Texas Insurance Code - Not Codified - Article 21.49-11. Texas Public Entity Excess Insurance Pool
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Art. 21.49-11. TEXAS PUBLIC ENTITY EXCESS INSURANCE POOL.
Article repealed effective April 1, 2007
Definitions
Sec. 1. In this article:
(1) "Pool" means the Texas public entity excess insurance
pool.
(2) "Fund" means the Texas public entity excess insurance
fund.
(3) "Board" means the board of trustees of the pool.
(4) "Public entity" means a city or a group of cities who
have formed an insurance pool under the provisions of The
Interlocal Cooperation Act (Article 4413(32c), Vernon's Texas
Civil Statutes).
(5) "Association" means an association whose governing
board is designated by this article to administer the pool.
(6) "Insurance" means liability insurance or workers'
compensation insurance.
Creation of pool
Sec. 2. (a) On written agreement of the presiding officers of
not fewer than 25 public entities in this state, the Texas public
entity excess insurance pool is created to provide excess liability
and workers' compensation insurance coverage to a public entity and
its officers and employees as provided by this article.
(b) Under the excess insurance coverage, the pool shall pay
that portion of a claim against a public entity and its officers and
employees that is finally determined or settled or is included in a
final judgment of a court and that is in excess of $1 million, but
the amount paid by the pool may not be in excess of the amount
determined by the board to be actuarially sound for the pool.
(c) Under the insurance coverage, the pool may participate
in the evaluation or defense of any claim.
Participation in pool
Sec. 3. A public entity is entitled to coverage from the pool
on:
(1) submitting a complete application;
(2) providing any other relevant information required by
the pool;
(3) meeting the underwriting guidelines established by the
pool; and
(4) paying the premiums required for the coverage.
Payment of contributions and premiums
Sec. 4. A public entity purchasing excess insurance coverage
from the pool may use funds of the public entity to pay any
contributions or premiums required by the pool for the coverage.
Board of trustees
Sec. 5. (a) The members of the governing board of an
association that has been in operation providing pooled
self-insurance within this state for more than five years on the
effective date of this article and that has as its members the
public entities that entered into the written agreement under
Section 2 of this article shall serve as the board of trustees of
the pool and shall administer the pool.
(b) Members of the board are not entitled to compensation
for their service on the board.
(c) Members of the board must represent members of the pool.
(d) The persons who serve as officers of the governing board
of the association shall serve as officers of the board.
(e) The board shall hold meetings at the call of the
chairman and at times established by its rules.
(f) A majority of the members of the board constitutes a
quorum.
(g) In addition to other duties provided by this article and
the plan of operation, the board shall:
(1) approve contracts other than excess insurance contracts
issued to public entities by the pool;
(2) consider and adopt premium rate schedules for the pool;
(3) consider and adopt policy forms for the pool;
(4) receive service of summons on behalf of the pool; and
(5) appoint and supervise the activities of the pool
manager.
(h) In addition to other authority provided by this article,
the board may:
(1) adopt necessary rules;
(2) delegate specific responsibilities to the pool manager;
and
(3) amend the plan of operation to assure the orderly
management and operation of the pool.
(i) A member of the board is not liable with respect to any
claim or judgment for which coverage is provided by the pool or for
any claim or judgment against a public entity covered by the pool
against whom a claim is made.
Plan of operation
Sec. 6. (a) Within 30 days after creation of the pool under
Section 2(a) of this article, the board shall meet to prepare a
detailed plan of operation for the pool.
(b) The plan of operation may include any matters relating
to the organization and operation of the pool and the pool's
finances. The plan must include:
(1) the organizational structure of the pool, the method of
procedure and operation of the board, and a summary of the method
for managing and operating the pool;
(2) a description of the financial arrangements necessary
to cover the initial expenses of the pool and estimates supported by
statistical data of the amounts of those contributions or other
financial arrangements;
(3) underwriting guidelines and procedures for the
evaluation of risks;
(4) procedures for purchase of reinsurance;
(5) methods, procedures, and guidelines for establishing
rates for premiums for and maximum limits of excess coverage
available from the pool;
(6) procedures for the processing and payment of claims;
(7) methods and procedures for defraying any losses and
expenses of the pool;
(8) methods, procedures, and guidelines for the management
and investment of the fund; and
(9) guidelines for nonrenewal of coverage.
Pool manager
Sec. 7. (a) The board shall appoint a pool manager who shall
serve at the pleasure of the board.
(b) The pool manager is entitled to receive the compensation
authorized by the board.
(c) The pool manager shall manage and conduct the affairs of
the pool under the general supervision of the board and shall
perform any other duties directed by the board.
(d) In addition to any other duties provided by this article
or by the board, the pool manager shall:
(1) receive and pass on applications from public entities
for insurance coverage from the pool;
(2) negotiate contracts for the pool;
(3) prepare premium rate schedules for the approval of the
board;
(4) collect and compile statistical data relating to the
insurance coverage provided by the pool, including relevant loss,
expense, and premium data, and make that information available to
the board; and
(5) prepare and submit to the board for approval proposed
policy forms for pool coverage.
(e) The pool manager may refuse to renew the coverage of any
public entity insured by the pool based on the guidelines provided
by the plan of operation.
Employees and other personnel
Sec. 8. (a) The pool manager shall employ or contract with
persons necessary to assist the board and pool manager in carrying
out the powers and duties of the pool.
(b) The board shall approve compensation paid to employees
of the pool and contracts made with other persons under this
section.
(c) The board may require any employee or person with whom
it contracts under this section to execute a bond in an amount
determined by the board, payable to the board, and conditioned on
the faithful performance of the employee's or person's duties or
responsibilities to the pool.
(d) An employee or person with whom the pool has contracted
under this section is not liable with respect to any claim or
judgment for which coverage is provided by the pool or for any claim
or judgment against any public entity covered by the pool against
whom a claim is made.
Office
Sec. 9. (a) The pool shall maintain its principal office in
Austin, Texas.
(b) The records, files, and other documents and information
relating to the pool must be maintained in the pool's principal
office.
Rules
Sec. 10. The board may adopt and amend rules to carry out this
article.
General powers and duties
Sec. 11. (a) The pool shall:
(1) issue insurance coverage to each public entity entitled
to coverage under this article;
(2) collect premiums for coverage issued or renewed by the
pool;
(3) process and pay valid claims; and
(4) maintain detailed data regarding the pool.
(b) The pool may:
(1) enter into contracts;
(2) purchase reinsurance;
(3) cancel or refuse to renew coverage; and
(4) perform any other acts necessary to carry out this
article, the plan of operation, and the rules adopted by the board.
Texas public entity excess insurance fund
Sec. 12. (a) On creation of the pool, the board shall create
the Texas public entity excess insurance fund.
(b) The fund is composed of:
(1) premiums paid by public entities for coverage by the
pool;
(2) proceeds from bonds and other money received by the pool
to cover the expenses of the fund;
(3) investments and money earned from investments of the
fund; and
(4) any other money received by the pool.
(c) The pool manager shall manage the fund under the general
supervision of the board.
(d) Administrative expenses of the pool may be paid from the
fund.
(e) Money in the fund may not be used to pay punitive
damages, fines or penalties for violation of a civil or criminal
statute, or fines or penalties imposed for violation of an
administrative rule or regulation or a public entity order or
ordinance.
(f) Money for a claim may not be paid from the fund under
excess insurance coverage unless and until all benefits payable
under any other underlying policy or self-insurance covering the
claim or judgment are exhausted.
(g) The board may select one or more banks to serve as
depository for money of the fund. Before the pool manager deposits
fund money in a depository bank in an amount that exceeds the
maximum amount secured by the Federal Deposit Insurance
Corporation, the bank must execute a bond or provide other security
in an amount sufficient to secure from loss the fund money that
exceeds the amount secured by the Federal Deposit Insurance
Corporation.
Investments
Sec. 13. (a) The fund manager, under the general supervision
of the board, shall manage and invest the money in the fund in the
manner provided by the plan of operation.
(b) Money earned by investment of money in the fund must be
deposited in the fund or reinvested for the fund.
Premium rates; limits of coverage
Sec. 14. (a) The board shall determine the rates for premiums
that will be charged and the maximum limits of coverage provided to
assure that the pool is actuarially sound.
(b) The pool manager shall prepare the statistical data and
other information and the proposed rate schedules and maximum
limits of insurance coverage for consideration of the board.
(c) The board shall periodically reexamine the rate
schedules and the maximum limits of insurance coverage as
conditions change.
Coverage period
Sec. 15. (a) On accepting insurance coverage from the pool, a
public entity is authorized to and shall maintain that coverage for
a period not less than 35 calendar months following the month the
coverage is issued.
(b) A public entity that voluntarily discontinues insurance
coverage in the pool may not again obtain coverage from the pool for
at least 36 calendar months following the month in which the
coverage was discontinued.
Coverage
Sec. 16. Excess coverage provided by the pool may be provided
on a claims-made or an occurrence basis.
Punitive damages
Sec. 17. Excess coverage provided by the pool may not provide
coverage for punitive damages.
Nonrenewal
Sec. 18. (a) The pool may refuse to renew the insurance
coverage of any public entity that fails to comply with the pool's
underwriting or risk management guidelines.
(b) A public entity whose insurance coverage is not renewed
by the pool is not eligible to apply for new coverage during the 11
calendar months beginning after the month in which the pool gave
written notice that it would not renew the coverage.
Shortage of available money
Sec. 19. (a) If money in the fund will be exhausted by payment
of all final and settled claims and final judgments during the
fiscal year, the amount paid by the pool to each person having a
claim or judgment shall be prorated, with each person receiving an
amount that is equal to the percentage the amount owed to him by the
pool bears to the total amount owed, outstanding, and payable by the
pool.
(b) The remaining amount that is due and unpaid to a person
who receives prorated payment under Subsection (a) of this section
must be paid by the member city incurring the original liability.
Application of other laws
Sec. 20. (a) Except as provided by Subsection (b) of this
section, the pool is not considered insurance under the Insurance
Code and other laws of this state, and the State Board of Insurance
has no jurisdiction over the pool.
(b) The pool is subject to Articles 1.24A, 1.24B, and 21.21
of this code.
Sec. 21. Expired.
Added by Acts 1987, 70th Leg., 1st C.S., ch. 1, Sec. 5.09, eff.
Sept. 2, 1987.
Article: 21.49-3d 21.49-4 21.49-4a 21.49-5 21.49-6 21.49-7 21.49-8 21.49-11 21.49-13 21.49-14 21.49-15 21.49-15A 21.49-16 21.49-17 21.49-18
Last modified: August 11, 2007
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