Texas Insurance Code - Not Codified - Article 5.20. Rebates Prohibited
Legal Research Home >
Texas Lawyer > Insurance Code - Not Codified > Texas Insurance Code - Not Codified - Article 5.20. Rebates Prohibited
Art. 5.20. REBATES PROHIBITED.
Article repealed effective April 1, 2007
(a) Except as provided by this article, no insurer or
employee thereof, and no broker or agent shall knowingly issue any
policy of insurance nor charge, demand or receive a premium thereon
except in accordance with the applicable filing. No insurer or
employee thereof, and no broker or agent shall pay, allow or give,
or offer to pay, allow, or give, directly or indirectly, as an
inducement to insurance, or after insurance has been effected, any
rebate, discount, abatement, credit or reduction of the premium
named in a policy of insurance, or any special favor or advantage in
the dividends or other benefits to accrue thereon, or any valuable
consideration or inducement whatever, not specified in the policy
of insurance, except to the extent provided for in such applicable
filing. No insured named in a policy of insurance, nor any employee
of such insured shall knowingly receive or accept, directly or
indirectly, any such rebate, discount, abatements, or reduction of
premium, or any special favor or advantage or valuable
consideration or inducement.
(b) Nothing in this article, however, shall be construed to
prohibit an insurer from sharing its profits after the same have
been earned with its policyholders under and in accordance with an
agreement as to such profit sharing contained in its policy
contract. Any profit sharing under any policy with insured shall be
uniform as between such insured, and shall consist only and solely
of the equitable distribution under and in accordance with the
terms of the policy of earnings between such insured, and no such
insurer shall discriminate in any distribution of profits between
insured of a class, and no classes for such distribution shall be
made or established except on the approval of the commissioner. No
part of any profit shall be distributed to any insured under any
such policy until the expiration of the policy contract, provided
no distribution of profits or dividends to insured shall take
effect or be paid until the same shall have been approved by the
commissioner; and provided further, that no such distribution
shall be approved until adequate reserves shall have been provided,
such reserves to be computed on the same basis for all classes of
insurers operating under this subchapter. Any violation of the
terms of this article shall constitute unjust discrimination and
shall constitute rebating, and shall be sufficient grounds for the
revocation of the permit of the insurer or of the license of the
agent being guilty of such unjust discrimination and rebating;
provided further, that nothing in this subchapter shall be
construed to prohibit the modification of rates by any rating plan
authorized under this subchapter.
(c) This article does not prohibit an insurer, on approval
by the commissioner, from sharing profits with policyholders who
are part of a group program established by a nonprofit business
association and who participate in the group program because of
membership in the association. An insurer that elects to make
distributions under this subsection shall file a written
description of its distribution program with the commissioner for
approval by the commissioner and shall notify the commissioner in
writing of each distribution made under the program. If the
commissioner does not act on the insurer's distribution program
within five business days of receipt of the insurer's distribution
program, the distribution program is considered approved. For
purposes of this subsection, "nonprofit business association"
means a business association that is a nonprofit corporation exempt
from federal income tax under Section 501(a) of the Internal
Revenue Code of 1986, and its subsequent amendments, by being
listed as an exempt organization under Section 501(c)(6) of that
code.
(d) As used in this article:
(1) "Insurance" includes suretyship.
(2) "Insurer" means an insurance company or other legal
entity described by Subsection (a), Article 5.13, of this code.
(3) "Policy" includes a bond.
Acts 1951, 52nd Leg., ch. 491.
Amended by Acts 1991, 72nd Leg., ch. 242, Sec. 2.20, eff. Sept. 1,
1991; Acts 1999, 76th Leg., ch. 1240, Sec. 2, eff. June 18, 1999;
Acts 2005, 79th Leg., ch. 631, Sec. 2, eff. Sept. 1, 2005.
Article: 5.14 5.15-1 5.15-2 5.15-3 5.15-4 5.18 5.19 5.20 5.21 5.22 5.23 5.25 5.25,
ante
Art 5.25-1
Last modified: August 11, 2007
|
