Texas Insurance Code - Not Codified - Article 21.81. Texas Automobile Insurance Plan Association
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Texas Laws > Insurance Code - Not Codified > Texas Insurance Code - Not Codified - Article 21.81. Texas Automobile Insurance Plan Association
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Art. 21.81. TEXAS AUTOMOBILE INSURANCE PLAN ASSOCIATION.
Article repealed effective April 1, 2007
Sec. 1. In this article:
(1) "Association" means the Texas Automobile Insurance Plan
Association established under this article.
(2) "Authorized insurer" means any insurer authorized by
the Texas Department of Insurance to write motor vehicle liability
coverage under the provisions of Chapter 5 of this code. Except as
provided by Section 13(f), Article 5.13-2 of this code, the term
does not include an insurer organized under Chapter 17 of this code.
(3) "Insurance" means an insurance policy that meets the
requirements of the Texas Motor Vehicle Safety-Responsibility Act
(Article 6701h, Vernon's Texas Civil Statutes).
(4) "Plan of operation" means the plan for operating the
association to provide a means by which insurance may be assigned to
an eligible person who is required by law to show proof of financial
responsibility for the future.
Creation of the Association
Sec. 2. (a) The Texas Automobile Insurance Plan Association
is established. The association is a nonprofit corporate body
composed of all authorized insurers. Each authorized insurer shall
be a member of the association and shall remain a member of the
association so long as the association is in existence as a
condition of its authority to write motor vehicle liability
insurance in this state.
(b) The association shall be administered by a governing
committee composed of fifteen members selected as follows:
(1) eight members who represent the interests of insurers,
elected by the members of the association according to a method
determined by such members;
(2) five public members nominated by the Office of Public
Insurance Counsel and selected by the commissioner; and
(3) two members who are licensed local recording agents, as
defined by the plan of operation.
(c) 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.
(d) A person may not serve on the governing committee as a
public member if that person, an individual related to that person
within the second degree of consanguinity or affinity, or an
individual residing in the same household with that person is:
(1) required to be registered or licensed under this code or
another insurance law of this state;
(2) employed by or acts as a consultant to a person required
to be registered or licensed under this code or another insurance
law of this state;
(3) the owner of, has a financial interest in, or
participates in the management of an organization required to be
registered or licensed under this code or another insurance law of
(4) an officer, employer, or consultant of an association in
the field of insurance; or
(5) required to register as a lobbyist under Chapter 305,
Authority of the Association; Plan of Operation
Sec. 3. (a) The governing committee has the responsibility
for the administration of the association through the plan of
operation. The association may collect funds from the member
companies to provide for the operation of the association.
Assessments must be made upon member companies in proportion to
their writings of motor vehicle liability insurance in this state.
If an assessment made upon a member insurer is not paid within a
reasonable time, the association may bring an action to collect the
assessment. In addition, the association may report the failure to
pay to the commissioner, who may institute a disciplinary action
under Article 1.10 of this code. The association has the powers
granted to nonprofit corporations under the Texas Non-Profit
Corporation Act (Article 1396-1.01 et seq., Vernon's Texas Civil
(b) The plan of operation of the association must provide
for the efficient, economical, fair, and nondiscriminatory
administration of the association.
(c) Subject to the approval of the commissioner, the
governing committee may make and amend the plan of operation.
(d) If the commissioner at any time believes that any part
of the plan of operation is not in keeping with the purposes of the
Texas Motor Vehicle Safety-Responsibility Act (Article 6701h,
Vernon's Texas Civil Statutes), the commissioner shall notify the
governing committee in writing so that the governing committee may
take corrective action.
(e) Among other provisions, the plan of operation must
contain incentive programs to encourage members to write insurance
on a voluntary basis and to minimize the use of the association as a
means to obtain insurance. The incentive programs are effective on
approval of the commissioner. One of these programs shall target
underserved geographic areas which shall be determined and
designated by the commissioner by rule. In determining which areas
will be designated as underserved, the commissioner shall consider
the availability of insurance, the number of uninsured drivers, the
number of drivers insured through the association, and any other
(f) The plan of operation must include a voluntary,
competitive limited assignment distribution plan that allows
members to contract directly with a servicing carrier to accept
assignments to that carrier by the association. A servicing
carrier must be an insurance company licensed to write automobile
insurance in this state and is qualified if it has written
automobile liability insurance in Texas for at least five years or
is currently engaged as a servicing carrier for assigned risk
automobile business in at least one other state. After notice and
hearing, the commissioner may prohibit an insurer from acting as a
servicing carrier. The terms of the contract between the servicing
carrier and the insurer, including the buy-out fee, shall be
determined by negotiation between the parties. The governing
committee may adopt reasonable rules for the conduct of business
under the contract and may establish reasonable standards of
eligibility for servicing carriers.
Duties and Functions of the Association
Sec. 4. (a) The association shall provide a means by which
insurance may be assigned to an authorized insurance company for a
person required by the Texas Motor Vehicle Safety-Responsibility
Act (Article 6701h, Vernon's Texas Civil Statutes) to show proof of
financial responsibility for the future.
(b) An applicant is not eligible for insurance through the
association unless the applicant and the servicing agent certify as
part of the application to the association that the applicant has
been rejected for insurance by at least two insurers licensed to do
business in this state and actually writing automobile insurance in
this state, including insurers that are not rate regulated.
(c) Repealed by Acts 1995, 74th Leg., ch. 619, Sec. 1, eff.
Sept. 1, 1995.
Rates for insurance; hearing
Sec. 5. (a) The commissioner shall determine and prescribe
appropriate rates to be charged for insurance provided through the
association that are just, reasonable, adequate, not excessive, not
confiscatory, and not unfairly discriminatory for the risks to
which they apply. 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. In making a
determination, the commissioner shall consider the reports of
aggregated premiums earned and losses and expenses incurred in the
writing of motor vehicle insurance through the plan collected under
the statistical plan provided for by Subsection (b) of this
(b) The commissioner shall promulgate reasonable rules and
statistical plans to be used by each insurer in the recording and
reporting of its premium, loss, and expense experience which must
be reported separately for business assigned to it and other data
required by the commissioner.
(c) The association shall file annually with the department
for approval by the commissioner rates to be charged for insurance
provided through the association. The association may not make
such a filing more than once in any 12-month period. Subchapter B,
Chapter 40, of this code does not apply to:
(1) a filing made under this subsection;
(2) Subsections (d)-(h) of this section; or
(3) a department action with respect to such a filing.
(d) Before approving, disapproving, or modifying a filing
made under Subsection (c) of this section, the commissioner shall
provide all interested persons a reasonable opportunity to:
(1) review the filing;
(2) obtain copies of the filing on payment of any legally
required copying cost; and
(3) submit to the commissioner written comments, analyses,
or information related to the filing.
(e) Not later than the 45th day after the date on which the
department receives the filing required under Subsection (c) of
this section, the commissioner shall schedule a hearing at which
interested persons may present written or oral comments relating to
the filing. A hearing under this subsection is not a contested case
hearing under Chapter 2001, Government Code. The association, the
public insurance counsel, and any other interested person or entity
that has submitted proposed changes or actuarial analyses may ask
questions of any person testifying at the hearing.
(f) The department shall file with the Texas Register notice
that a filing has been made under Subsection (c) of this section not
later than the seventh day after the date the filing is received by
the department. The notice must include information relating to:
(1) the availability of the filing for public inspection at
the department during regular business hours and the procedures for
obtaining copies of the filing;
(2) procedures for making written comments related to the
(3) the time, place, and date of the hearing scheduled under
Subsection (e) of this section.
(g) After the conclusion of the hearing, the commissioner
shall approve, disapprove, or modify the filing in writing. If the
commissioner disapproves a filing, the commissioner shall state in
writing the reasons for the disapproval and the criteria to be met
by the association to obtain approval. The association may file
with the commissioner, not later than the 10th day after the date on
which the association receives the commissioner's written
disapproval, an amended filing to comply with the commissioner's
(h) Before approving or disapproving an amended filing, the
commissioner shall provide all interested persons a reasonable
opportunity to review the amended filing, obtain copies of the
amended filing on payment of any legally required copying cost, and
submit to the commissioner written comments or information related
to the amended filing in the manner provided by Subsection (d) of
this section, and may hold a hearing not later than the 20th day
after the date on which the department receives the amended filing
in the manner provided by Subsection (e) of this section. Not later
than the 10th day after the date on which the hearing on the amended
filing is concluded, the commissioner shall approve or disapprove
the amended filing. Not later than the 30th day after the date on
which the amended filing is received by the department, the
commissioner shall disapprove the amended filing or it is
considered approved. The requirements adopted under Subsections
(f) and (g) of this section apply to a hearing conducted under this
(i) A person aggrieved by a decision of the commissioner
under this section may, not later than the 30th day after the date
of the commissioner's decision, appeal the decision. An appeal of a
commissioner's decision under this section must be made in
accordance with Subchapter D, Chapter 36, of this code.
Immunity from Liability
Sec. 6. (a) The association, a member of the governing
committee, and any employee of the association is not personally
liable for any act performed in good faith within the scope of the
person's authority as determined under this article or the plan of
operation or for damages occasioned by his or her official acts or
omissions except for an act or omission that is corrupt or
malicious. The association shall provide counsel to defend any
action brought against a member of the governing committee or an
employee by reason of the person's official act or omission whether
or not at the time of the institution of the action the defendant
has terminated service with the association.
(b) This section is cumulative with and does not affect or
modify any common law or statutory privilege or immunity.
Added by Acts 1993, 73rd Leg., ch. 685, Sec. 14.03, eff. Sept. 1,
1993. Sec. 4(c) repealed by Acts 1995, 74th Leg., ch. 619, Sec. 1,
eff. Sept. 1, 1995; Sec. 5 amended by Acts 2001, 77th Leg., ch.
1071, Sec. 4, eff. Sept. 1, 2001; Sec. 1(2) amended by Acts 2003,
78th Leg., ch. 206, Sec. 21.39, eff. June 11, 2003.
Last modified: August 11, 2007