SUBCHAPTER A GENERAL PROVISIONS
- Texas Section 887.001 - Definitions
In this chapter: (1) "Assessment" means any money or thing of value, including premiums, paid in consideration of insurance provided by an insurance certificate. (2)...
- Texas Section 887.002 - Purpose
The primary purpose of this chapter and Chapter 888 is to secure to members and the beneficiaries of members the full and prompt payment of...
- Texas Section 887.003 - Applicability Of Chapter
(a) This chapter governs: (1) local mutual aid associations; (2) statewide mutual life associations; (3) life, health, and accident associations; (4) mutual assessment life, health,...
- Texas Section 887.004 - Inapplicability To Certain Organizations Of Members Of Religious Denomination
This chapter does not apply to an association that: (1) is not operated for profit; (2) is composed only of the members of a particular...
- Texas Section 887.005 - Department Of Public Safety Employee Mutual Association
Notwithstanding any other provision of this chapter, a mutual association for employees of the Department of Public Safety may provide coverage and benefits to retired...
- Texas Section 887.006 - Construction
(a) This chapter does not: (1) enlarge the powers or rights of any association; (2) enlarge the scope of an association's legal or corporate existence;...
- Texas Section 887.007 - Deposit Of Fees
The department shall deposit a fee collected under this chapter to the credit of the Texas Department of Insurance operating account. Added by Acts 2001,...
- Texas Section 887.008 - Interpretation Of Chapter By Commissioner
If a provision of this chapter appears obscure when applied to health, accident, or disability provisions in an insurance certificate issued by an association authorized...
SUBCHAPTER B GENERAL POWERS AND DUTIES; OFFICERS AND DIRECTORS
- Texas Section 887.009 - Rules
The commissioner may adopt reasonable rules to implement the purposes of this chapter. Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June...
- Texas Section 887.051 - Bylaws
(a) An association shall submit to the department a copy of the association's bylaws. The department shall examine the bylaws and approve the bylaws if...
- Texas Section 887.052 - Amendment Of Bylaws
(a) A majority of an association's members present at a regular meeting or at a meeting called for the purpose may amend the association's bylaws....
- Texas Section 887.053 - Immunity
An officer, director, or member of an association is not individually liable because of an insurance certificate issued by the association or a claim arising...
- Texas Section 887.054 - Financial Officer; Bond
(a) An association, by resolution entered in its minutes, shall designate an officer to be responsible for handling the association's funds. The president, secretary, or...
- Texas Section 887.055 - Bond Requirements For Certain Persons
(a) In addition to the bond required by Section 887.054 and any other bond required by law, an association shall obtain a separate or blanket...
- Texas Section 887.056 - Recovery On Bond
(a) On receipt of information that an officer of an association has violated the terms of a bond under Section 887. 054 or 887.055, the...
- Texas Section 887.057 - Deposit
(a) An association shall, through the department, deposit with the comptroller an amount equal to the largest risk assumed by the association on any one...
- Texas Section 887.058 - Change Of Association's Name
An association may change its name by amending the association's charter if: (1) the association submits the proposed amendment to the department for approval; and...
- Texas Section 887.059 - Books And Records
(a) An association shall keep the association's books and records in a form and manner that: (1) accurately reflects the condition of the association or...
- Texas Section 887.060 - Annual Statement
(a) Not later than April 1 of each year, an association shall file with the department a sworn statement of the association's condition on the...
- Texas Section 887.061 - Report On Condition Of Association
The department may require from an association written reports on the condition of the association at any time the department considers advisable. The department may...
- Texas Section 887.062 - Examination
The following provisions apply to an association: (1) Subchapter A, Chapter 86; and (2) Sections 401.051, 401.052, 401.054-401.062, 401.151, 401.152, 401.155, and 401.156. Added by...
- Texas Section 887.063 - Admitted Assets
An association may include among its admitted assets, within the assets of the expense fund only, any asset designated as a net asset under Section...
- Texas Section 887.064 - Dividends
If the amount of an association's mortuary fund exceeds the amount of reserves required by Subchapter I, the association may pay dividends from the fund...
SUBCHAPTER C AUTHORITY TO ENGAGE IN BUSINESS
- Texas Section 887.065 - Merger
(a) An association may not merge with another association without the advance approval of the department. (b) The department may grant approval under Subsection (a)...
- Texas Section 887.101 - Certificate Of Authority Required
(a) Except as provided by Section 887.102, the department shall require an association or person to hold a certificate of authority issued by the department...
- Texas Section 887.102 - Exempt Association; Permit
(a) An association is not required to hold a certificate of authority under Section 887.101 if the association: (1) limits its membership to: (A) the...
- Texas Section 887.103 - Refusal Of Certificate Of Authority Or Permit
(a) An association may not continue to engage in the business of insurance in this state if the commissioner notifies the association in writing of...
SUBCHAPTER D MEMBERS
- Texas Section 887.104 - Refusal Or Removal For Unworthiness Of Public Trust
(a) The department may not issue a certificate of authority to an association if the department determines that an officer, employee, or member of the...
- Texas Section 887.151 - Classes Of Members
(a) An association's constitution and bylaws shall state the number of members to be admitted in a class of the association. (b) An association shall...
- Texas Section 887.152 - Qualifying Membership In Association
(a) An individual must qualify under an association's bylaws to become a member of the association. (b) An association must maintain the qualifying membership at...
- Texas Section 887.153 - Voting Rights Of Members
An association shall permit each member of the association to vote at any periodic meeting or special meeting of the members. Added by Acts 2001,...
- Texas Section 887.154 - Membership Records
An association shall keep: (1) a complete and correct roster of the association's members, with proper statistical records for determining by age or some other...
SUBCHAPTER E POWERS AND DUTIES RELATING TO INSURANCE AND COVERAGES
- Texas Section 887.155 - Transfer Of Membership Or Merger Of Classes
(a) Without advance approval of the department, an association may not: (1) transfer any part or class of membership or all membership to another association;...
- Texas Section 887.201 - Limit On Life Insurance
An association may not insure an individual life for more than $5,000. Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
- Texas Section 887.202 - Stipulated Premium Plan; Deduction Of Unpaid Premium Balance
(a) An association may issue an insurance certificate on a stipulated premium plan that provides for the insured to pay regular premiums weekly, monthly, quarterly,...
- Texas Section 887.203 - Issuance Of Life Insurance Policy By Certain Associations
(a) A local mutual aid association or statewide mutual assessment company that has a mortuary fund and expense fund with a combined value of at...
- Texas Section 887.204 - Renewal Or Reinstatement Of Insurance Certificate
(a) If an insurance certificate terminates for any reason and the association's rules provide that a reinstated certificate is regarded as a new certificate, an...
- Texas Section 887.205 - Life Insurance Certificate Beneficiaries
(a) An association may pay death benefits only to: (1) a member's spouse; (2) a member's relative by blood to the fourth degree or by...
- Texas Section 887.206 - Payment Of Claim; Proof Of Claim
(a) An association shall pay each claim under an insurance certificate in full not later than the 60th day after the date of receipt of...
- Texas Section 887.207 - Exception To Full Payment Requirement: Assessment-as-needed Associations
(a) Section 887.206 does not apply to a class organized before May 12, 1939, and operating on the postmortem or assessment-as-needed plan on that date....
- Texas Section 887.208 - Contested Claims
(a) An association may not contest a claim: (1) only for delay or for a captious or inconsequential reason; or (2) to force settlement at...
- Texas Section 887.209 - Venue
An action brought against an association that grows out of or is based on any right of claim or loss or proceeds due, arising from...
SUBCHAPTER F CONTENTS OF APPLICATIONS AND INSURANCE CERTIFICATES
- Texas Section 887.210 - Reinsurance
(a) An association may enter into a reinsurance agreement with a legal reserve company that: (1) is authorized to write life, health, and accident insurance...
- Texas Section 887.251 - General Requirements For Insurance Certificate And Application Forms; Incontestability
(a) An insurance certificate issued by an association must include: (1) any condition of the certificate, including any portion of the bylaws of the association...
- Texas Section 887.252 - Application For Insurance Certificate
(a) An application for an insurance certificate issued by an association must be signed by the applicant. If the applicant is a minor, the application...
- Texas Section 887.253 - Life Insurance Certificate Forms
(a) A life insurance certificate issued by an association must include: (1) on the front page of the certificate, a definitive statement of the amount...
- Texas Section 887.254 - Health And Accident Insurance Certificate Forms
An insurance certificate issued by an association must include a plain statement of each health, accident, or other benefit under the certificate and the terms...
- Texas Section 887.255 - Life Insurance Benefit Reductions And Exclusions
(a) An association may, with the commissioner's approval, issue an insurance certificate that provides for: (1) reduced benefits if the insured: (A) dies or is...
SUBCHAPTER G ASSESSMENTS AND REVENUE
- Texas Section 887.256 - Form Approval
(a) The commissioner shall approve the form and language of an insurance certificate before the certificate is used by an association. The commissioner shall, in...
- Texas Section 887.301 - Assessments Required
(a) An association shall levy regular and periodic assessments on its membership in amounts and at intervals necessary to: (1) meet the reasonable operating expenses...
- Texas Section 887.302 - Authority To Increase Assessment Rates On Certain Insurance Certificates
(a) An association's board of directors may by resolution increase assessment rates on life insurance certificates in force up to the rate on an attained...
- Texas Section 887.303 - Approval Required For Certain Rate Increases
An association may not implement a rate increase on insurance certificates in force before the commissioner approves the rate increase as complying with this chapter....
- Texas Section 887.304 - Limit On Rate Increases
Notwithstanding any other provision of this chapter, on a life insurance certificate issued after May 21, 1965, an association may not during any consecutive five-year...
- Texas Section 887.305 - Expense Loading On Certain Insurance Certificates
If an association increases a life insurance assessment rate at any age other than at age of issue, the expense loading on the new assessments...
- Texas Section 887.306 - Assessment-as-needed Associations: Payments On Certain Insurance Certificates
(a) This section applies only to an association operating on an assessment-as-needed basis. (b) If the members' payments on insurance certificates issued and in force...
- Texas Section 887.307 - Revenue Of Association; Deposit
(a) The revenue of an association must be derived from: (1) membership fees; and (2) assessments. (b) Not later than the fifth day after the...
- Texas Section 887.308 - Suspension Of Member For Nonpayment
Before suspending a member from membership for nonpayment of assessments or membership fees, an association shall send notice to the member by first class mail...
SUBCHAPTER H MORTUARY AND EXPENSE FUNDS
- Texas Section 887.309 - Failure To Comply With Certain Commissioner Orders
If an association refuses to comply with an order of the commissioner regarding rates or assessments under this chapter, the commissioner shall treat the association...
- Texas Section 887.351 - Mortuary And Expense Funds
An association's bylaws must provide for the method and procedure for allocating assessments between the association's mortuary and expense funds. Added by Acts 2001, 77th...
- Texas Section 887.352 - Limits On Use Of Funds
An association may spend or invest money from a mortuary fund or expense fund only as provided for each fund by this subchapter. Added by...
- Texas Section 887.353 - Division Of Funds: Certain Life Insurance Certificates
(a) This section applies to a life insurance certificate insuring the life of one or more individuals issued: (1) after December 31, 1965; or (2)...
- Texas Section 887.354 - Division Of Funds: Accident And Health Insurance Certificates And Certain Life Insurance Certificates
(a) This section applies to: (1) a life insurance certificate in force on December 31, 1965, to which Section 887.353 does not apply; and (2)...
- Texas Section 887.355 - Division Of Funds: Certain Life Insurance Certificates With No Rate Increase
(a) This section applies to a life insurance certificate in force on December 31, 1965, on which the assessment rate has not been increased. (b)...
- Texas Section 887.356 - Division Of Funds: Assessment-as-needed Associations
(a) An association operating on an assessment-as-needed basis shall divide collected assessments into at least: (1) a mortuary fund; and (2) an expense fund. (b)...
- Texas Section 887.357 - Investment Of Funds
(a) An association may invest money from a mortuary fund only in securities and investments that are a legal investment for the reserve funds of...
- Texas Section 887.358 - Payment Of Taxes On Mortuary Fund Income
An association may pay from a mortuary fund any taxes that are assessed against income on the fund and required to be paid by the...
- Texas Section 887.359 - Payment Of Reinsurance Premium
An association may pay from a mortuary fund the premiums for any reinsurance under Section 887.210. Added by Acts 2001, 77th Leg., ch. 1419, Sec....
SUBCHAPTER I RESERVES
- Texas Section 887.360 - Cost Of Defending Contested Claims
An association authorized to write accident, health, or hospitalization insurance may pay the reasonable costs of defending a contested claim on an accident, health, or...
- Texas Section 887.401 - Reserves On Individual Life Insurance Certificates
(a) An association shall reserve an individual life insurance certificate insuring one or more persons at individual premiums for each person as provided by this...
- Texas Section 887.402 - Reserves On Family Group Life Insurance Certificates
(a) An association shall reserve a family group life insurance certificate on which the association charges a group premium that is not reduced on the...
- Texas Section 887.403 - Issue Year And Issue Age In Certain Insurance Certificates
(a) In this section, "gross premium" means the renewal net premium plus any expense loading designated by the association or as otherwise regulated by this...
- Texas Section 887.404 - Reserves On Accident, Health, And Hospitalization Insurance Certificates
An association shall maintain reserves on each of its accident, health, and hospitalization insurance certificates in the manner required of a company authorized to issue...
- Texas Section 887.405 - Computation Of Reserve Liability
(a) Each year, an association shall compute its reserve liability on all outstanding insurance certificates. (b) To make the computation, an association: (1) shall use...
- Texas Section 887.406 - Increase Of Reserves
(a) If an association does not have in its mortuary fund the reserves required by this subchapter, the association's board of directors by appropriate action...
SUBCHAPTER J CONVERSION TO LEGAL RESERVE INSURANCE COMPANY
- Texas Section 887.407 - Nonapplicability To Assessment-as-needed Associations
This subchapter does not apply to an association operating on an assessment-as-needed basis. Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June...
- Texas Section 887.451 - Authorization To Convert Or Reinsure
Subject to the requirements of this subchapter, an association may convert or reinsure itself to a legal reserve insurance company operating under Chapter 882. Added...
- Texas Section 887.452 - Proposal For Conversion Or Reinsurance
An association's board of directors may determine by majority vote to submit a proposed conversion or reinsurance under Section 887.451 to the members of the...
- Texas Section 887.453 - Members Meeting; Notice
(a) On receipt of the commissioner's written approval of proposed plans under Section 887.452 or of the plans as amended to meet the commissioner's requirements...
- Texas Section 887.454 - Members Meeting; Procedures
(a) In a meeting called under Section 887.453, a member may vote in person, by proxy, or by mail. (b) All votes must be cast...
- Texas Section 887.455 - Completion And Legal Effect Of Conversion Or Reinsurance
(a) An association's conversion or reinsurance is complete when the association has: (1) complied with all laws regulating the incorporation of a mutual legal reserve...
- Texas Section 887.456 - Continuing Obligations Of Converted Or Reinsured Association
(a) The standing of each claim against an association that converts or reinsures under this subchapter must be preserved unimpaired under the reorganized company or...
SUBCHAPTER K CONVERSION TO STOCK LEGAL RESERVE LIFE INSURANCE COMPANY
- Texas Section 887.457 - Disbursement Of Mortuary Fund
(a) The mortuary fund belonging to an association that converts or reinsures under this subchapter is the property of the reorganized company or the company...
- Texas Section 887.501 - Applicability Of Subchapter
This subchapter applies only to a local mutual aid association or statewide mutual assessment company or association engaging in business in this state on January...
- Texas Section 887.502 - Authorization To Convert
An association may convert to a stock legal reserve life insurance company if the association: (1) has at least $100,000 in the association's mortuary fund...
- Texas Section 887.503 - Approval By Membership
An association may convert under this subchapter only if the association's membership votes to approve the conversion at a meeting called for that purpose. Added...
- Texas Section 887.504 - Amendment Of Charter Or Articles Of Association Required
On authorization under Section 887.503, the board of directors and officers of the association shall amend the association's charter or articles of association to comply...
- Texas Section 887.505 - Exchange Of Insurance Certificates; Reserves
(a) An association that converts to a stock legal reserve life insurance company shall exchange each insurance certificate in force on the date of the...
- Texas Section 887.506 - Completion Of Conversion
An association becomes a stock legal reserve life insurance company on: (1) compliance with this subchapter; and (2) approval by the commissioner. Added by Acts...
- Texas Section 887.507 - Legal Effect Of Conversion
Except as provided by this subchapter, an association that converts to a stock legal reserve life insurance company under this subchapter is subject to Chapter...
- Texas Section 887.508 - Exemption From Capital And Surplus Requirements
(a) An association is exempt from the capital and surplus requirements of Section 887.502(2) if the association: (1) possesses capital in an amount equal to...
- Texas Section 887.509 - Limits On Operation Of Converted Association
Unless the association increases the association's capital and surplus to the minimum capital and surplus required for the organization of a stock legal reserve life...
SUBCHAPTER L GENERAL FINANCIAL REGULATION
- Texas Section 887.510 - Increase Of Capital And Surplus Required
(a) An association that converts to a stock legal reserve life insurance company under this subchapter shall, not later than the 10th anniversary of the...
SUBCHAPTER O PENALTIES
- Texas Section 887.551 - Hazardous Financial Condition, Supervision, Conservatorship, And Liquidation
The following provisions apply to an association engaged in the business of insurance in this state: (1) Subchapter A, Chapter 404; (2) Chapter 441; and...
- Texas Section 887.701 - Unlawful Conversion; Criminal Penalty
(a) A director, officer, agent, employee, attorney at law, or attorney in fact of an association commits an offense if the person: (1) fraudulently takes,...
- Texas Section 887.702 - Diversion Of Special Funds; Criminal Penalty
(a) A director, officer, agent, employee, attorney at law, or attorney in fact of an association commits an offense if the person wilfully borrows, withholds,...
- Texas Section 887.703 - Appropriation Of Money; Criminal Penalty
(a) An officer or employee of a mutual accident insurance company commits an offense if the person uses or appropriates, or knowingly permits the use...
- Texas Section 887.704 - Violation Of Commissioner Order; Criminal Penalty
(a) A director, officer, agent, employee, attorney at law, or attorney in fact of an association commits an offense if the person wilfully fails to...
- Texas Section 887.705 - Other Violations; Criminal Penalty
(a) A director, officer, agent, employee, attorney at law, or attorney in fact of an association or other person commits an offense if the person...