as required by Section 822.054 or
822.210, subject to Subchapter B, Chapter 404 [Section 5, Article
1.10], but may not impair the capital of the company.
       SECTION 2E.072.  Section 881.006(b), Insurance Code, is
amended to correct a cross-reference to read as follows:
       (b)  Sections 201.001 and 201.002 apply [Article 1.31A
applies] to the fee.
       SECTION 2E.073.  Section 882.002, Insurance Code, is amended
to correct cross-references to read as follows:
       Sec. 882.002.  EXAMINATION OF COMPANY.  The following
provisions [Articles 1.15 and 1.16] apply to a mutual life
insurance company organized under this chapter:
             (1)  Subchapter A, Chapter 86; and
             (2)  Sections 401.051, 401.052, 401.054-401.062,
401.151, 401.152, 401.155, and 401.156.
       SECTION 2E.074.  Section 882.056(a), Insurance Code, is
amended to correct a cross-reference to read as follows:
       (a)  To obtain a charter for a mutual life insurance company
under this chapter, the incorporators must pay the charter fee in
the amount determined under Chapter 202 [Article 4.07] and file
with the department:
             (1)  an application for charter on the form and
including the information prescribed by the commissioner;
             (2)  the company's articles of incorporation; and
             (3)  an affidavit made by two or more of the
incorporators that states that:
                   (A)  the unencumbered surplus requirements of
Section 882.055 are satisfied;
                   (B)  the unencumbered surplus is the bona fide
property of the company; and
                   (C)  the information in the application and
articles of incorporation is true and correct.
       SECTION 2E.075.  Section 883.202(a), Insurance Code, is
amended to correct a cross-reference to read as follows:
       (a)  A domestic mutual insurance company that writes
fidelity and surety bond coverage shall maintain on deposit with
the comptroller cash or securities of the kind described by a
provision of Subchapter B, Chapter 424, other than Section 424.052,
424.072, or 424.073, [Article 2.10] in an amount equal to the amount
of cash or securities required of a domestic stock insurance
company.
       SECTION 2E.076.  Section 884.002(c), Insurance Code, is
amended to correct cross-references to read as follows:
       (c)  The following provisions of this code apply to a
stipulated premium company:
             (1)  Article [1.15;
             [(2)Article 1.15A;
             [(3)Article 1.16;
             [(4)Article 1.19;
             [(5)Article 1.32;
             [(6)Article 3.10;
             [(7)Article 3.39;
             [(8)Article 3.40;
             [(9)Article 21.07-7;
             [(10)Article 21.21;
             [(11)Article 21.28;
             [(12)Article 21.32;
             [(13)Article 21.39;
             [(14)Article] 21.47;
             (2) [(15)]  Section 38.001;
             (3)  Chapter 86;
             (4)  Subchapter A, Chapter 401;
             (5)  Sections 401.051, 401.052, 401.054-401.062,
401.151, 401.152, 401.155, and 401.156;
             (6)  Sections 403.001, 403.052, and 403.102;
             (7)  Subchapter A, Chapter 404;
             (8)  Section 421.001;
             (9)  Subchapter D, Chapter 425;
             (10)  Chapter 443;
             (11)  Chapter 492, other than Sections 492.051(b) and
(c);
             (12)  Chapter 541;
             (13) [(16)]  Sections 801.001-801.002;
             (14) [(17)]  Sections 801.051-801.055;
             (15) [(18)]  Section 801.057;
             (16) [(19)]  Sections 801.101-801.102;
             (17) [(20)]  Subchapter A, Chapter 821;
             (18) [(21)]  Chapter 824;
             (19) [(22)]  Chapter 828;
             (20) [(23)]  Section 841.251;
             (21) [(24)]  Section 841.259;
             (22) [(25)]  Section 841.261; [and]
             (23) [(26)]  Section 841.703; and
             (24)  Chapter 4152.
       SECTION 2E.077.  Section 884.056(a), Insurance Code, is
amended to correct a cross-reference to read as follows:
       (a)  To obtain a charter for a stipulated premium company
under this chapter, the incorporators must pay a charter fee in an
amount determined under Chapter 202 [Article 4.07] and file with
the department:
             (1)  an application for charter on the form and
containing the information prescribed by the department;
             (2)  the company's articles of incorporation; and
             (3)  an affidavit made by two or more of the
incorporators that states that:
                   (A)  the minimum capital and surplus requirements
of Section 884.054 are satisfied;
                   (B)  the capital and surplus is the bona fide
property of the company; and
                   (C)  the information in the application and
articles of incorporation is true and correct.
       SECTION 2E.078.  Section 884.059(c), Insurance Code, is
amended to correct a cross-reference to read as follows:
       (c)  If the commissioner does not reject the application
under Subsection (b), the commissioner shall approve the
application and on receipt of a fee in the amount determined under
Chapter 202 [Article 4.07] shall provide to the incorporators a
certified copy of the application, articles of incorporation, and
submitted affidavit.
       SECTION 2E.079.  Section 884.201, Insurance Code, is amended
to correct a cross-reference to read as follows:
       Sec. 884.201.  FORM OF CAPITAL AND SURPLUS.  After a charter
is granted under this chapter, the stipulated premium company:
             (1)  shall maintain the company's minimum capital at
all times in a form described by Section 884.054(d); and
             (2)  may invest the company's surplus as provided by
Sections 425.203-425.228 [Article 3.39].
       SECTION 2E.080.  Section 884.253(c), Insurance Code, is
amended to correct a cross-reference to read as follows:
       (c)  A stipulated premium company that complies with
Subsection (b) may pay cash dividends in accordance with Sections
403.001 and 403.052 [Article 21.32].
       SECTION 2E.081.  Sections 884.256(a) and (e), Insurance
Code, are amended to correct cross-references to read as follows:
       (a)  Except as provided by Section 884.406, not later than
March 31 of each year a stipulated premium company shall:
             (1)  prepare a statement showing the condition of the
company on December 31 of the preceding year; and
             (2)  deliver the statement to the department
accompanied by a filing fee in the amount determined under Chapter
202 [Article 4.07].
       (e)  Fees collected under this section shall be deposited to
the credit of the Texas Department of Insurance operating account.
Sections 201.001 and 201.002 apply [Article 1.31A applies] to fees
collected under this section.
       SECTION 2E.082.  Section 884.307(a), Insurance Code, is
amended to correct cross-references to read as follows:
       (a)  A stipulated premium company that possesses capital and
unencumbered surplus in a combined amount of at least $100,000 more
than all of its liabilities, including contingent liabilities, may
issue annuity contracts as authorized by Chapters [Chapter] 3 and
1701 and Title 7.
       SECTION 2E.083.  Section 884.310, Insurance Code, is amended
to correct a cross-reference to read as follows:
       Sec. 884.310.  AGENT.  Each agent of a stipulated premium
company must be licensed under Title 13 [Subchapter A, Chapter 21].
       SECTION 2E.084.  Sections 884.311(a) and (c), Insurance
Code, are amended to correct cross-references to read as follows:
       (a)  A stipulated premium insurance company issuing life,
health, or accident coverages or maintaining policies in force that
were issued in accordance with Subchapter I may elect that the
company's investments and transactions be governed by Subchapter C,
Chapter 425 [Article 3.33 of this code].
       (c)  After the second anniversary of the effective date of an
initial election authorized by this section, the stipulated premium
insurance company may elect that the company's investments and
transactions be governed by Sections 425.203-425.228 [Article 3.39
of this code].
       SECTION 2E.085.  Section 884.357, Insurance Code, is amended
to correct a cross-reference to read as follows:
       Sec. 884.357.  FORM APPROVAL.  The approval of a form of an
insurance policy issued by a stipulated premium company is governed
by Chapter 1701 [Article 3.42].
       SECTION 2E.086.  Section 884.402, Insurance Code, is amended
to correct cross-references to read as follows:
       Sec. 884.402.  ADDITIONAL COVERAGE.  A stipulated premium
company that, at the time it begins to issue coverages under this
subchapter, possesses the amounts of capital and unencumbered
surplus equal to or greater than the corresponding amounts required
for organization of a life and health company under Sections
841.052, 841.054, 841.204, 841.205, 841.301, and 841.302 may,
subject to Section 884.403:
             (1)  issue any kind of life insurance coverage
authorized by Chapter 3, 841, or 1701 or Title 7;
             (2)  issue any kind of health or accident insurance
coverage authorized by:
                   (A)  Title 7;
                   (B)  Chapter 3, 704, 841, 846, 982, 1201, 1202,
1203, 1210, 1251, 1252, 1253, 1254, 1301, 1351, 1354, 1359, 1364,
1368, 1501, 1504, 1505, 1506, 1552, 1575, 1576, 1579, 1581, 1625,
1651, 1652, or 1701;
                   (C)  Chapter 492, other than Sections 492.051(b)
and (c);
                   (D)  Subchapter B, Chapter 38, Subchapter D,
Chapter 425, Subchapter A or F, Chapter 1204, Subchapter A, Chapter
1273, Subchapter A, B, or D, Chapter 1355, Subchapter A, Chapter
1366, Subchapter A, Chapter 1507;
                   (E)  Section 1204.151, 1204.153, 1204.154, or
1451.051; or
                   (F)  Chapter 177, Local Government Code; or
             (3)  issue life insurance coverage through policies
without cash surrender values or nonforfeiture values and that
exceed $10,000 on one life.
       SECTION 2E.087.  Section 884.405, Insurance Code, is amended
to correct cross-references to read as follows:
       Sec. 884.405.  AGENT; LICENSE.  (a)  An agent may not
solicit or write any coverage authorized by this subchapter unless
the agent: