Texas Insurance Code - Not Codified - Article 1.14-3. Texas Insurance Exchange
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Art. 1.14-3. TEXAS INSURANCE EXCHANGE.
Article repealed effective April 1, 2007
Definitions
Sec. 1. In this article:
(1) "Exchange" means the Texas Insurance Exchange.
(2) "Board" means the State Board of Insurance.
(3) "Directors" means the board of directors of the
exchange.
(4) "Member" means a person, firm, corporation, or
underwriting syndicate authorized by the directors of the exchange
to insure or reinsure risks through the exchange.
(5) "Subscriber" means a person, firm, corporation, or
other organization designated by the directors of the exchange as a
subscriber on payment of fees or dues required by the constitution
and bylaws.
Creation of Exchange
Sec. 2. The Texas Insurance Exchange is created and shall
operate under a constitution and bylaws and under regulations
promulgated by the board.
Purpose of Exchange
Sec. 3. The purpose of the exchange is to provide a facility
for underwriting the following:
(1) reinsurance of any kind of insurance;
(2) direct insurance of any kind of risk located entirely
outside the United States;
(3) direct insurance of any kind of risk located in a state
of the United States other than this state if the risk qualifies for
placement under the excess and surplus lines requirements of the
jurisdiction in which the risk is located; and
(4) a risk located in this state that is submitted to and
certified as having been rejected by a committee representative of
not fewer than three and not more than seven insurers licensed to do
an insurance business in this state and subject to conditions
imposed by regulations promulgated by the board.
Management of Exchange
Sec. 4. The board shall promulgate regulations under which
the exchange shall be operated and managed, and the directors shall
operate and manage the exchange in accordance with those
regulations.
Operation of Exchange
Sec. 5. (a) The exchange shall function under a constitution
and bylaws adopted by it and approved by the board.
(b) The exchange may amend its constitution and bylaws in
accordance with their terms and with the approval of the board.
(c) The constitution and bylaws and amendments to the
constitution and bylaws are invalid without the approval of the
board.
(d) Notwithstanding any authority under this article to
adopt or amend the constitution and bylaws, the constitution and
bylaws must provide for:
(1) the election of nine directors, four of whom represent
the public interest and are not members, subscribers, or agents of
the exchange;
(2) the location of the principal offices of the exchange
and its members within this state for the purpose of the transaction
of the types of business described in Section 3 of this article;
(3) the submission by the exchange, its members, and
applicants for membership in the exchange of financial information
required by regulations promulgated by the board;
(4) the exchange to establish and maintain a security fund
in a form and amount specified by regulations promulgated by the
board;
(5) the voting power of members;
(6) the voting power and other rights granted under the
Texas Non-Profit Corporation Act (Article 1396-1.01 et seq.,
Vernon's Texas Civil Statutes) to participate in the conduct and
management of the affairs of the exchange by agents transacting
business on the exchange; and
(7) the rights and duties of members, including the manner
and form for conducting business, financial stability, dues,
membership fees, mandatory arbitration, and other matters
necessary or appropriate to conduct business authorized by this
article.
(e) For the purposes of this section, a principal office is
an office at which officers and personnel who are engaged in
administration, underwriting, claims adjustment, policyholders'
service, marketing, accounting, record-keeping, and support
services are located.
Directors
Sec. 6. (a) The directors for the exchange shall be elected by
the members of the exchange and by any other persons authorized by
the constitution and bylaws of the exchange to vote for election of
directors.
(b) At least two-thirds of the directors must be citizens of
the United States.
Taxes
Sec. 7. (a) Except as provided by this section and Section 8
of this article, the exchange is not subject to any state or local
taxes measured by income, premiums, or gross receipts.
(b) Direct premiums written, procured, or received by any
member through the exchange on risks located in this state are
deemed written, procured, or received by the exchange, and those
premiums are subject to the premium taxes imposed under Chapter 4 of
this code. Those taxes shall be reported, paid, and administered as
provided by Chapter 4 of this code.
(c) For purposes of Chapter 4 of this code, the exchange and
its members are considered insurance carriers.
Sec. 8. Repealed by Acts 2003, 78th Leg., ch. 1274, Sec.
26(b)(2).
Application of This Article and Regulations
Sec. 9. This article and regulations promulgated by the
commissioner or the comptroller, as applicable, apply to the
exchange, its members, and the insurance and reinsurance written
through the exchange, except to the extent exempt by regulations of
the commissioner or the comptroller, as applicable. An exemption
may not be unfairly discriminatory or detrimental to the solvency
of licensed insurers.
Investment in Members and Agents
Sec. 10. (a) The board by regulation may establish
limitations on investments in members of the exchange.
(b) The investment in a member by agents transacting
business on the exchange and the investment in an agent transacting
business on the exchange by a member, either directly or
indirectly, in each case is limited in the aggregate to less than 20
percent of the total investment in the member or agent or to a
lesser amount provided by board regulation.
Application of Certain Statutes
Sec. 11. For purposes of Article 1.14-1 of this code,
insurance and reinsurance written under Subdivision (4) of Section
3 of this article written by members of the exchange are deemed to
have been written in accordance with specific authorization of the
laws of this state.
Guaranty Funds
Sec. 12. Performance of the contractual obligations of the
exchange or its members entered into under this article is not
covered by any of the Texas insurance guaranty funds provided by the
laws of this state. This section does not apply to the security
fund provided by Subdivision (4) of Subsection (d) of Section 5 of
this article.
Added by Acts 1987, 70th Leg., ch. 415, Sec. 1, eff. Sept. 1, 1987.
Sec. 5(d) amended by Acts 1991, 72nd Leg., ch. 242, Sec. 9.03, eff.
Sept. 1, 1991; Secs. 8 and 9 amended by Acts 1993, 73rd Leg., ch.
685, Sec. 3.08, eff. Sept. 1, 1993; Sec. 8 repealed by Acts 2003,
78th Leg. ch. 1274, Sec. 26(b)(2), eff. April 1, 2005.
Article: 1.02 1.04A 1.04D 1.09-1 1.10 1.12 1.13 1.14-3 1.15 1.15A 1.15B 1.16 1.17 1.17A 1.18
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Last modified: August 10, 2007
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