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AN ACT
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relating to requirements for county mutual insurance companies. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Section 822.205(a), Insurance Code, is amended |
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to read as follows: |
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(a) Except as provided by Section 912.308, this [This] |
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section applies only to an insurance company that: |
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(1) writes insurance only in this state; and |
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(2) is not required by law to have capital stock. |
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SECTION 2. Section 912.308(b), Insurance Code, is amended |
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to read as follows: |
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(b) Except as provided by Section 912.056, a [A] county |
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mutual insurance company is subject to Subchapter B, Chapter 404, |
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and Sections 822.203, [822.205,] 822.210, and 822.212. |
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SECTION 3. Section 912.056, Insurance Code, is amended by |
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adding Subsections (d), (e), (f), and (g) to read as follows: |
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(d) A company organized and operating under this chapter |
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that, as of September 1, 2001, and continuously thereafter, |
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appointed managing general agents, created districts, or organized |
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local chapters to manage a portion of the company's business |
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independent of all other business of the company may continue to |
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operate in that manner and may appoint and contract with one or more |
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managing general agents in accordance with this code only if the |
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company: |
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(1) cedes 85 percent or more of the company's direct |
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and assumed risks to one or more reinsurers; and |
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(2) has a private passenger automobile insurance |
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business: |
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(A) with a market share of not greater than five |
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percent; or |
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(B) that is predominantly nonstandard. |
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(e) A company described by Subsection (d) shall file, for |
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each managing general agent, district, or local chapter program, |
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the rating information required by the commissioner by rule. Each |
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managing general agent, district, or local chapter program shall be |
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treated as a separate insurer for the purposes of Chapters 544, |
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2251, 2253, and 2254. |
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(f) Notwithstanding any other provision of this code, a |
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company operating under Subsection (d) that cedes 85 percent or |
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more of the company's direct and assumed risks to one or more |
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nonaffiliated reinsurers shall maintain unencumbered surplus, or |
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guaranty fund and unencumbered surplus, equal to the greater of $2 |
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million or five percent of the company's recoverable for |
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reinsurance after taking full credit against the recoverable as |
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otherwise permitted for: |
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(1) premium payable to ceding insurers, net of any |
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ceding commission due the company; |
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(2) collateral held as required by Section 493.104, |
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letters of credit, and security trusts that secure the collection |
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of the reinsurance; and |
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(3) reinsurance through reinsurers whose financial |
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strength is rated "A" or better by the A. M. Best Company, |
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Incorporated, or another nationally recognized statistical rating |
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organization acceptable to the commissioner. |
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(g) The commissioner by rule shall adopt a transition period |
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for insurance companies subject to Subsection (f) to meet the |
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requirements of that subsection and for the pro rata elimination of |
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any deficiencies in the amounts required under that subsection. |
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The transition period adopted under this subsection must be for a |
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period of not less than five years. |
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SECTION 4. This Act takes effect September 1, 2009. |
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______________________________ |
______________________________ |
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President of the Senate |
Speaker of the House |
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I certify that H.B. No. 2449 was passed by the House on April |
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9, 2009, by the following vote: Yeas 148, Nays 0, 1 present, not |
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voting. |
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______________________________ |
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Chief Clerk of the House |
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I certify that H.B. No. 2449 was passed by the Senate on May |
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26, 2009, by the following vote: Yeas 31, Nays 0. |
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______________________________ |
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Secretary of the Senate |
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APPROVED: _____________________ |
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Date |
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_____________________ |
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Governor |