CHAPTER 550. PROHIBITED PRACTICES RELATING TO PAYMENTS - Texas Statutes

INSURANCE CODE

TITLE 5. PROTECTION OF CONSUMER INTERESTS

SUBTITLE C. DECEPTIVE, UNFAIR, AND PROHIBITED PRACTICES

CHAPTER 550. PROHIBITED PRACTICES RELATING TO PAYMENTS

Sec. 550.001. SOLICITATION OR COLLECTION OF CERTAIN PAYMENTS.

(a) An insurer or an insurer's agent or sponsoring organization

may not solicit or collect, in connection with an application for

insurance or the issuance of a policy, a payment other than:

(1) a premium;

(2) a tax;

(3) a finance charge;

(4) a policy fee;

(5) an agent fee;

(6) a service fee, including a charge for costs described by

Section 4005.003;

(7) an inspection fee; or

(8) membership dues in a sponsoring organization.

(b) The commissioner by rule shall permit a sponsoring

organization to solicit a voluntary contribution with a

membership renewal solicitation if the membership renewal

solicitation is separate from an insurance billing.

(c) Except as otherwise provided by statute, an insurer may

require that membership dues in its sponsoring organization be

paid as a condition for issuance or renewal of an insurance

policy.

(d) Criminal penalties for a violation of this section are the

same as criminal penalties provided for a violation under

Subchapter K, Chapter 823.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1,

2005.

Sec. 550.002. INCREASE IN CERTAIN PREMIUM PAYMENTS. (a) In

this section:

(1) "Account" means a person's account in a financial

institution.

(2) "Financial institution" means a state or national bank, a

state or federal savings and loan association or corporation, or

a state or federal credit union.

(3) "Insurer" means a person or entity engaged in the business

of insurance in this state as described by Chapter 101. The term

includes a person or entity engaged in the business of surplus

lines insurance in this state.

(4) "Person" means an insured, a policy or certificate holder,

or an owner of an insurance policy or certificate.

(b) An insurer receiving automatic premium payments through

withdrawal of funds from a person's account, including an escrow

account, as authorized by that person to pay premiums on

insurance coverage provided through that insurer, may not

increase the amount of funds to be withdrawn from the account to

pay premiums on that coverage unless the insurer, not later than

the 30th day before the effective date of the increase in the

premium payment amount, notifies the person of the increase by

mailing a notice through the United States Postal Service.

(b-1) The notice must include the insurer's toll-free telephone

number, mailing address, and electronic mail address, if

applicable, through which the person may object to the increase

described by Subsection (b). An objection made by the

policyholder through a telephone call, mail, or electronic mail

constitutes a valid objection for purposes of this section.

(b-2) The insurer may increase the amount of funds to be

withdrawn from the account only if the insurer does not receive a

valid objection to the increase on or before the fifth day before

the date on which the increase is scheduled to take effect.

(c) This section does not require an insurer to notify a person

of an increase in a premium payment amount if:

(1) the insurance contract or certificate:

(A) when issued contains a schedule of increasing premiums;

(B) expressly specifies the exact amount of each premium; and

(C) specifies the period for which each premium is payable; or

(2) the increase is the result of a change ordered by the

insured.

(d) This section does not apply to an increase in a premium

payment that is less than $10 or 10 percent of the previous

amount per month.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1,

2005.

Amended by:

Acts 2009, 81st Leg., R.S., Ch.

1167, Sec. 1, eff. June 19, 2009.