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Texas Insurance Code - Not Codified - Article 5.13-1. Legal Service Contracts

Legal Research Home > Texas Lawyer > Insurance Code - Not Codified > Texas Insurance Code - Not Codified - Article 5.13-1. Legal Service Contracts

Art. 5.13-1. LEGAL SERVICE CONTRACTS.  (a) Every insurer 
governed by Subchapter B of Chapter 5 of the Insurance Code, as 
amended, and every life, health, and accident insurer governed by 
Chapter 3 of the Insurance Code, as amended, is authorized to issue 
prepaid legal services contracts.  Every such insurer or rating 
organization authorized under Article 5.16 of the Insurance Code 
shall file with the State Board of Insurance all rules and forms 
applicable to prepaid legal service contracts in a manner to be 
established by the State Board of Insurance.  Certification, by a 
qualified actuary, to the appropriateness of the charges, rates, or 
rating plans, based upon reasonable assumptions, shall accompany 
the filing along with adequate supporting information.
	(b)  The State Board of Insurance shall, within a reasonable 
period, approve any form if the requirements of this section are 
met.  It shall be unlawful to issue such forms until approved or to 
use such schedules of charges, rates, or rating plans until filed.  
If the State Board of Insurance has good cause to believe such rates 
and rating plans do not comply with the standards of this article, 
it shall give notice in writing to every insurer or rating 
organization which filed such rates or rating plans, stating 
therein in what manner and to what extent such noncompliance is 
alleged to exist and specifying therein a reasonable time, not less 
than 30 days thereafter, in which such noncompliance may be 
corrected.  If the board has not acted on any form, rate, rating 
plan, or charges within 30 days after the filing of same, they shall 
be deemed approved.  The board may require the submission of 
whatever relevant information is deemed necessary in determining 
whether to approve or disapprove a filing made pursuant to this 
section.
	(c)  The right of such insurers to issue prepaid legal 
services contracts on individual, group, or franchise bases is 
hereby recognized, and qualified agents of such insurers who are 
licensed under Article 21.07-1 or 21.14 of this code shall be 
authorized to write such coverages under such rules as the 
commissioner may prescribe.
	(d)  The State Board of Insurance is hereby vested with power 
and authority under this article to promulgate, after notice of 
hearing, and to enforce, rules and regulations concerning the 
application to the designated insurers of this article and for such 
clarification, amplification, and augmentation as in the 
discretion of the State Board of Insurance are deemed necessary to 
accomplish the purposes of this article.
	(e)  This article shall be construed as a specific exception 
to Article 3.54 of the Texas Insurance Code.
	(f)  All legal services contracts and related promotional 
material issued pursuant to Chapter 23 and the issuance of legal 
services contracts pursuant to Article 5.13-1 shall be truthful and 
accurate and shall properly describe the coverage offered.  Such 
description should include, but not be limited to, a description of 
coverage offered as either an indemnity coverage or a contract that 
provides only consultation and advice on simple legal matters, 
either alone or in combination with a referral service, and that 
provides fee discounts for other matters.  To provide for the 
actuarial soundness of a prepaid legal services contract issued 
under this article, the State Board of Insurance may require that 
prepaid legal services contracts have rates that are adequate to 
reasonably provide the benefits under the prepaid legal services 
contracts.  This subsection does not apply to a prepaid legal 
services contract that provides only consultation and advice on 
simple legal matters, either alone or in combination with a 
referral service, and that provides fee discounts for other 
matters.
	(g)  The State Board of Insurance may not determine, fix, 
prescribe, set, or promulgate maximum rates or maximum amounts of 
premium to be charged for a prepaid legal services contract issued 
under this chapter.  Nothing in this Act shall be construed as 
compelling the State Board of Insurance to establish standard or 
absolute rates and the board is specifically authorized, in its 
discretion, to approve different rates for different insurers for 
the same risk or risks on the types of insurance covered by this 
article.  The board shall approve such rates as filed by any insurer 
unless it finds that such filing does not meet the requirements of 
this article.
	(h)  An insurer may not issue or renew a prepaid legal 
service contract under this article after March 1, 2004.

Added by Acts 1975, 64th Leg., p. 134, ch. 60, Sec. 2, eff. Sept. 1, 
1975.  

Subsecs. (a), (b), (f), (g) amended by Acts 1995, 74th Leg., ch. 
873, Sec. 1, eff. Sept. 1, 1995;  Subsec. (c) amended by Acts 2001, 
77th Leg., ch. 703, Sec. 7.03, eff. Sept. 1, 2001.  Subsec. (h) 
added by Acts 2003, 78th Leg., ch. 1181, Sec. 2, eff. Sept. 1, 2003.

Last modified: August 11, 2007