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  H.B. No. 2570
 
 
 
 
AN ACT
  relating to the regulation of stipulated premium insurance
  companies.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Subsections (a) and (c), Section 884.054,
  Insurance Code, are amended to read as follows:
         (a)  A proposed stipulated premium company's capital stock
  must be in an amount of at least $200,000 [$15,000].
         (c)  To be incorporated, a stipulated premium company must
  possess at the time of incorporation, in addition to its capital,
  surplus in an amount of at least $75,000 [$7,500]. The amount of
  the surplus is not required to be stated in the company's articles
  of incorporation.
         SECTION 2.  Subsection (b), Section 884.202, Insurance Code,
  is amended to read as follows:
         (b)  Capital stock may be decreased to an amount that is less
  than $200,000 [$100,000] only to avoid insolvency as provided by
  Section 884.205 [and may never be decreased to an amount that is
  less than the minimum amount of paid-up stock required by Section
  884.054].
         SECTION 3.  Subsection (a), Section 884.205, Insurance Code,
  is amended to read as follows:
         (a)  If, when computing the liabilities of a stipulated
  premium company under this chapter, one-third or more of the
  company's capital stock becomes impaired, the company shall correct
  the impairment not later than the 60th day after the date the
  company becomes subject to this subsection by:
               (1)  reducing the company's capital stock [subject to
  the limitation provided by Section 884.202(b)];
               (2)  adjusting the premium rate if permitted by policy
  contract; or
               (3)  both reducing capital stock and adjusting the
  premium rate.
         SECTION 4.  Subsection (b), Section 884.303, Insurance Code,
  is amended to read as follows:
         (b)  A stipulated premium company may not insure one life
  under this section for more than $25,000 [$15,000], except as
  provided by Section 884.304 or Subchapter I.
         SECTION 5.  Section 884.304, Insurance Code, is amended to
  read as follows:
         Sec. 884.304.  LIFE INSURANCE OF MORE THAN $25,000
  [$15,000].  (a)  Except as provided by this section, a stipulated
  premium company may not assume liability on a life insurance risk on
  one life in an amount that exceeds $25,000 [$15,000].
         (b)  If a stipulated premium company assumes a life insurance
  risk under a life insurance policy, the initial death benefit of
  $25,000 [$15,000] or less may increase to an amount greater than
  $25,000 [$15,000] subject to this section.
         (c)  For each policy year of a policy for which, after
  issuance, the death benefit exceeds $25,000 [$15,000], the amount
  of the increase of the death benefit at the end of that policy year
  from the end of the preceding policy year may not exceed the greater
  of:
               (1)  the amount computed using the maximum rate of
  increase provided by the policy, which rate may not exceed five
  percent a year, compounded annually; or
               (2)  the amount computed using the consumer price index
  for all urban consumers for all items and for all regions of the
  United States combined, as determined by the United States
  Department of Labor, Bureau of Labor Statistics, on September 30 of
  the year preceding the year in which the policy year ends,
  compounded annually.
         SECTION 6.  Subsection (a), Section 884.404, Insurance Code,
  is amended to read as follows:
         (a)  A stipulated premium company that issues any insurance
  coverage under this subchapter shall maintain at all times the
  capital and unencumbered surplus required under Section 884.054
  [when the stipulated premium company began writing the coverage].
         SECTION 7.  Section 4054.051, Insurance Code, is amended to
  read as follows:
         Sec. 4054.051.  LICENSE REQUIRED.  Except as provided by
  Subchapter G, a person is required to hold a general life, accident,
  and health license if the person acts as:
               (1)  an agent who represents a health maintenance
  organization;
               (2)  an industrial life insurance agent for an insurer
  that writes only weekly premium life insurance on a debit basis
  under Chapter 1151;
               (3)  an agent who writes life, accident, and health
  insurance for a life insurance company;
               (4)  an agent who writes only accident and health
  insurance;
               (5)  an agent who writes fixed or variable annuity
  contracts or variable life contracts;
               (6)  an agent who writes for a stipulated premium
  company:
                     (A)  only life insurance in excess of $25,000
  [$15,000] on any one life;
                     (B)  only accident and health insurance; or
                     (C)  both kinds of insurance described by
  Paragraphs (A) and (B);
               (7)  an agent who writes life, accident, and health
  insurance for any type of authorized life insurance company that is
  domiciled in this state, including a legal reserve life insurance
  company, and who represents the company:
                     (A)  in a foreign country or territory; and
                     (B)  on a United States military installation or
  with United States military personnel;
               (8)  an agent who writes life, accident, and health
  insurance for a fraternal benefit society except as provided by
  Section 885.352; or
               (9)  an agent who writes any other kind of insurance as
  required by the commissioner for the protection of the insurance
  consumers of this state.
         SECTION 8.  The heading to Subchapter E, Chapter 4054,
  Insurance Code, is amended to read as follows:
  SUBCHAPTER E.  LIFE INSURANCE NOT
  EXCEEDING $25,000 [$15,000]
         SECTION 9.  Subsection (a), Section 4054.201, Insurance
  Code, is amended to read as follows:
         (a)  The department shall issue a license to an individual
  applicant to act as an agent who writes only life insurance policies
  in an amount that does not exceed $25,000 [$15,000] on any one life
  on receipt of certification from a stipulated premium company, a
  statewide mutual assessment company, a local mutual aid
  association, or a local mutual burial association, that the
  applicant has:
               (1)  completed a course of study and instruction in
  compliance with this subchapter; and
               (2)  passed without aid a written examination
  administered by the insurer.
         SECTION 10.  Section 4054.206, Insurance Code, is amended to
  read as follows:
         Sec. 4054.206.  LIMIT ON AGENT'S AUTHORITY.  An insurance
  agent licensed under this subchapter may not write any coverage or
  combination of coverages with an initial guaranteed death benefit
  that exceeds $25,000 [$15,000] on any life.
         SECTION 11.  Subsections (a) and (d), Section 4054.301,
  Insurance Code, are amended to read as follows:
         (a)  Except as provided by Subsection (b), a person is
  required to hold a life agent license if the person does not hold a
  general life, accident, and health license under Subchapter B and
  the person acts as:
               (1)  an agent who writes insurance coverage on human
  lives, including endowment benefits and annuities, benefits in the
  event of death or dismemberment by accident, and benefits for
  disability income;
               (2)  an industrial life insurance agent for an insurer
  that writes only weekly premium life insurance on a debit basis
  under Chapter 1151;
               (3)  an agent who writes fixed or variable annuity
  contracts or variable life contracts;
               (4)  an agent who writes for a stipulated premium
  company only life insurance in excess of $25,000 [$15,000] on any
  one life; or
               (5)  an agent who writes any other kind of insurance as
  required by the commissioner for the protection of the insurance
  consumers of this state.
         (d)  A person who holds a license to write life insurance not
  exceeding $25,000 [$15,000] under Subchapter E and who engages in
  the business of insurance only within the scope of that license is
  not required to hold a life agent license.  A person who holds a life
  agent license may write the insurance described by that subchapter.
         SECTION 12.  A stipulated premium company shall increase its
  capital stock and surplus as required under Chapter 884, Insurance
  Code, as amended by this Act, not later than a date prescribed by
  rule by the commissioner of insurance in connection with a
  reasonable schedule of intermediate increases adopted by the
  commissioner to provide for a 10-year phase-in of the changes in law
  made by this Act.
         SECTION 13.  This Act applies only to an insurance policy
  delivered, issued for delivery, or renewed on or after January 1,
  2010. A policy delivered, issued for delivery, or renewed before
  January 1, 2010, is governed by the law as it existed immediately
  before the effective date of this Act, and that law is continued in
  effect for that purpose.
         SECTION 14.  This Act takes effect September 1, 2009.
 
 
  ______________________________ ______________________________
     President of the Senate Speaker of the House     
 
 
         I certify that H.B. No. 2570 was passed by the House on April
  15, 2009, by the following vote:  Yeas 147, Nays 0, 1 present, not
  voting; and that the House concurred in Senate amendments to H.B.
  No. 2570 on May 29, 2009, by the following vote:  Yeas 142, Nays 0,
  1 present, not voting.
 
  ______________________________
  Chief Clerk of the House   
 
         I certify that H.B. No. 2570 was passed by the Senate, with
  amendments, on May 23, 2009, by the following vote:  Yeas 31, Nays
  0.
 
  ______________________________
  Secretary of the Senate   
  APPROVED: __________________
                  Date       
   
           __________________
                Governor