H.B. No. 4291

	AN ACT
	relating to insurance charters and certificates of authority.
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
	SECTION 1.  Section 801.001(2), Insurance Code, is amended
	to read as follows:
	(2)  "Insurer" means the issuer of an insurance policy
	that is issued to another in consideration of a premium and that
	insures against a loss that may be insured against under the law.
	The term includes a:
	(A)  fraternal benefit society;
	(B)  Lloyd's plan;
	(C)  mutual company of any kind, including a:
	(i)  statewide mutual assessment
	association;
	(ii)  local mutual aid association or burial
	association; and
	(iii)  county or farm mutual insurance
	company;
	(D)  reciprocal or interinsurance exchange; [and]
	(E)  group hospital service corporation;
	(F)  health maintenance organization;
	(G)  nonprofit legal services corporation; and
	(H)  stock company.
	SECTION 2.  Section 801.051, Insurance Code, is amended to
	read as follows:
	Sec. 801.051.  APPROVAL, DENIAL, OR DISAPPROVAL OF
	APPLICATION FOR [ISSUANCE OF] CERTIFICATE; ELIGIBILITY; HEARING.
	(a) The department shall approve, deny, or disapprove an
	application for a certificate of authority to act as an insurer.
	(b)  If the department determines that the applicant has
	complied with the law, the department shall approve the application
	and issue under the department's seal a certificate of authority to
	act as an insurer [to an applicant applying for the certificate if
	the department determines that the applicant has complied with the
	law].
	(c)  On the applicant's request, the commissioner shall hold
	a hearing on a denial. Not later than the 30th day after the date of
	the applicant's request for a hearing, the commissioner shall
	request a hearing date.
	SECTION 3.  Section 801.102, Insurance Code, is amended to
	read as follows:
	Sec. 801.102.  DENIAL OF APPLICATION OR REVOCATION OF
	CERTIFICATE. (a) If after conducting an inquiry under Section
	801.101 the department determines that [, based on substantial
	evidence,] the person who is the subject of the inquiry is not
	worthy of the public confidence, the department shall [, after
	written notice and hearing]:
	(1)  deny the application for a certificate of
	authority; or
	(2)  revoke the insurer's certificate of authority.
	(b)  On the applicant's request, the commissioner shall hold
	a hearing on a denial or revocation. Not later than the 30th day
	after the date of the applicant's request for a hearing, the
	commissioner shall request a hearing date.
	SECTION 4.  Section 822.057(b), Insurance Code, is amended
	to read as follows:
	(b)  If the commissioner is not satisfied with the affidavit
	filed under Subsection (a)(3), the commissioner may require that
	the incorporators provide at their expense additional evidence of a
	matter required in the affidavit before the commissioner:
	(1)  receives the proposed articles of incorporation or
	the application for charter; or
	(2)  [provides notice of a hearing on the application
	for charter or holds a hearing; or
	[(3)]  issues a certificate of authority to the
	company.
	SECTION 5.  Section 822.058(b), Insurance Code, is amended
	to read as follows:
	(b)  After the items required for a charter under Sections
	822.057(a)(1) and (2) are filed with the department and the
	proposed insurance company has complied with all legal requirements
	[and before any hearing], the commissioner shall conduct an
	examination of the company to determine whether:
	(1)  the minimum capital stock and surplus requirements
	of Section 822.054 are satisfied;
	(2)  the capital stock and surplus is the bona fide
	property of the company; and
	(3)  the insurance company has fully complied with
	insurance laws.
	SECTION 6.  Section 822.060, Insurance Code, is amended to
	read as follows:
	Sec. 822.060.  ACTION ON APPLICATION. (a)  In considering
	the application, the commissioner [, not later than the 30th day
	after the date on which a hearing under Section 822.057 is
	completed,] shall determine if:
	(1)  the proposed capital structure of the company
	meets the requirements of this code;
	(2)  the proposed officers, directors, attorney in
	fact, or managing head of the company have sufficient insurance
	experience, ability, standing, and good record to make success of
	the proposed company probable; and
	(3)  the applicants are acting in good faith.
	(b)  If the commissioner determines that the applicant has
	not met the standards set out by [an affirmative finding any of the
	issues under] Subsection (a) [adversely to the applicants], the
	commissioner shall deny [reject] the application in writing, giving
	the reason for the denial [rejection].
	(c)  If the commissioner does not deny [reject] the
	application under Subsection (b), the commissioner shall approve
	the application. On approval of an application, the articles of
	incorporation of the company shall be filed with the department.
	(d)  On the applicant's request, the commissioner shall hold
	a hearing on a denial. Not later than the 30th day after the date of
	the applicant's request for a hearing, the commissioner shall
	request a hearing date.
	SECTION 7.  Sections 822.158(b) and (c), Insurance Code, are
	amended to read as follows:
	(b)  If the commissioner determines that the applicant has
	not met the requirements [by an affirmative finding any of the
	issues] set out by Subsection (a) [adversely to the applicants],
	the commissioner shall deny [reject] the application. On the
	applicant's request, the commissioner shall hold a hearing on a
	denial. Not later than the 30th day after the date of the
	applicant's request for a hearing, the commissioner shall request a
	hearing date.
	(c)  If the commissioner does not deny [reject] the
	application under Subsection (b), the commissioner shall approve
	the application and the amendment shall be filed with the
	department.
	SECTION 8.  Section 841.059(a), Insurance Code, is amended
	to read as follows:
	(a)  After the charter fee is paid and all items required for
	a charter under Section 841.058 are filed with the department, [:
	[(1)     the commissioner may set a date for a hearing on
	the application; and
	[(2)]  the department shall make or cause to be made a
	full and thorough examination of the domestic insurance company
	[before the hearing].
	SECTION 9.  Section 841.061, Insurance Code, is amended by
	amending Subsections (a) and (b) and adding Subsections (b-1) and
	(b-2) to read as follows:
	(a)  In considering the application, the commissioner [, not
	later than the 30th day after the date a hearing under Section
	841.060 is completed,] shall determine if:
	(1)  the minimum capital and surplus required by
	Section 841.054 are the bona fide property of the domestic
	insurance company;
	(2)  the proposed officers, directors, and managing
	executive of the company have sufficient insurance experience,
	ability, and standing to make success of the proposed company
	probable; and
	(3)  the applicants are acting in good faith.
	(b)  If the commissioner determines that the applicant has
	not met the standards set out by [an affirmative finding any of the
	issues under] Subsection (a) [adversely to the applicants], the
	commissioner shall deny [reject] the application in writing, giving
	the reason for the denial [rejection]. An application may not be
	granted unless it is adequately supported by competent evidence.
	(b-1)  On the applicant's request, the commissioner shall
	hold a hearing on a denial. Not later than the 30th day after the
	date of the applicant's request for a hearing, the commissioner
	shall request a hearing date.
	(b-2)  An interested party may participate fully and in all
	respects in any proceeding related to the application. An
	intervenor has the rights and privileges of a proper or necessary
	party in a civil suit in the courts of this state, including the
	right to be represented by counsel.
	SECTION 10.  Section 841.061(c), Insurance Code, as
	effective April 1, 2009, is amended to read as follows:
	(c)  If the commissioner does not deny [reject] the
	application under Subsection (b), the commissioner shall approve
	the application.  On approval of an application, the department
	shall record the information required by Section 841.058 in records
	maintained for that purpose.  On receipt of a fee in the amount
	determined under Chapter 202, the commissioner shall provide to the
	incorporators a certified copy of the application, articles of
	incorporation, and submitted affidavit.
	SECTION 11.  Section 846.054, Insurance Code, is amended by
	amending Subsection (a) and adding Subsection (a-1) to read as
	follows:
	(a)  The commissioner shall approve, deny, or disapprove an
	application for [issue] an initial certificate of authority [to a
	multiple employer welfare arrangement] that meets the requirements
	of Section 846.053 not later than the 60th day after the date on
	which the application is filed.
	(a-1)  On the applicant's request, the commissioner shall
	hold a hearing on a denial. Not later than the 30th day after the
	date of the applicant's request for a hearing, the commissioner
	shall request a hearing date.
	SECTION 12.  Section 882.057, Insurance Code, is amended to
	read as follows:
	Sec. 882.057.  APPLICATION PROCESS. (a)  After the charter
	fee is paid and all items required for a charter under Section
	882.056 are filed with the department, the commissioner shall
	approve, deny, or disapprove [may set a date for a hearing on] the
	application.
	(b)  On the applicant's request, the commissioner shall hold
	a hearing on a denial. Not later than the 30th day after the date of
	the applicant's request for a hearing, the commissioner shall
	request a hearing date [The date for a hearing on an application may
	not be before the 11th or later than the 60th day after the date
	notice is provided under Subsection (c)].
	(c)  [The commissioner shall:
	[(1)     provide written notice of the date of a hearing
	to:
	[(A)     the person or persons who filed the
	application; and
	[(B)     any interested party, including any other
	party who had previously requested a copy of the notice; and
	[(2)     publish, at the expense of the incorporators, a
	copy of the notice in a newspaper of general circulation in the
	county in which the mutual life insurance company's home office is
	proposed to be located.
	[(d)     The department shall make a record of the proceedings
	of a hearing under this section.
	[(e)]  An interested party [is entitled to oppose or support
	the granting or denial of the application and] may [intervene and]
	participate fully and in all respects in any [hearing or other]
	proceeding related to [on] the application. An intervenor has the
	rights and privileges of a proper or necessary party in a civil suit
	in the courts of this state, including the right to be represented
	by counsel.
	SECTION 13.  Sections 882.058(a) and (b), Insurance Code,
	are amended to read as follows:
	(a)  In considering the application, the commissioner [, not
	later than the 30th day after the date a hearing under Section
	882.057 is completed,] shall determine if:
	(1)  the minimum unencumbered surplus required by
	Section 882.055 is the bona fide property of the mutual life
	insurance company;
	(2)  the proposed officers, directors, and managing
	executives of the company have sufficient insurance experience,
	ability, and standing to make success of the proposed company
	probable; and
	(3)  the applicants are acting in good faith.
	(b)  If the commissioner determines that the applicant has
	not met the standards set out by [an affirmative finding any of the
	issues under] Subsection (a) [adversely to the applicants], the
	commissioner shall deny [reject] the application in writing, giving
	the reason for the denial [rejection]. An application may not be
	granted unless it is adequately supported by competent evidence.
	SECTION 14.  Section 884.057, Insurance Code, is amended to
	read as follows:
	Sec. 884.057.  ACTION BY COMMISSIONER AND DEPARTMENT AFTER
	FILING. (a)  After the charter fee is paid and all items required
	for a charter under Section 884.056 are filed with the department,
	[:
	[(1)]  the commissioner shall approve or deny [may set
	a date for a hearing on] the charter application [; and
	[(2)     the department shall make or cause to be made a
	full and thorough examination of the company before a hearing].
	(b)  On the applicant's request, the commissioner shall hold
	a hearing on a denial. Not later than the 30th day after the date of
	the applicant's request for a hearing, the commissioner shall
	request a hearing date [The stipulated premium company shall pay
	for the examination required under Subsection (a)(2)].
	(c)  An interested party may participate fully and in all
	respects in any proceeding related to the application. An
	intervenor has the rights and privileges of a proper or necessary
	party in a civil suit in the courts of this state, including the
	right to be represented by counsel.
	SECTION 15.  Section 884.058, Insurance Code, is amended to
	read as follows:
	Sec. 884.058.  EXAMINATION AFTER DETERMINATION [APPLICATION
	PROCESS]. After making a determination [(a)     The date for a
	hearing] on an application under Section 884.057, the [may not be
	before the 11th or later than the 30th day after the date notice is
	provided under Subsection (b).
	[(b)  The] commissioner shall immediately make or cause to be
	made a full and thorough examination of the company. The company
	shall pay for the examination [:
	[(1)     provide written notice of the date of a hearing
	to:
	[(A)     the person or persons who filed the
	application; and
	[(B)     any interested party, including any other
	party who had previously requested a copy of the notice; and
	[(2)     publish, at the expense of the incorporators, a
	copy of the notice in a newspaper of general circulation in the
	county in which the stipulated premium company's home office is
	proposed to be located.
	[(c)     The department shall make a record of the proceedings
	of a hearing under this section.
	[(d)     An interested party is entitled to oppose or support
	the granting or denial of the application and may intervene and
	participate fully and in all respects in any hearing or other
	proceeding on the application. An intervenor has the rights and
	privileges of a proper or necessary party in a civil suit in the
	courts of this state, including the right to be represented by
	counsel].
	SECTION 16.  Section 911.056, Insurance Code, is amended by
	amending Subsection (a) and adding Subsection (a-1) to read as
	follows:
	(a)  The [On receipt of an application for a permit to
	solicit insurance under Section 911.055, the] department shall
	approve or deny an [examine the] application for a permit to solicit
	insurance under Section 911.055. If the department finds that the
	application complies with this chapter, the department shall issue
	to the applicants a permit to solicit insurance.
	(a-1)  If the department finds that the application does not
	comply with this chapter, the department shall deny the
	application. On the applicant's request, the commissioner shall
	hold a hearing on a denial. Not later than the 30th day after the
	date of the applicant's request for a hearing, the commissioner
	shall request a hearing date.
	SECTION 17.  Section 982.102, Insurance Code, is amended by
	amending Subsection (c) and adding Subsection (d) to read as
	follows:
	(c)  Before approving or denying the application of a foreign
	or alien insurance company for [issuing] a certificate of authority
	to engage in the business of insurance in this state [to a foreign
	or alien insurance company], the commissioner shall:
	(1)  examine the company, at the company's expense, at
	its principal office in the United States; or
	(2)  accept a report of an examination made by the
	insurance department or other insurance supervisory official of
	another state or government of a foreign country.
	(d)  On the applicant's request, the commissioner shall hold
	a hearing on a denial. Not later than the 30th day after the date of
	the applicant's request for a hearing, the commissioner shall
	request a hearing date.
	SECTION 18.  Section 982.113, Insurance Code, is amended to
	read as follows:
	Sec. 982.113.  ISSUANCE OF CERTIFICATE OF AUTHORITY TO LIFE,
	HEALTH, OR ACCIDENT INSURANCE COMPANY. (a)  The commissioner shall
	file in the commissioner's office the documents delivered to the
	department under this subchapter and shall approve or deny an
	application for a certificate of authority.
	(b)  The commissioner shall issue to a foreign or alien life
	insurance company, accident insurance company, life and accident
	insurance company, health and accident insurance company, or life,
	health, and accident insurance company a certificate of authority
	to engage in this state in the kind of business specified in the
	documents if:
	(1)  the company has complied with the requirements of
	this chapter and any other requirement imposed on the company by
	law; and
	(2)  the company's operational history demonstrates
	that the expanded operation of the company in this state or its
	operations outside this state will not create a condition that
	might be hazardous to the company's policyholders or creditors or
	to the public.
	(c) [(b)]  The operational history of a life insurance
	company, accident insurance company, life and accident insurance
	company, health and accident insurance company, or life, health,
	and accident insurance company under Subsection (b)(2) [(a)(2)]
	must be reviewed in conjunction with:
	(1)  the company's loss experience;
	(2)  the kinds and nature of risks insured by the
	company;
	(3)  the company's financial condition and its
	ownership;
	(4)  the company's proposed method of operation;
	(5)  the company's affiliations;
	(6)  the company's investments;
	(7)  the company's contracts, if any, leading to
	contingent liability or agreements in respect to guaranty and
	surety, other than insurance; and
	(8)  the ratio of total annual premium and net
	investment income to commission expenses, general insurance
	expenses, policy benefits paid, and required policy reserve
	increases.
	(d)  On the applicant's request, the commissioner shall hold
	a hearing on a denial. Not later than the 30th day after the date of
	the applicant's request for a hearing, the commissioner shall
	request a hearing date.
	SECTION 19.  The following provisions of the Insurance Code
	are repealed:
	(1)  Section 822.057(c);
	(2)  Section 822.058(a);
	(3)  Section 822.059;
	(4)  Section 841.060;
	(5)  Section 843.081; and
	(6)  Section 882.058(c).
	SECTION 20.  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. 4291 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. 4291 was passed by the Senate on May
	21, 2009, by the following vote:  Yeas 31, Nays 0.
	______________________________
	Secretary of the Senate
	APPROVED:  _____________________
	Date
	_____________________
	Governor