CHAPTER 827. WITHDRAWAL AND RESTRICTION PLANS - Texas Statutes

INSURANCE CODE

TITLE 6. ORGANIZATION OF INSURERS AND RELATED ENTITIES

SUBTITLE B. ORGANIZATION OF REGULATED ENTITIES

CHAPTER 827. WITHDRAWAL AND RESTRICTION PLANS

Sec. 827.001. DEFINITIONS. In this chapter:

(1) "Insurer" means an insurance company or other legal entity

authorized to engage in the business of insurance in this state,

including a reciprocal or interinsurance exchange, a Lloyd's

plan, and a county mutual insurance company. The term includes an

affiliate. The term does not include a farm mutual insurance

company or an eligible surplus lines insurer regulated under

Chapter 981.

(2) "Rating territory" means a rating territory established by

the department.

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

2003. Amended by Acts 2003, 78th Leg., ch. 206, Sec. 10.01(a),

eff. June 11, 2003.

Sec. 827.002. EXEMPTION. This chapter does not apply to a

transfer of business from an insurer to a company that:

(1) is within the same insurance group as the insurer;

(2) is authorized to engage in the business of insurance in this

state; and

(3) is not a reciprocal or interinsurance exchange, a Lloyd's

plan, a county mutual insurance company, or a farm mutual

insurance company.

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

2003. Amended by Acts 2003, 78th Leg., ch. 206, Sec. 10.02, eff.

June 1, 2003.

Sec. 827.003. WITHDRAWAL PLAN REQUIRED. An insurer shall file

with the commissioner a plan for orderly withdrawal if the

insurer proposes to:

(1) reduce the insurer's total annual premium volume by 50

percent or more;

(2) reduce the insurer's annual premium by 75 percent or more in

a line of insurance in this state; or

(3) reduce in this state, or in any applicable rating territory,

the insurer's total annual premium volume in a line of personal

automobile or residential property insurance by 50 percent or

more.

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

2003. Amended by Acts 2003, 78th Leg., ch. 206, Sec. 10.03, eff.

June 11, 2003.

Sec. 827.004. PROVISIONS OF WITHDRAWAL PLAN. A withdrawal plan

filed under Section 827.003 must:

(1) be constructed to protect the interests of the people of

this state;

(2) indicate the dates on which the insurer intends to begin and

to complete the plan; and

(3) provide for:

(A) meeting the insurer's contractual obligations;

(B) providing service to the insurer's policyholders and

claimants in this state; and

(C) meeting any applicable statutory obligations, such as

payment of assessments to the guaranty fund and participation in

an assigned risk plan or joint underwriting arrangement.

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

2003.

Sec. 827.005. APPROVAL OF WITHDRAWAL PLAN. (a) Except as

provided by Subsection (b), the commissioner shall approve a

withdrawal plan that adequately provides for meeting the

requirements prescribed by Section 827.004(3).

(b) The commissioner may modify, restrict, or limit a withdrawal

plan under this section as necessary if the commissioner finds

that a line of insurance subject to the withdrawal plan is not

offered in a quantity or manner to adequately cover the risks in

this state or to adequately protect the residents of this state

and policyholders in this state. The commissioner may by order

set the date on which the insurer's withdrawal begins.

(c) A withdrawal plan is deemed approved if the commissioner:

(1) does not hold a hearing on the plan before the 61st day

after the date the plan is filed with the commissioner; or

(2) does not deny approval before the 61st day after the date a

hearing on the plan is held.

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

2003. Amended by Acts 2003, 78th Leg., ch. 206, Sec. 10.04, eff.

June 11, 2003.

Sec. 827.006. RESUMPTION OF WRITING INSURANCE AFTER COMPLETE

WITHDRAWAL. An insurer that withdraws from writing all lines of

insurance in this state may not, without the approval of the

commissioner, resume writing insurance in this state before the

fifth anniversary of the date of withdrawal.

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

2003.

Sec. 827.007. PENALTIES. The commissioner may impose the civil

penalties under Chapter 82 on an insurer that fails to obtain the

commissioner's approval before the insurer:

(1) withdraws from writing a line of insurance in this state; or

(2) reduces the insurer's total annual premium volume by 75

percent or more in any year.

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

2003.

Sec. 827.008. RESTRICTION PLAN. (a) Before an insurer, in

response to a catastrophic natural event that occurred during the

preceding six months, may restrict writing new business in a

rating territory in a line of personal automobile or residential

property insurance, the insurer must file a proposed restriction

plan with the commissioner for the commissioner's review and

approval.

(b) The commissioner may modify, restrict, or limit a

restriction plan under this section as necessary if the

commissioner finds that a line of insurance subject to the

restriction plan is not offered in this state in a quantity or

manner to adequately cover the risks in this state or to

adequately protect the residents of this state and policyholders

in this state in light of the impact of the catastrophic natural

event. The commissioner may by order set the date on which the

insurer's restriction begins.

(c) A withdrawal plan must be filed and approved under Sections

827.003 and 827.004 if an insurer's decision not to accept new

business in a line of personal automobile or residential property

insurance results in a reduction of the insurer's total annual

premium volume by 50 percent or more.

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

2003. Amended by Acts 2003, 78th Leg., ch. 206, Sec. 10.05, eff.

June 11, 2003.

Sec. 827.009. DEPOSIT OF SECURITIES. Under this chapter, the

commissioner may require the deposit of securities in this state

in trust in the name of the commissioner if the commissioner

determines, after notice and hearing, that there is reasonable

cause to conclude that the interests of the people of this state

are best served by the deposit.

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

2003.

Sec. 827.010. MORATORIUM. (a) The commissioner may impose a

moratorium of not longer than two years on:

(1) the approval of withdrawal plans; or

(2) the implementation of plans to restrict the writing of new

business described by Section 827.008.

(b) A moratorium under this section may be imposed on plans

implemented after the commissioner has published notice of

intention to impose a moratorium on plans under Subsection

(a)(2).

(c) The commissioner may annually renew a moratorium imposed

under this section.

(d) To impose or renew a moratorium under this section, the

commissioner must determine, after notice and hearing, that a

catastrophic event has occurred and that as a result of that

event a particular line of insurance is not reasonably expected

to be available to a substantial number of policyholders or

potential policyholders in this state or, in the case of lines of

personal automobile or residential property insurance, in a

rating territory.

(e) The provisions of Chapter 2001, Government Code, relating to

contested cases apply to the notice and hearing.

(f) The commissioner by rule shall establish reasonable criteria

for applying the standards for determining whether to impose a

moratorium under this section.

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

2003. Amended by Acts 2003, 78th Leg., ch. 206, Sec. 10.06(a),

eff. June 11, 2003.

Sec. 827.011. RULES. The commissioner shall adopt rules as

necessary to enforce this chapter.

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

2003.