Texas Insurance Code § 961.203 Claim Fund; Expense Fund

Sec. 961.203. CLAIM FUND; EXPENSE FUND. (a) A nonprofit legal services corporation shall maintain a claim fund and an expense fund.

(b) The claim fund is composed of:

(1) application fees; and

(2) at least 70 percent of the regular payments by participants, except the department may adjust this percentage on a showing that the adjustment:

(A) is in the best interest of the persons receiving legal services under the contract at the time of the adjustment; or

(B) is necessary for the corporation's development during its first year of existence.

(c) Money in the claim fund must be maintained as cash or in demand deposits or invested in:

(1) certificates of deposit, share accounts, and time deposits in a public bank or savings and loan association the deposits of which are insured by a federal government agency; or

(2) obligations of a state or the federal government.

(d) Money in the expense fund may be invested only in legal investments for the capital, surplus, and contingency funds of a stock life insurance company.

(e) Net income from an investment of money in a fund accrues to that fund.

(f) Money in the claim fund may be disbursed only to pay:

(1) a valid claim;

(2) the cost of settling a contested claim;

(3) tax on the fund's income;

(4) a refund of a fee deposited in the fund;

(5) an expense directly incurred on or for preservation of an investment of the fund, including the cost of transferring a security; or

(6) an amount as provided by a contract under Section 961.207.

Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003.

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Last modified: September 28, 2016