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Texas Insurance Code - Not Codified - Article 21.49-6. Self-Insurance Trusts For Banks

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Art. 21.49-6. SELF-INSURANCE TRUSTS FOR BANKS.                                 

Article repealed effective April 1, 2007
	                                                                               

Definitions
	Sec. 1. In this article:                                                       
	(1)  "Bank" means any bank chartered under the provisions of 
federal or state law.
	(2)  "Board" means the State Board of Insurance.                               
	(3)  "Trustees" means the trustees of a self-insurance trust 
created under this article.

Authorization to create trusts to self-insure banks
	Sec. 2. On approval of its plan of organization and operation 
as provided in Section 3 of this article, a group or association of 
banks or bankers, composed of any number of members, may create a 
trust to self-insure banks that are members of the group or 
association or any of whose officers are members of the group or 
association against losses resulting from (a) dishonest acts and 
criminal acts of employees or losses resulting from robbery or 
other acts commonly included within a bank's bond coverage, and (b) 
indemnification for wrongful acts committed by directors, 
officers, and employees of a member of the group or association 
subject to the limitations contained in Article 2.02-1, Texas 
Business Corporation Act.

Plan of Organization and Operation
	Sec. 3. Before organizing and operating a trust as provided 
in this article, the group or association proposing to organize the 
trust shall select trustees to administer the trust and shall 
prepare a detailed plan of organization and operation in the form 
and manner prescribed by the board.  The plan shall be submitted to 
the board for examination, suggested changes, and final approval, 
and may be amended from time to time with the approval of the board.

Approval of Plan
	Sec. 4. The board shall approve a self-insurance plan under 
this article only if it is satisfied that the trust has and will 
continue to possess the ability to pay valid claims made against it.

Creation of Trust Fund
	Sec. 5. (a) The trustees of the self-insurance trust shall 
create a trust fund to pay claims made under the coverage provided 
in Section 2 of this article.
	(b)  The fund shall be under the administration and control 
of the trustees and shall be paid out on claims and shall be 
invested as provided in the plan.

Participation in trust;  contributions
	Sec. 6. Any bank that is a member or any of whose officers are 
members of the group or association organizing the trust may 
participate in the self-insurance trust by entering into contract 
or agreement with the trustees for insurance under the trust 
against losses resulting from (a) dishonest acts or criminal acts 
of its employees or losses resulting from robbery or other acts 
commonly included within a bank's bond coverage, and (b) 
indemnification for wrongful acts committed by directors, 
officers, and employees of a member of the group or association 
subject to the limitations contained in Article 2.02-1, Texas 
Business Corporation Act.  The bank or officers shall pay the 
required contribution to the trust fund.

Amount of Coverage
	Sec. 7. The amount of coverage to be provided banks 
participating in the trust and the amount of contributions to be 
paid by those banks shall be determined by the trustees as provided 
in the plan.

Professional Staff and Consultants
	Sec. 8. (a) The trustees shall employ appropriate 
professional staff and consultants for program management.
	(b)  Salaries for professional staff and consultants and for 
paying the costs of administering the trust program shall be paid 
from the trust fund;  provided that, the total amount for payment of 
salaries and administration shall not exceed an amount fixed by the 
board but in no event to exceed 35 percent of the total amount of 
money in the trust fund in any one year.

Continuing Supervision
	Sec. 9. A self-insurance trust approved by the board under 
the provisions of this article is subject to the continuing 
supervision of the board relating to its solvency and to approval of 
its policy forms, and the board may set certain minimum 
requirements to ensure the capability of the trust to satisfy its 
contractual obligations.

Rules
	Sec. 10. The board may adopt necessary rules to carry out the 
provisions of this article.

Trust Not Engaged in Business of Insurance
	Sec. 11. A self-insurance trust created under this article is 
not engaged in the business of insurance under this code and under 
other laws of this state, and the provisions of any chapters or 
articles of this code, including Article 21.28-C, are declared 
inapplicable to a trust organized and operated under this article.

Added by Acts 1977, 65th Leg., p. 1698, ch. 674, Sec. 1, eff. June 
15, 1977.

Sec. 2 amended by Acts 1987, 70th Leg., ch. 164, Sec. 1, eff. May 25, 
1987;  Sec. 6 amended by Acts 1987, 70th Leg., ch. 164, Sec. 2, eff. 
May 25, 1987.

Last modified: August 11, 2007