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  H.B. No. 4339
 
 
 
 
AN ACT
  relating to the establishment and operation of the unauthorized
  insurance guaranty fund.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Subtitle D, Title 4, Insurance Code, is amended
  by adding Chapter 464 to read as follows:
  CHAPTER 464. UNAUTHORIZED INSURANCE GUARANTY FUND ACT
  SUBCHAPTER A. GENERAL PROVISIONS
         Sec. 464.001.  SHORT TITLE. This chapter may be cited as the
  Unauthorized Insurance Guaranty Fund Act.
         Sec. 464.002.  CONSTRUCTION AND PURPOSE. (a) The purpose of
  this chapter is to alleviate the financial hardship imposed on
  persons who are harmed by the sale of unauthorized insurance in this
  state. Persons who suffer damages as a result of unpaid claims on
  policies issued by unauthorized insurers in this state are not
  covered under guaranty acts, which provide protection to persons
  with claims against authorized insurers. The legislature finds
  that it is appropriate to provide additional remedies to these
  persons.
         (b)  The commissioner's powers under this Act shall be
  liberally construed to support the purpose stated in Subsection
  (a).
         (c)  This chapter does not limit the powers granted the
  commissioner under other provisions of law. The powers and
  authority of the commissioner under this chapter are cumulative and
  are in addition to all other powers and authority that are available
  to the commissioner.
         Sec. 464.003.  DEFINITIONS. In this chapter:
               (1)  "Delinquency proceeding" has the meaning assigned
  by Section 443.004.
               (2)  "Fund" means the unauthorized insurance guaranty
  fund.
               (3)  "Fund account" means the account established for
  the deposit of money held by the fund.
               (4)  "Policy claim" means an obligation incurred under
  a contract or policy of insurance issued by an unauthorized insurer
  as described by Chapter 101. The term does not include claims under
  reinsurance contracts or claims of other creditors.
               (5)  "Receiver" means the receiver of an unauthorized
  insurer in a delinquency proceeding, including the commissioner
  when acting in that capacity, or a special deputy receiver.
               (6)  "Unauthorized insurer" has the meaning assigned by
  Section 443.004.
         Sec. 464.004.  APPLICABILITY. This chapter applies to a
  delinquency proceeding under Chapter 443 of an unauthorized
  insurer.
         Sec. 464.005.  IMMUNITY. Liability does not exist and a
  cause of action does not arise against the commissioner or an agent,
  employee, or representative of the commissioner for any good faith
  act or omission in performing the commissioner's, or the agent's,
  employee's, or representative's powers and duties under this
  chapter.
         Sec. 464.006.  EXEMPTION FROM CERTAIN FEES AND TAXES. The
  fund is exempt from payment of all fees and taxes levied by this
  state or a political subdivision of this state.
         Sec. 464.007.  RULES. The commissioner may adopt rules as
  necessary to implement this chapter.
  [Sections 464.008-464.050 reserved for expansion]
  SUBCHAPTER B. FUND
         Sec. 464.051.  CREATION OF UNAUTHORIZED INSURANCE GUARANTY
  FUND. The unauthorized insurance guaranty fund is established.
         Sec. 464.052.  DEPOSIT OF FUNDS. (a)  The fund account shall
  be established with the Texas Treasury Safekeeping Trust Company in
  accordance with procedures adopted by the comptroller. The
  comptroller shall account for the deposited money separately from
  all other money.
         (b)  The commissioner may identify collected penalties to be
  deposited into the fund account from:
               (1)  administrative penalties assessed by the
  commissioner for violations of Chapter 101 or penalties under
  Section 861.702, including amounts collected through state warrant
  holds;
               (2)  civil penalties assessed under Chapter 101 when
  the commissioner is the party requesting penalties;
               (3)  administrative penalties assessed by the
  commissioner against a person holding a certificate of authority,
  license, registration, or other authorization to engage in the
  business of insurance that is issued or recognized by the
  commissioner for engaging in conduct outside the scope of the
  person's certificate, license, registration, or authorization;
               (4)  administrative penalties assessed by the
  commissioner against a person holding a certificate of authority,
  license, registration, or authorization issued or recognized by the
  commissioner for using unapproved forms, rates, or advertisements
  if the forms, rates, or advertisements are required to be approved
  by the commissioner before being used in this state; and
               (5)  forfeitures of bonds issued under Section 101.353
  or 101.354.
         (c)  In determining the amounts to be deposited into the fund
  account, the commissioner shall consider:
               (1)  the amount existing in the fund account;
               (2)  the anticipated penalties described by Subsection
  (b) that have been or may be collected;
               (3)  the estimated assets, administrative expenses,
  and claims of any unauthorized insurers subject to a delinquency
  proceeding; and
               (4)  any anticipated delinquency proceedings of
  unauthorized insurers.
         (d)  If the commissioner determines that the amounts on
  deposit in the fund account exceed the amount required to pay
  administrative expenses and claims of existing and anticipated
  delinquency proceedings of unauthorized insurers, the commissioner
  may transfer the excess amount from the fund to the comptroller for
  deposit into the general revenue fund.
         (e)  The commissioner shall notify the comptroller of the
  existence of money under Subsection (c) to be credited to the fund
  account. The commissioner must enter an order to transfer amounts
  from the fund account.
         Sec. 464.053.  ADVANCE OF FUNDS. (a) In the event of a
  delinquency proceeding of an unauthorized insurer, the
  commissioner may advance funds from the fund account if the assets
  of the unauthorized insurer are insufficient to pay administrative
  expenses or policy claims. The commissioner shall hold the funds in
  a separate account. Funds advanced under this section are
  available to supplement the assets of the unauthorized insurer, and
  do not become property of the unauthorized insurer or the
  receivership estate.
         (b)  In determining an amount to be advanced, the
  commissioner shall consider:
               (1)  the amount existing in the fund, and any estimated
  future amounts to be deposited in the fund;
               (2)  the assets of the unauthorized insurer that are
  anticipated to be available to pay administrative expenses and
  claims;
               (3)  the projected administrative expenses and claims
  in the delinquency proceeding; and
               (4)  the projected administrative expenses and claims
  in other existing and anticipated delinquency proceedings of
  unauthorized insurers.
         Sec. 464.054.  USE OF FUNDS. (a) An amount advanced under
  Section 464.053 may be used to supplement the assets of an
  unauthorized insurer to pay administrative expenses and policy
  claims that are approved by:
               (1)  the commissioner in a proceeding under Section
  443.051; or
               (2)  the receiver in a proceeding under Section
  443.052.
         (b)  For the purposes of Section 443.301(b), approved policy
  claims under this chapter shall be classified as Class 2 claims.
         (c)  The commissioner or receiver, as applicable, is not
  required to make distributions from the assets of the unauthorized
  insurer before using amounts advanced under Section 464.053. Any
  payment of a policy claim made under Subsection (a) shall be treated
  as a distribution under Section 443.302. If approved policy claims
  cannot be paid in full from the funds advanced under Section 464.053
  and the assets of the unauthorized insurer available for
  distribution, the claims shall be paid on a pro rata basis in the
  manner described in Section 443.301.
         (d)  Amounts advanced that are not needed to pay
  administrative expenses or policy claims shall be returned to the
  fund account. On a final distribution under Section 443.302 or the
  termination of a delinquency proceeding, any funds of the
  unauthorized insurer remaining after the payment in full of
  administrative expenses and policy claims shall be used to repay
  the advance, up to the amount of the advance.
         (e)  A person who has a policy claim may receive funds
  deposited or advanced under this chapter only in accordance with
  this section.
         SECTION 2.  This Act takes effect immediately if it receives
  a vote of two-thirds of all the members elected to each house, as
  provided by Section 39, Article III, Texas Constitution.  If this
  Act does not receive the vote necessary for immediate effect, this
  Act takes effect September 1, 2009.
 
 
  ______________________________ ______________________________
     President of the Senate Speaker of the House     
 
 
         I certify that H.B. No. 4339 was passed by the House on April
  15, 2009, by the following vote:  Yeas 147, Nays 0, 1 present, not
  voting.
 
  ______________________________
  Chief Clerk of the House   
 
 
         I certify that H.B. No. 4339 was passed by the Senate on May
  21, 2009, by the following vote:  Yeas 31, Nays 0.
 
  ______________________________
  Secretary of the Senate    
  APPROVED:  _____________________
                     Date          
   
            _____________________
                   Governor