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Texas Insurance Code - Not Codified - Article 21.49-14. Texas Nonprofit Organizations Liability Pool
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Art. 21.49-14. TEXAS NONPROFIT ORGANIZATIONS LIABILITY
POOL.
Article repealed effective April 1, 2007
Definitions
Sec. 1. In this article:
(1) "Pool" means the Texas Nonprofit Organizations
Liability Pool.
(2) "Fund" means the Texas nonprofit organizations
liability fund.
(3) "Board" means the board of trustees of the pool.
(4) "Nonprofit organization" means an organization that is
exempt under Section 501(c)(3) or (4), Internal Revenue Code of
1986.
Creation of pool
Sec. 2. On written agreement of the chief executive officers
of not fewer than 15 nonprofit organizations, the Texas Nonprofit
Organizations Liability Pool is created to provide primary and
excess liability insurance coverage as provided by this article.
Scope of coverage
Sec. 3. (a) The pool shall insure a nonprofit organization
and its officers and employees against liability for acts and
omissions under the laws of this state.
(b) Under the liability insurance coverage, the pool shall
provide primary and excess liability coverage to nonprofit
organizations that qualify under this article and the plan of
operation for the pool.
(c) The pool may provide primary liability coverage to a
nonprofit organization in an amount not to exceed $250,000. The
pool may provide excess liability coverage to a nonprofit
organization in an amount that is found by the board to be
actuarially sound.
(d) The pool may participate in the evaluation, settlement,
and defense of a claim against a nonprofit organization insured by
the pool if the claim is covered by pool coverage.
(e) Under pool coverage, the pool is liable on any claim
only to the limit provided by the coverage of the nonprofit
organization against which the claim is made.
Participation in the pool
Sec. 4. A nonprofit organization is entitled to coverage from
the pool on:
(1) submitting a complete application;
(2) providing any other information required by the pool;
(3) meeting the underwriting standards established by the
pool; and
(4) paying the premiums required for the coverage.
Plan of operation
Sec. 5. (a) At the time the chief executive officers of the
nonprofit organizations enter into the written agreement under
Section 2 of this article, the chief executive officers shall
select nine persons to serve as a temporary board to draft the plan
of operation for the pool.
(b) Within 30 days after selection, the members of the
temporary board shall meet to prepare a detailed plan of operation
for the pool.
(c) 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, including the
method of selection of the board, 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 contributions and other 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 standards and procedures for the
evaluation of risks; provided that such standards shall include,
but not be limited to, the requirement that all participants in the
pool receive on-going training in the methods of controlling
liability losses;
(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) methods, procedures, and guidelines for negotiating and
paying settlements, defense of claims, and paying judgments;
(7) procedures for the processing and payment of claims;
(8) methods and procedures for defraying any losses and
expenses of the pool;
(9) methods, procedures, and guidelines for the management
and investment of the fund; and
(10) guidelines for nonrenewal of coverage.
(d) The temporary board shall complete and adopt the plan of
operation within 90 days after the date of the appointment of the
temporary board.
(e) On completion of the plan of operation, the temporary
board shall submit the plan to the State Board of Insurance for
examination, suggested changes, and final approval. The State
Board of Insurance shall approve the plan of operation under this
subsection only if it is satisfied that the pool has and will
continue to possess the ability to pay valid claims made against it.
(f) The plan of operation may be amended by the board with
the approval of the State Board of Insurance; provided that such
plan shall maintain the requirement that all participants in the
pool receive on-going training in the methods of controlling
liability losses.
(g) Within 15 days after the day on which the plan of
operation is approved by the State Board of Insurance, the first
board must be selected as provided by the plan of operation. The
members of the first board shall take office not later than the 30th
day after the date of the adoption of the plan of operation.
Board of trustees
Sec. 6. (a) The pool is governed by a board of nine trustees
selected as provided by the plan of operation. Four of the members
of the board of trustees shall be representatives of the general
public. A public representative may not be:
(1) an officer, director, or employee of an insurance
company, insurance agency, agent, broker, solicitor, adjuster, or
any other business entity regulated by the State Board of
Insurance;
(2) a person required to register with the secretary of
state under Chapter 305, Government Code; or
(3) related to a person described by Subdivision (1) or (2)
of this subsection within the second degree of affinity or
consanguinity.
(b) Members of the board serve for staggered terms of two
years with the terms of four trustees expiring in odd-numbered
years as provided by the plan of operation.
(c) A vacancy on the board shall be filled as provided by the
plan of operation.
(d) Each member of the board shall execute a bond in the
amount required by the plan of operation payable to the pool and
conditioned on the faithful performance of his duties. The pool
shall pay the cost of the bond.
(e) Members of the board are not entitled to compensation
for their service on the board.
(f) The board shall select from its membership persons to
serve as chairman, vice-chairman, and secretary. The persons
selected serve in that capacity for terms of one year that expire as
provided by the plan of operation.
(g) The board shall hold meetings at the call of the
chairman and at times established by its rules.
(h) A majority of the members of the board constitutes a
quorum.
(i) In addition to other duties provided by this article and
the plan of operation, the board shall:
(1) approve contracts other than insurance contracts issued
to nonprofit organizations 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.
(j) 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.
(k) 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
a claim or judgment against a nonprofit organization covered by the
pool against whom a claim is made.
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 execute a bond in the amount
determined by the board, payable to the pool, conditioned on the
faithful performance of his duties. The pool shall pay the cost of
the bond.
(d) 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.
(e) 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 nonprofit
organizations for liability 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
liability coverage provided by the pool, including relevant loss,
expense, and premium data, and make that information available to
the board and to the public; and
(5) prepare and submit to the board for approval proposed
policy forms for pool coverage.
(f) The pool manager may refuse to renew the coverage of any
nonprofit organization 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 a nonprofit organization covered by the pool
against whom a claim is made.
Records; information
Sec. 9. 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 primary and excess liability coverage to each
nonprofit organization entitled to coverage under this article;
(2) collect premiums for coverage issued or renewed by the
pool;
(3) process and pay valid claims;
(4) maintain detailed data regarding the pool; and
(5) establish a plan to conduct loss control training or
contract with an outside organization or individual to establish
on-going training and facilities inspection programs designed to
reduce the potential liability losses of participants in 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 nonprofit organizations liability fund
Sec. 12. (a) On creation of the pool, the first board shall
create the Texas nonprofit organizations liability fund.
(b) The fund is composed of:
(1) premiums paid by nonprofit organizations for coverage
by the pool;
(2) contributions and other money received by the pool to
cover the initial 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, but payments for this purpose during any fiscal year of the
pool may not exceed 10 percent of the total amount of the money in
the fund during that fiscal year.
(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 of a state agency or an ordinance
or order of a local government.
(f) 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.
Contributions
Sec. 14. The board shall determine the amount of any
contributions necessary to meet initial expenses of the pool. The
board shall make this determination based on the data provided in
the plan of operation.
Premium rates; limits of coverage
Sec. 15. (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 coverage for consideration of the board.
(c) The board shall periodically reexamine the rate
schedules and the maximum limits of coverage as conditions change.
Coverage period
Sec. 16. (a) On accepting coverage from the pool, a nonprofit
organization shall maintain that coverage for a period of not less
than 24 calendar months following the month the coverage is issued.
(b) A nonprofit organization that voluntarily discontinues
coverage in the pool may not again obtain coverage from the pool for
at least 12 calendar months following the month in which the
coverage was discontinued.
Claims-made coverage
Sec. 17. Liability insurance coverage provided by the pool
may be provided on a claims-made basis on forms approved by the
State Board of Insurance.
Punitive damages
Sec. 18. Liability insurance coverage provided by the pool
may not provide coverage for punitive damages.
Nonrenewal
Sec. 19. (a) Except as provided by Subsection (b) of this
section, the pool may refuse to renew the coverage of any nonprofit
organization that fails to comply with the pool's underwriting
standards.
(b) The pool may not refuse to renew the coverage of a
nonprofit organization for the first 24 calendar months following
the month in which the nonprofit organization was first insured by
the pool; provided that the pool participant maintains
underwriting standards established by the plan of operation.
(c) Subsection (b) of Section 16 of this article does not
apply to discontinuance of a nonprofit organization's coverage if
the pool refuses renewal under this section. A nonprofit
organization whose coverage is not renewed is not eligible to apply
for new coverage during the 12 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. 20. (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 that
person 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 in the immediately following fiscal year.
Jurisdiction of insurance board; application of Insurance Code
Sec. 21. (a) Except as provided by Subsection (c) of this
section, the pool is not engaged in the business of insurance under
this code and other laws of this state, and this code and other
insurance laws of this state do not apply to the pool.
(b) In addition to this article, the pool is subject to:
(1) the requirement of this code and the State Board of
Insurance relating to reporting liability claims data;
(2) the requirements of Subchapter B, Chapter 5, of this
code relating to the making, filing, and approval of rates; and
(3) the continuing supervision of the State Board of
Insurance relating to the pool's solvency.
(c) The State Board of Insurance may set certain minimum
requirements to assure the capability of the pool to satisfy its
obligations.
(d) Article 21.28-C of this code does not apply to the pool.
(e) The State Board of Insurance shall charge the pool
reasonable fees for services performed by the board pursuant to
this Act.
Added by Acts 1987, 70th Leg., 1st C.S., ch. 6, Sec. 1, eff. Sept. 2,
1987. Sec. 6(a), (b) amended by Acts 1991, 72nd Leg., ch. 242, Sec.
9.14, eff. Sept. 1, 1991.
Article: 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 21.49-20 21.49A. FAIR PLAN (FAIR ACCESS TO INSURANCE
REQUIREMENTS) ACT.
Article repealed effective April 1, 2007
Authority; Purpose
Sec. 1. (a) If the commissioner determines, after a public
hearing, that in all or any part of the state residential property
insurance is not reasonably available in the voluntary market to a
substantial number of insurable risks or that at least 25 percent of
the applicants to the residential property market assistance
program who are qualified under the plan of operation have not been
placed with an insurer in the previous six-month period, the
commissioner may establish a FAIR (Fair Access to Insurance
Requirements) Plan to deliver residential property insurance to
citizens of this state in underserved areas, which shall be
determined and designated by the commissioner by rule.
(a-1) Expired.
(b) Except as provided by this subsection, each insurer, as
defined herein, as a condition of its authority to transact
residential property insurance in this state, shall participate in
the FAIR Plan Association in accordance with this Act. The Texas
Windstorm Insurance Association established by Article 21.49 of
this code may not participate in the FAIR Plan Association for any
purpose.
(c) The FAIR Plan may not provide windstorm and hail
insurance coverage for a risk eligible for that coverage under
Article 21.49 of this code.
Definitions
Sec. 2. (1) "FAIR Plan Association" or "association" means a
nonprofit association established pursuant to this Act to develop
and administer a program to provide residential property insurance
in designated underserved areas in this state.
(2) "Insurer" means any licensed insurer writing property
and casualty insurance in this state, including:
(A) a Lloyd's plan company; and
(B) a reciprocal or interinsurance exchange.
(3) "Residential property insurance" means the coverage
against loss to real or tangible personal property at a fixed
location provided in a homeowners policy, residential fire and
allied lines policy, or farm and ranch owners policy.
(4) "Inspection bureau" means the organization or
organizations designated by the FAIR Plan Association with the
approval of the commissioner to make inspections to determine the
condition of the properties for which residential property
insurance is sought and to perform such other duties as may be
authorized by the FAIR Plan Association or the commissioner. The
manner and scope of the inspection and evaluation report for
residential property shall be prescribed by the association
pursuant to the plan of operation.
(5) "Net direct premiums" means gross direct written
premiums less return premiums upon canceled contracts
(irrespective of reinsurance assumed or ceded) written on
residential property pursuant to this Act.
(6) "Underserved area(s)" means area(s) designated as
underserved by the commissioner by rule. In determining which
areas will be designated as underserved, the commissioner shall
consider the factors specified in Section 1, Article 5.35-3, of
this code.
Governing Committee; Plan of Operation
Sec. 3. (a) The FAIR Plan shall be administered by the
governing committee of the association pursuant to a plan of
operation. Subject to the approval of the commissioner, the
governing committee shall develop the plan of operation and propose
amendments thereto. The plan of operation and any amendments
thereto shall be adopted by the commissioner by rule. The governing
committee may on its own initiative or at the request of the
commissioner amend the plan of operation.
(b) The governing committee shall be composed of 11 members
appointed by the commissioner as follows:
(1) five members who represent the interests of insurers;
(2) four public members who reside in this state; and
(3) two members who are licensed general property and
casualty agents.
(c) The commissioner or the commissioner's designated
representative from within the Texas Department of Insurance shall
serve as an ex officio member.
(d) To be eligible to serve on the governing committee as a
representative of insurers, a person must be a full-time employee
of an authorized insurer that is a member of the association. A
member of the governing committee may be removed by the
commissioner without cause and replaced in accordance with
Subsection (b) of this section.
(e) The plan of operation shall provide:
(1) for establishment of a FAIR Plan Association for the
issuing of residential property insurance pursuant to this Act and
the distribution of the losses and the expenses in the writing of
such insurance in this state;
(2) that all insurers licensed to write property insurance
and writing residential property insurance shall participate in the
assessments of the association, in the proportion that the net
direct premiums, of each participating insurer, written in this
state during the preceding calendar year, bear to the aggregate net
direct premium written in this state by all participating insurers;
such information shall be determined in accordance with the
residential property statistical plan adopted by the commissioner;
(3) that a participating insurer is entitled to receive
credit for similar insurance voluntarily written in a designated
underserved area and its participation in the assessments of the
association shall be reduced in accordance with the provisions of
the plan of operation;
(4) for the immediate binding of eligible risks; for the
use of premium installment payment plans, adequate marketing, and
service facilities; and for the establishment of reasonable
service standards;
(5) procedures for efficient, economical, fair, and
nondiscriminatory administration of the FAIR Plan Association;
(6) procedures for determining the net level of
participation required for each insurer in the FAIR Plan
Association;
(7) for the use of deductibles and other underwriting
devices and for assessment of all members in amounts sufficient to
operate the association; and establish maximum limits of liability
to be placed through the program; and commissions to be paid to the
licensed agents submitting applications;
(8) that the association issue policies in its own name;
(9) reasonable underwriting standards for determining
insurability of the risk;
(10) procedures for the assumption and ceding of
reinsurance by the association; and
(11) any other procedures or operational matters deemed
necessary by the governing committee or the commissioner.
(f) Notwithstanding Chapter 551, Government Code, or any
other law, members of the governing committee may meet by telephone
conference call, video conference, or other similar
telecommunication method. The governing committee may use
telephone conference call, video conference, or other similar
telecommunication method for purposes of establishing a quorum or
voting or for any other meeting purpose in accordance with this
subsection and Subsection (g) of this section. This subsection
applies without regard to the subject matter discussed or
considered by the members of the governing committee at the
meeting.
(g) A meeting held by telephone conference call, video
conference, or other similar telecommunication method:
(1) is subject to the notice requirements applicable to
other meetings of the governing committee;
(2) may not be held unless notice of the meeting specifies
the location of the meeting at which at least one member of the
governing committee is physically present;
(3) must be audible to the public at the location specified
in the notice under Subdivision (2) of this subsection; and
(4) must provide two-way audio communication between all
members of the governing committee attending the meeting during the
entire meeting, and if the two-way audio communication link with
members attending the meeting is disrupted so that a quorum of the
governing committee is no longer participating in the meeting, the
meeting may not continue until the two-way audio communication link
is reestablished.
FAIR Plan Association
Sec. 4. Pursuant to procedures and requirements set forth in
the plan of operation, the FAIR Plan Association (association)
shall develop and administer a program for participation by all
insurers licensed to write property insurance in this state and
writing residential property insurance in this state. The
association shall make residential property insurance available to
applicants in underserved areas whose property is insurable in
accordance with reasonable underwriting standards but who, after
diligent efforts, are unable to procure such insurance through the
voluntary market, as evidenced by two declinations from insurers
licensed to write and actually writing residential property
insurance in the state.
Powers of the Association; Centralized Operations Authorized
Sec. 5. (a) The association is authorized, for FAIR Plan
purposes only, to issue policies of insurance and endorsements
thereto in its own name or a trade name duly adopted for that
purpose, and to act on behalf of all participating insurers in
connection with said policies and otherwise in any manner necessary
to accomplish the purposes of this Act, including but not limited to
issuance of policies, collection of premiums, issuance of
cancellations, and payment of commissions, losses, judgments, and
expenses.
(b) The participating insurers shall be liable to the
association as provided in this Act and the plan of operation for
the expenses and liabilities so incurred by the association, and
the association shall make assessments against the participating
insurers as required to meet such expenses and liabilities. In
connection with any policy issued by the association:
(1) service of any notice, proof of loss, legal process, or
other communication with respect to the policy shall be made upon
the association; and
(2) any action by the insured constituting a claim under the
policy shall be brought only against the association, and the
association shall be the proper party for all purposes in any action
brought under or in connection with any such policy. The foregoing
requirements shall be set forth in any policy issued by the
association and the form and content of any such policy shall be
subject to the approval of the commissioner.
(c) The association is authorized to assume and cede
reinsurance in conformity with the plan of operation.
(d) Each insurer must participate in the assessments of the
association in the proportion that its net direct premiums written
bear to the aggregate net direct premiums written by all insurers.
Coverage for Windstorm and Hail Insurance; Coverage for Certain
Property Located Over Water
Sec. 5A. (a) A policy issued by the association may include
coverage against loss or damage by windstorm or hail for:
(1) a building or other structure that is built wholly or
partially over water; and
(2) the corporeal movable property contained in a building
or structure described by Subdivision (1) of this subsection.
(b) The association may impose appropriate limits of
coverage and deductibles for coverage described by Subsection (a)
of this section.
(c) The governing committee of the association shall submit
any proposed changes to the plan of operation necessary to
implement Subsections (a) and (b) of this section to the
commissioner for the approval of the commissioner in the manner
provided by Section 3(a) of this article.
(d) The commissioner shall adopt rules as necessary to
implement this section, including any rules necessary to implement
changes in the plan of operation proposed under Subsections (a) and
(b) of this section.
Property Inspection; FAIR Plan Procedure
Sec. 6. (a) Any person having an insurable interest in real or
tangible personal property at a fixed location in an underserved
area who, after diligent effort has been unable to obtain
residential property insurance, as evidenced by two current
declinations from insurers licensed to write property insurance and
actually writing residential property insurance in the state, is
entitled upon application to the association to an inspection and
evaluation of the property by representatives of the inspection
bureau.
(b) Applications may be made on behalf of the applicant by a
licensed general lines property and casualty agent and shall be
submitted on forms prescribed by the association.
(c) Promptly after the request for inspection is received,
an inspection must be made and an inspection report filed with the
association and made available to the applicant upon request.
(d) If the inspection bureau finds that the residential
property meets the reasonable underwriting standards established
in the plan of operation, the applicant shall be so informed in
writing and a policy or binder shall be issued by the association.
If the residential property does not meet the criteria, the
applicant shall be informed, in writing, of the reasons for the
failure of the residential property to meet the criteria.
(e) If, at any time, the applicant makes improvements in the
residential property or its condition which the applicant believes
are sufficient to make the residential property meet the criteria,
a representative of the inspection bureau shall reinspect the
residential property upon request. In any case, the applicant for
residential property insurance shall be eligible for one
reinspection any time within 60 days after the initial FAIR Plan
inspection. If upon reinspection the residential property meets
the reasonable underwriting standards established in the plan of
operation, the applicant shall be so informed in writing and a
policy or binder shall be issued by the association.
Approval of Rates
Sec. 7. The association shall file with the commissioner for
approval the proposed rates and supplemental rate information to be
used in connection with the issuance of policies or endorsements.
Rates shall be set in an amount sufficient to carry all claims to
maturity and to meet the expenses incurred in the writing and
servicing of the business. Within 60 days of the filing of the
proposed rates, the commissioner shall enter an order either
approving or disapproving, in whole or in part, the proposed rates.
The commissioner may, upon notice to the association, extend the
period for entering an order under this section an additional 30
days. No such policies or endorsements shall be issued until such
time as the commissioner approves the rates to be applied to the
policy or endorsement. An order disapproving a rate shall state the
grounds for the disapproval and the findings in support thereof.
Appeals; Judicial Review
Sec. 8. (a) Any applicant or affected insurer has the right of
appeal to the association. A decision of the association may be
appealed to the commissioner within 30 days after such decision.
(b) All orders or decisions of the commissioner made
pursuant to this Act are subject to judicial review in accordance
with Subchapter D, Chapter 36, of this code.
Immunity from Liability
Sec. 9. There is no liability on the part of, and no cause of
action against insurers, the inspection bureau, the association,
the governing committee, their agents or employees, or the
commissioner or the commissioner's authorized representatives,
with respect to any inspections required to be undertaken by this
Act or for any acts or omissions in connection therewith, or for any
statements made in any report and communication concerning the
insurability of the property, or in the findings required by the
provisions of this Act, or at the hearings conducted in connection
with such inspections.
Insolvency
Sec. 10. In the event any participating insurer fails, by
reason of insolvency, to pay any assessment, the association shall
cause the reimbursement ratios to be immediately recalculated,
excluding therefrom the amount of the insolvent insurer's
assessment determined by the commissioner to be uncollectible, so
that such uncollectible amount is, in effect, assumed and
redistributed among the remaining participating insurers.
Assessments and Premium Surcharges
Sec. 11. Should a deficit occur in the association, the
association, at the direction of the commissioner, shall either
request the issuance of public securities as authorized by Article
21.49A-1 of this code or assess participating insurers in
accordance with this section. As reimbursement for assessments
paid under this section or service fees paid under Article 21.49A-1
of this code, each insurer may charge a premium surcharge on every
property insurance policy issued by it insuring property in this
state, the effective date of which policy is within the three-year
period commencing 90 days after the date of assessment by the
association under this section or commencing 90 days after payment
of a service fee under Article 21.49A-1 of this code. The amount of
the surcharge shall be calculated on the basis of a uniform
percentage of the premium on such policies equal to one-third of the
ratio of the amount of an insurer's assessment or service fee
payment to the amount of its direct earned premiums as reported in
its financial statement to the department for the calendar year
immediately preceding the year in which the assessment is made,
such that over the period of three years the aggregate of all such
surcharges by an insurer shall be at least equal to the amount of
the assessment or service fee payment of such insurer. The amount
of any assessment paid and surcharged under this section may be
carried by the member insurer as an admitted asset of the insurer
for all purposes, including exhibition in annual statements under
Section 862.001 of this code, until collected. The commissioner
shall adopt rules and procedures as necessary to implement this
section.
Sanctions
Sec. 12. If the association, inspection bureau, or
participating insurer is found to be in violation of or in failure
to comply with this Act, each entity shall be subject to the
sanctions authorized in Chapter 82 of this code and administrative
penalties authorized under Chapter 84 of this code. The
commissioner may also utilize any other disciplinary procedures
authorized by this code, including the cease and desist procedures
authorized by Chapter 83 of this code.
Annual Report
Sec. 13. The association shall compile a calendar year annual
operating report and submit such annual report to the commissioner
on or before March 31 of the following calendar year. This annual
report shall be a matter of public record.
Powers of the Commissioner
Sec. 14. (a) In addition to any powers conferred upon the
commissioner by this or any other law, the commissioner is charged
with the authority to supervise the association and the inspection
bureau. In addition, the commissioner has the power:
(1) to examine the operation of the association and the
inspection bureau through free access to all the books, records,
files, papers, and documents relating to their operation and may
summon, qualify, and examine as witnesses all persons having
knowledge of such operations, including the governing committee,
officers, or employees thereof;
(2) to do all things necessary to enable the State of Texas
and the association to fully participate in any federal program of
reinsurance which may be enacted for purposes similar to the
purposes of this Act;
(3) to require such reports from the association concerning
risks insured by the association pursuant to this Act as may be
deemed necessary; and
(4) to adopt policy forms, endorsements, rates, and rating
and rule manuals for use by the association.
Retention of Profits
Sec. 15. The association shall retain any profits of the
association to be used for the purposes of the association. The
profits of the association shall be used to mitigate losses,
including the purchase of reinsurance and the offset of future
assessments, and may not be distributed to insurers.
Assets of Association
Sec. 16. On dissolution of the association, all assets of the
association shall be deposited in the general revenue fund.
Added by Acts 1995, 74th Leg., ch. 415, Sec. 6, eff. Aug
Last modified: August 11, 2007
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