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AN ACT
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relating to requirements regarding certain shareholder and |
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policyholder dividends. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Section 403.001, Insurance Code, is amended to |
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read as follows: |
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Sec. 403.001. LIMITATION ON DIVIDENDS. An insurer |
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organized under the laws of this state, including a life, health, |
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fire, marine, or inland marine insurance company, may not pay a |
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shareholder dividend except from surplus profits arising from the |
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insurer's business. |
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SECTION 2. Subsections (a), (b), and (c), Section 1806.056, |
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Insurance Code, are amended to read as follows: |
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(a) This subchapter does not prohibit an insurer[, on
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approval by the commissioner,] from distributing to policyholders |
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who are on active duty in the United States Armed Forces any |
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estimated profits resulting from service by those policyholders in |
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a foreign country in a combat theater of operations after January 1, |
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1990. |
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(b) An insurer that elects to make distributions under this |
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section must: |
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(1) file a written application describing |
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[description of] the insurer's distribution [program] with the |
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commissioner for approval of a policyholder dividend amount that |
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exceeds 10 percent of surplus; or [and] |
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(2) notify the commissioner in writing of each |
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distribution of a policyholder dividend amount that is not greater |
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than 10 percent of surplus [made under the program]. |
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(c) If the commissioner does not act on the application |
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[insurer's distribution program] on or before the fifth business |
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day after the date the commissioner receives the application |
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[insurer's description of the program], the distribution [program] |
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is considered approved. |
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SECTION 3. Section 1806.057, Insurance Code, is amended to |
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read as follows: |
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Sec. 1806.057. PROFIT SHARING WITH MEMBERS OF CERTAIN |
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ASSOCIATIONS AUTHORIZED. (a) Section 1806.054 does not prohibit |
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an insurer[, on approval by the commissioner,] from sharing profits |
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with policyholders who are part of a group program established by a |
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nonprofit business association and who participate in the group |
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program because of membership in the association. |
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(b) An insurer that elects to make distributions under this |
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section must: |
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(1) file a written application describing |
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[description of] the insurer's distribution [program] with the |
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commissioner for approval of a policyholder dividend amount that |
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exceeds 10 percent of surplus; or [and] |
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(2) notify the commissioner in writing of each |
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distribution of a policyholder dividend amount that is not greater |
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than 10 percent of surplus [made under the program]. |
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(c) If the commissioner does not act on the application |
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[insurer's distribution program] on or before the fifth business |
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day after the date the commissioner receives the application |
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[insurer's description of the program], the distribution [program] |
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is considered approved. |
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SECTION 4. Section 1806.058, Insurance Code, is amended by |
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amending Subsection (b) and adding Subsection (c) to read as |
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follows: |
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(b) An insurer must obtain commissioner approval before |
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distributing a policyholder dividend if the dividend amount exceeds |
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10 percent of surplus [A distribution of profits or dividends to
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insureds may not take effect or be paid until the commissioner
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approves the distribution]. The commissioner may not approve a |
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distribution of profits or dividends until the insurer has |
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[provided] adequate reserves. The reserves must be computed on the |
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same basis for all classes of insurers operating under this |
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subchapter, Subtitle C, and Subchapter A, Chapter 5. |
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(c) The insurer must notify the commissioner in writing of |
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each distribution if the insurer's policyholder dividend amount is |
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not greater than 10 percent of surplus. |
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SECTION 5. Section 1806.105, Insurance Code, is amended by |
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amending Subsection (c) and adding Subsection (d) to read as |
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follows: |
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(c) A distribution of profits or dividends to an insured may |
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not take effect or be distributed until: |
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(1) the insurer has adequate reserves [are provided], |
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as computed on the same basis for all classes of insurers to which |
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this subchapter applies; and |
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(2) if the policyholder dividend amount exceeds 10 |
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percent of surplus, the commissioner approves the distribution. |
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(d) The insurer must notify the commissioner in writing of |
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each distribution if the insurer's policyholder dividend amount is |
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not greater than 10 percent of surplus. |
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SECTION 6. Section 1806.106, Insurance Code, is amended to |
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read as follows: |
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Sec. 1806.106. PROFIT SHARING WITH CERTAIN ASSOCIATIONS |
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AUTHORIZED. (a) This subchapter does not prohibit an insurer[, on
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approval by the commissioner,] from sharing profits with |
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policyholders who are part of a group program established by a |
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nonprofit business association and who participate in the group |
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program because of membership in the association. |
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(b) An insurer that elects to make distributions under this |
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section must: |
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(1) file a written application describing |
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[description of] the insurer's distribution [program] with the |
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commissioner for approval of a policyholder dividend amount that |
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exceeds 10 percent of surplus; or [and] |
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(2) notify the commissioner in writing of each |
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distribution of a policyholder dividend amount that is not greater |
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than 10 percent of surplus [made under the program]. |
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(c) If the commissioner does not act on the application |
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[insurer's distribution program] on or before the fifth business |
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day after the date the commissioner receives the application |
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[insurer's description of the program], the distribution [program] |
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is considered approved. |
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SECTION 7. Section 2052.004, Insurance Code, is amended by |
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amending Subsections (b) and (c) and adding Subsection (d) to read |
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as follows: |
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(b) A policyholder dividend under a workers' compensation |
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insurance policy: |
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(1) must be [does not take effect until] approved by |
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the department if the insurer's policyholder dividend amount |
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exceeds 10 percent of surplus; and |
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(2) may not be approved by the department until the |
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insurance company has [provides] adequate reserves. |
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(c) For purposes of Subsection (b), reserves must be |
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computed on the same basis for all classes of insurance companies |
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operating under this subtitle and Section 2051.002 [Article 5.66]. |
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(d) An insurer must notify the department in writing of a |
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distribution if the insurer's policyholder dividend amount is not |
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greater than 10 percent of surplus. |
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SECTION 8. This Act takes effect immediately if it receives |
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a vote of two-thirds of all the members elected to each house, as |
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provided by Section 39, Article III, Texas Constitution. If this |
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Act does not receive the vote necessary for immediate effect, this |
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Act takes effect September 1, 2013. |
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______________________________ |
______________________________ |
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President of the Senate |
Speaker of the House |
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I hereby certify that S.B. No. 1006 passed the Senate on |
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March 27, 2013, by the following vote: Yeas 30, Nays 0. |
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______________________________ |
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Secretary of the Senate |
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I hereby certify that S.B. No. 1006 passed the House on |
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May 17, 2013, by the following vote: Yeas 134, Nays 0, two |
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present not voting. |
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______________________________ |
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Chief Clerk of the House |
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Approved: |
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______________________________ |
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Date |
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______________________________ |
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Governor |