83R372 TJS-F
 
  By: Sheets H.B. No. 1833
 
 
 
A BILL TO BE ENTITLED
 
AN ACT
  relating to the residual market for workers' compensation insurance
  in this state and to the operation, governance, and organization of
  the Texas Mutual Insurance Company.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
  ARTICLE 1. RESIDUAL MARKET FOR WORKERS' COMPENSATION INSURANCE
         SECTION 1.01.  WORKERS' COMPENSATION ASSIGNED RISK PROGRAM.  
  Subtitle E, Title 10, Insurance Code, is amended by adding Chapter
  2056 to read as follows:
  CHAPTER 2056. WORKERS' COMPENSATION ASSIGNED RISK PROGRAM
         Sec. 2056.001.  DEFINITIONS. In this chapter:
               (1)  "Assigned risk program" means the program
  established under Section 2056.002 by which insurers provide
  workers' compensation insurance to residual market employers.
               (2)  "Insurer" means an insurance company as defined by
  Section 2053.001.
               (3)  "Residual market employer" means an employer that
  is unable to obtain workers' compensation insurance through the
  voluntary insurance market in this state.
         Sec. 2056.002.  ASSIGNED RISK PROGRAM; PLAN OF OPERATION.
  (a) The commissioner by rule shall:
               (1)  establish an assigned risk program through which
  residual market employers may obtain workers' compensation
  insurance in this state; and
               (2)  approve a plan of operation for the assigned risk
  program established under this section, which must:
                     (A)  specify the eligibility criteria and
  procedures for obtaining insurance through the assigned risk
  program; and
                     (B)  provide for the implementation and
  administration of the assigned risk program, including reasonable
  service standards, policies, forms, and contracts.
         (b)  The commissioner may contract with a licensed
  statistical agent for workers' compensation in this state to
  administer the assigned risk program.
         (c)  The commissioner shall require each insurer to
  participate in the assigned risk program in proportion to the
  insurer's voluntary market share in this state as a condition of the
  insurer's authority to engage in the business of insurance in this
  state.
         (d)  The commissioner may provide for an insurer to meet the
  insurer's obligation under this section through direct policy
  assignment, reinsurance, pooling, or otherwise.
         Sec. 2056.003.  RATES AND FUNDING. (a) The statistical
  agent, if any, contracted to administer the assigned risk program
  under Section 2056.002 shall file rates for review under Subchapter
  B, Chapter 2053.
         (b)  Rates for insurance procured through the assigned risk
  program must be actuarially sufficient to cover all incurred losses
  and administrative expenses of the program.
  ARTICLE 2. OPERATION AND ORGANIZATION OF TEXAS
  MUTUAL INSURANCE COMPANY
         SECTION 2.01.  ARTICLES OF INCORPORATION. (a) Not later
  than January 1, 2015, the board of directors of the Texas Mutual
  Insurance Company shall file with the commissioner of insurance
  articles of incorporation, which must state:
               (1)  the name of the company;
               (2)  the purpose of the company;
               (3)  the location of the company's principal or home
  office; and
               (4)  the name and address of each member of the board of
  directors.
         (b)  Notwithstanding any other law, the articles of
  incorporation filed under this Act shall be considered restated
  articles of incorporation.
         SECTION 2.02.  BOARD OF DIRECTORS. (a) Not later than
  December 31, 2014, the Texas Mutual Insurance Company shall hold a
  meeting of its policyholders to elect a board of directors to govern
  the company beginning January 1, 2015.
         (b)  The board of directors established under Section
  2054.051, Insurance Code, is abolished effective January 1, 2015.
         SECTION 2.03.  CONTINUATION OF CORPORATE EXISTENCE. (a) The
  corporate existence of the Texas Mutual Insurance Company
  continues, and all assets, liabilities, earned surplus, rights,
  licenses, and permits of the company as it existed under Chapter
  2054, Insurance Code, before January 1, 2015, remain in full force
  and effect as the assets, liabilities, earned surplus, rights,
  licenses, and permits of the company.
         (b)  All policies of insurance and other contracts entered
  into or issued by the Texas Mutual Insurance Company before January
  1, 2015, remain in full force and effect in accordance with their
  respective terms.
         (c)  The certificate of authority issued to the Texas Mutual
  Insurance Company as the company existed under Chapter 2054,
  Insurance Code, before January 1, 2015, continues in effect.
         (d)  Effective January 1, 2015, the Texas Mutual Insurance
  Company operates under Chapter 883, Insurance Code, and is neither
  subject to obligations or limitations not imposed on, nor given
  advantages not granted to, other mutual insurance companies
  operating under Chapter 883, Insurance Code.
  ARTICLE 3. CONFORMING AMENDMENTS
         SECTION 3.01.  REPEALER. The following laws are repealed:
               (1)  Section 552.0225(c), Government Code;
               (2)  Section 552.143(f), Government Code;
               (3)  Section 462.008, Insurance Code;
               (4)  Section 2051.153(b), Insurance Code; and
               (5)  Chapter 2054, Insurance Code.
         SECTION 3.02.  CONFORMING AMENDMENT TO LABOR CODE. Section
  418.002(c), Labor Code, is amended to read as follows:
         (c)  The court may order a person to pay restitution to an
  insurance company[, including the Texas Mutual Insurance Company,]
  if the person commits an offense under this section.
         SECTION 3.03.  CONFORMING AMENDMENTS TO INSURANCE CODE.  (a)
  Section 2052.004(a), Insurance Code, is amended to read as follows:
         (a)  Subject to Subsections (b) and (c), this subtitle may
  not be construed to prohibit an insurance company[, including the
  Texas Mutual Insurance Company,] from issuing participating
  policies.
         (b)  Section 2053.001(2), Insurance Code, is amended to read
  as follows:
               (2)  "Insurance company" means a person authorized to
  engage in the business of workers' compensation insurance in this
  state.  The term includes:
                     (A)  [the Texas Mutual Insurance Company;
                     [(B)]  a Lloyd's plan under Chapter 941; and
                     (B) [(C)]  a reciprocal and interinsurance
  exchange under Chapter 942.
         (c)  Section 2053.154(a), Insurance Code, is amended to read
  as follows:
         (a)  For purposes of this section, "insurance company" means
  a stock company, mutual insurance company, reciprocal or
  interinsurance exchange, or Lloyd's plan authorized to engage in
  the business of workers' compensation insurance in this state.
  [The term includes the Texas Mutual Insurance Company.]
         SECTION 3.04.  EFFECTIVE DATE OF ARTICLE. This article
  takes effect January 1, 2015.
  ARTICLE 4. TRANSITION
         SECTION 4.01.  TRANSITION. (a) As soon as practicable after
  the effective date of this Act, but not later than January 1, 2015,
  the commissioner of insurance shall adopt rules necessary to
  implement the assigned risk program required by Chapter 2056,
  Insurance Code, as added by this Act.
         (b)  As soon as practicable after the Texas Mutual Insurance
  Company files articles of incorporation with the commissioner of
  insurance and elects a board of directors as required by Article 2
  of this Act, the commissioner shall adopt any rules necessary to
  reflect the fact that the Texas Mutual Insurance Company is a mutual
  insurance company organized under and governed by Chapter 883,
  Insurance Code, and other laws applicable to mutual insurance
  companies in this state.
  ARTICLE 5. EFFECTIVE DATE
         SECTION 5.01.  EFFECTIVE DATE OF ACT. Except as otherwise
  provided by this Act, this Act takes effect September 1, 2013.