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