CHAPTER 911. FARM MUTUAL INSURANCE COMPANIES - Texas Statutes

INSURANCE CODE

TITLE 6. ORGANIZATION OF INSURERS AND RELATED ENTITIES

SUBTITLE F. FARM AND COUNTY MUTUAL INSURANCE COMPANIES

CHAPTER 911. FARM MUTUAL INSURANCE COMPANIES

SUBCHAPTER A. GENERAL PROVISIONS

Sec. 911.001. LIMITED EXEMPTION FROM INSURANCE LAWS;

APPLICABILITY OF CERTAIN LAWS. (a) A provision of this code,

other than this chapter, does not apply to a farm mutual

insurance company holding a certificate of authority under this

chapter unless farm mutual insurance companies are expressly

mentioned in the other law.

(b) A law enacted after May 20, 1973, does not apply to a farm

mutual insurance company unless the law states that it applies to

a farm mutual insurance company.

(c) Except to the extent of any conflict with this chapter, the

following provisions apply to a farm mutual insurance company:

(1) Subchapter A, Chapter 32;

(2) Subchapter D, Chapter 36;

(3) Sections 31.002(2), 32.021(c), 32.023, 32.041, 33.002,

38.001, 81.001-81.004, 201.005, 201.055, 401.051, 401.052,

401.054-401.062, 401.103-401.106, 401.151, 401.152, 401.155,

401.156, 421.001, 801.051-801.055, 801.057, 801.101, 801.102,

822.204, 841.004, 841.251, 841.252, 862.101, 1806.001, 1806.101,

1806.103(b), and 1806.104-1806.107;

(4) Chapter 86;

(5) Subchapter A, Chapter 401;

(6) Subchapter B, Chapter 404;

(7) Chapter 422;

(8) Subchapter B, Chapter 424, other than Section 424.052,

424.072, or 424.073;

(9) Chapter 441;

(10) Chapter 443;

(11) Chapter 462;

(12) Chapter 481;

(13) Chapter 541;

(14) Chapter 802;

(15) Subchapter A, Chapter 805;

(16) Chapter 824; and

(17) Article 1.09-1.

(d) After hearing, the commissioner may adopt rules regarding

the application of a law referred to in Subsection (c) to farm

mutual insurance companies. The department may enforce rules

adopted under this subsection.

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

2003.

Amended by:

Acts 2005, 79th Leg., Ch.

631, Sec. 3, eff. September 1, 2005.

Acts 2007, 80th Leg., R.S., Ch.

730, Sec. 2E.106, eff. April 1, 2009.

Sec. 911.002. GENERAL RULEMAKING AUTHORITY; ENFORCEMENT. After

hearing, the commissioner may adopt rules to clarify and augment

this chapter as determined by the commissioner to be necessary to

accomplish the purposes of this chapter. The department may

enforce rules adopted under this section.

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

2003.

Sec. 911.003. FEES. (a) The department shall charge and

collect the following fees:

(1) $10 for an amendment to a farm mutual insurance company's

charter; and

(2) $1 for the issuance of a company's certificate of authority.

(b) The department shall charge and the comptroller shall

collect a fee of $20 for the filing of an annual statement

required by the department.

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

2003.

SUBCHAPTER B. ORGANIZATION OF FARM MUTUAL INSURANCE COMPANY;

DIRECTORS

Sec. 911.051. APPLICABILITY OF TEXAS NON-PROFIT CORPORATION ACT.

Except to the extent of any conflict with this chapter, the

Texas Non-Profit Corporation Act (Article 1396-1.01 et seq.,

Vernon's Texas Civil Statutes) applies to a farm mutual insurance

company. The commissioner has each power and duty of, and shall

perform each act to be performed by, the secretary of state under

that Act with respect to farm mutual insurance companies.

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

2003.

Sec. 911.052. FORMATION OF COMPANY: INCORPORATION REQUIRED. To

form a farm mutual insurance company, an association of

individuals that does not hold a certificate of authority issued

by the department must obtain a charter as required by this

subchapter.

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

2003.

Sec. 911.053. INCORPORATION REQUIREMENTS. (a) In this section,

"separate risk" means one or more items of real property and the

property's contents, if any, that is not exposed to any other

property on which insurance is applied for in the association

seeking the charter.

(b) To be granted a charter as a farm mutual insurance company,

an association must:

(1) demonstrate that the association:

(A) has existed as an association of individuals for at least

three years;

(B) has at least 100 individual members;

(C) operates for the purpose of membership recreation or welfare

under a system of subordinate lodges, locals, or districts;

(D) does not have capital stock;

(E) is organized and operates solely for the mutual benefit of

its members and not for profit;

(F) has a representative form of government; and

(G) has decided by a majority vote of the association's members

to apply for a charter as a farm mutual insurance company under

this chapter; and

(2) have:

(A) at least 100 written applications for insurance on at least

400 separate risks; and

(B) an unencumbered surplus as required by Section 911.308(b).

(c) Coverage for a risk described by Subsection (b)(2)(A) may

not be in an amount that exceeds one percent of the total amount

of insurance coverage to be issued by the association as stated

in its application for a charter.

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

2003.

Sec. 911.054. CHARTER AND ARTICLES OF INCORPORATION. (a) The

charter and articles of incorporation of an association that

wants to form a farm mutual insurance company must state the

names and post office addresses of at least 25 charter members of

the company, all of whom are residents of one or more adjoining

counties in this state and each of whom must:

(1) be a member of the association;

(2) own at least $5,000 of insurable property for which the

member has applied in writing for insurance coverage from the

company to be formed; and

(3) sign the charter and articles of incorporation.

(b) In addition to the requirements of Subsection (a), the

charter must:

(1) be acknowledged before a notary public by at least five of

the charter members described by Subsection (a);

(2) state:

(A) the name of the company, which must include the words "Farm

Mutual" or "Farmers Mutual";

(B) the location of the company's principal office;

(C) the number, names, and post office addresses of each of the

company's first directors, of which there must be at least five;

and

(D) the type of property the company will insure and the risk to

be insured against; and

(3) include any other provision the incorporators want

consistent with this chapter.

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

2003.

Sec. 911.055. APPLICATION FOR PERMIT TO SOLICIT INSURANCE. (a)

At least 10 residents described by Section 911.054(a) that want

to form a farm mutual insurance company may apply to the

department for a permit to solicit insurance on the mutual or

cooperative plan.

(b) The application for a permit to solicit insurance must:

(1) state:

(A) that at least 100 individuals are members of an association

described by Section 911.053(b)(1);

(B) that the association has indicated, by majority vote, that

the association wants to:

(i) insure property of the association's members under this

chapter; and

(ii) be chartered as a farm mutual insurance company;

(C) the name of the company, which must include the words "Farm

Mutual" or "Farmers Mutual";

(D) the location of the company's principal office;

(E) the risks the company proposes to insure; and

(F) the names and places of residence of at least 10 of the

applicants; and

(2) be accompanied by:

(A) affidavits of at least two of the applicants, each of whom

must:

(i) state the applicant's name and residence; and

(ii) verify the facts stated in the application; and

(B) a filing fee in the amount of $25.

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

2003.

Sec. 911.056. ISSUANCE OF PERMIT TO SOLICIT INSURANCE; TERM.

(a) The department shall approve or deny an application for a

permit to solicit insurance under Section 911.055. If the

department finds that the application complies with this chapter,

the department shall issue to the applicants a permit to solicit

insurance.

(a-1) If the department finds that the application does not

comply with this chapter, the department shall deny the

application. On the applicant's request, the commissioner shall

hold a hearing on a denial. Not later than the 30th day after

the date of the applicant's request for a hearing, the

commissioner shall request a hearing date.

(b) A permit issued under this section authorizes the permit

holders to solicit insurance on the mutual or cooperative plan in

accordance with the terms of the application. The permit does not

authorize the permit holders to:

(1) issue insurance policies; or

(2) pay losses.

(c) A permit issued under this section is valid for six months.

On receipt of an application for renewal and a fee in the amount

of $10, the department may renew a permit issued under Section

911.055 as frequently and for the period as the department

determines necessary.

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

2003.

Amended by:

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

1022, Sec. 16, eff. June 19, 2009.

Sec. 911.057. COLLECTION AND REFUND OF MONEY FROM CERTAIN

INDIVIDUALS APPLYING FOR INSURANCE. An association described by

Section 911.053(b)(1) of which the applicants for a permit to

solicit insurance are members shall hold in trust money collected

from an individual applying for insurance in the association

until the association is incorporated. If the association's

incorporation is not perfected, the association shall refund the

money to the individual applying for the insurance.

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

2003.

Sec. 911.058. MEMBERSHIP CONTROL OF COMPANY. (a) The control

of a farm mutual insurance company must be ultimately vested as

provided by this chapter in the company's members through a

supreme legislative or governing body, the members of which must

be elected directly by the company's members or by delegates

elected by the company's members.

(b) Through the company's governing body, the company's members

may establish local chapters, branches, lodges, or similar

organizations.

(c) The methods provided by this section for the control of a

farm mutual insurance company are exclusive.

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

2003.

Sec. 911.059. ELIGIBILITY OF BOARD OF DIRECTORS; TERM. (a) An

individual is eligible to serve as a director of a farm mutual

insurance company if the individual is a policyholder who

maintains insurance coverage in the amount of at least $3,000

written by the company on the individual's property.

(b) Except as otherwise provided by the company's bylaws or

constitution, a director serves for a term of one year or until

the director's successor qualifies for office.

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

2003.

Sec. 911.060. GENERAL POWERS OF BOARD OF DIRECTORS. The board

of directors of a farm mutual insurance company has the powers

provided by:

(1) this chapter; and

(2) the company's charter, constitution, and bylaws to the

extent those powers do not conflict with this chapter.

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

2003.

Sec. 911.061. AUTHORITY TO BORROW MONEY. (a) The board of

directors of a farm mutual insurance company, acting through its

authorized officers, may borrow money in an amount determined to

be necessary to pay the company's accrued or unaccrued losses.

(b) The board may pledge as security for a loan the assets of

the company, including the contingent liability of its

policyholders.

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

2003.

Sec. 911.062. REMOVAL OF OFFICER OR DIRECTOR. (a) The board of

directors of a farm mutual insurance company, at a meeting, may

remove an officer or director of the company if, by a two-thirds

majority vote of all the company's directors, the board

determines that the removal of the individual is in the best

interest of the company. The board may remove an officer or

director under this subsection without stating a reason for the

removal.

(b) The board may appoint one or more individuals to assume the

duties and serve the unexpired term of an officer or director

removed under this section.

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

2003.

Sec. 911.063. CREATION OF LOCAL CHAPTERS AND DISTRICTS. (a) A

farm mutual insurance company's bylaws may provide for:

(1) the organization of local chapters to transact the company's

business; and

(2) the creation of districts in and for which directors may be

elected.

(b) The bylaws may also provide that delegates from the

company's local chapters are the company's supreme governing

body.

(c) The company may consider the hazards against which the

company insures and the company's classes of risks and territory

of operation in organizing the local chapters and creating the

districts.

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

2003.

Sec. 911.064. POLICYHOLDER MEETINGS. (a) A farm mutual

insurance company shall hold a policyholder meeting to elect

directors and transact business at the time and place and in the

manner prescribed by the company's bylaws.

(b) A special meeting of a company's policyholders may be called

by:

(1) the president, the general manager, or one-third of the

company's directors; or

(2) the commissioner.

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

2003.

Sec. 911.065. VOTING BY POLICYHOLDER. (a) Each policyholder of

a farm mutual insurance company is entitled to only one vote at a

policyholders' meeting.

(b) A policyholder may not vote by proxy.

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

2003.

Sec. 911.066. AUTHORITY TO PROHIBIT WAIVER OF BYLAWS. A farm

mutual insurance company may provide in its bylaws that a company

adjuster, representative appointed by the company, or local

chapter or officer or agent elected by the local chapter may not

waive a provision in the company's constitution or bylaws or in a

policy issued by the company.

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

2003.

Sec. 911.067. APPLICATION FOR EXTENSION OF CHARTER FOR CERTAIN

COMPANIES; TERM. (a) Before a farm mutual insurance company's

charter expires, the company may apply to the department for an

extension of the company's charter if:

(1) the company was chartered, holding a certificate of

authority, and operating before May 21, 1973, under Chapter 16,

Insurance Code, as it existed on that date; or

(2) the company was organized and engaging in business before

April 6, 1937, and the company continues to engage in business.

(b) A farm mutual insurance company described by Subsection (a)

and whose charter has expired may apply to the department to have

the charter extended perpetually if the company is engaged in

business in this state.

(c) The term of the charter begins on the date that the charter

is extended or, if the original charter expired before the

charter is extended, the date the original charter expired.

(d) An application for an extension must be authorized by either

a two-thirds majority vote of the company's directors or by a

simple majority vote of those voting at a policyholders' meeting

and must:

(1) state in full the charter to be extended;

(2) state the period for which the charter is to be extended;

and

(3) be signed and acknowledged by the president and secretary of

the company.

(e) A company whose charter is extended retains the rights,

privileges, and immunities granted the company under the

company's original charter.

(f) The department shall charge and collect a fee of $10 for the

extension of a farm mutual insurance company's charter.

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

2003.

SUBCHAPTER C. AUTHORITY TO ENGAGE IN BUSINESS IN THIS STATE

Sec. 911.101. AUTHORITY TO ENGAGE IN BUSINESS. Except to the

extent of any conflict with this chapter, a farm mutual insurance

company must hold a certificate of authority under Section

801.051 to engage in the business of insurance in this state

under this chapter.

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

2003.

SUBCHAPTER D. POLICIES AND COVERAGE

Sec. 911.151. KINDS OF INSURANCE AUTHORIZED. (a) A farm mutual

insurance company may insure property against loss or damage by:

(1) fire, lightning, explosion, theft, windstorm, hurricane,

hail, riot, civil commotion, smoke, aircraft, or land vehicles;

or

(2) any other hazard against which any other fire or windstorm

insurance company operating in this state under Chapter 862 may

write insurance on property described by Subsection (b).

(b) The company may write insurance against the hazards

described by Subsection (a) on:

(1) a rural or urban dwelling and attendant outhouses and yard

buildings and all their contents for home and personal use,

musical instruments and libraries, barns and ranch buildings of

any description and vehicles and implements used on or about

barns or ranch buildings;

(2) agricultural products that are produced or kept on farms or

ranches;

(3) a church building, fraternal lodge hall, private or church

school, or nonindustrial use building owned by a nonprofit

organization, regardless of the location;

(4) a trailer or mobile home; and

(5) growing crops if the insurance is reinsured by:

(A) the Federal Crop Insurance Corporation under Section 508,

Federal Crop Insurance Act (7 U.S.C. Section 1508); or

(B) a property and casualty insurance company that:

(i) is authorized to write insurance in this state; and

(ii) has a rating by the A.M. Best Company of A- or better.

(c) An insurance policy written by a farm mutual insurance

company against loss or damage by windstorm, hurricane, or hail,

as described by Subsection (a), may include coverage for:

(1) a building or other structure that is built wholly or

partially over water; and

(2) the corporeal movable property contained in a building or

structure described by Subdivision (1).

(d) The farm mutual insurance company may impose appropriate

limits of coverage and deductibles for coverage described by

Subsection (c).

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

2003.

Amended by:

Acts 2005, 79th Leg., Ch.

1153, Sec. 4, eff. September 1, 2005.

Sec. 911.152. PROPERTY AND HAZARDS AGAINST WHICH COMPANY MAY NOT

INSURE. (a) A farm mutual insurance company may not insure:

(1) a building, or the building's contents, with more than 40

percent of the building's floor space or more than 500 square

feet of floor space, whichever is less, used for business

purposes, except as provided by Section 911.151(b)(3); or

(2) any type of commercial or private passenger motor vehicle,

except as provided by Section 911.151(b)(4).

(b) A farm mutual insurance company may not assume or issue an

insurance policy that:

(1) indemnifies an insured for liability to a third party the

insured incurs in committing a tortious act; or

(2) covers an insured for liability the insured incurs under a

contract to maintain, hold, or store property belonging to

another.

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

2003.

Sec. 911.153. CONTRACT TERMS: INCORPORATION OF BYLAWS. (a) A

farm mutual insurance company's bylaws are part of each contract

between the company and an insured.

(b) Each policy issued by the company must state that the

company's bylaws are part of the contract.

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

2003.

Sec. 911.154. CONTRACT TERMS: ADOPTION OF ADDITIONAL PROVISIONS.

(a) A farm mutual insurance company may adopt as part of the

company's bylaws and insurance policies any provision contained

in the standard policies of companies writing fire or windstorm

insurance as adopted by the commissioner to the extent the

provision applies to a farm mutual insurance company.

(b) A company that adopts a provision as provided by Subsection

(a) shall state in the company's bylaws or in each policy issued

by the company that the provision has been adopted as provided by

Subsection (a).

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

2003.

Sec. 911.155. REPAIR OR REPLACEMENT OF INSURED PROPERTY. The

company's bylaws may authorize the company to require, at its

option, that all or a percentage of the money paid for a loss be

used to replace or repair the damaged or destroyed property. The

requirement may apply equally to personal and real property,

including personal and real property exempt from execution, such

as a homestead or a building on the homestead. The company may

provide in its bylaws that the requirements of Section 862.053 do

not apply to its insurance policies.

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

2003.

SUBCHAPTER E. CHARGES, PREMIUMS, AND ASSESSMENTS

Sec. 911.201. PAYMENT OF PREMIUM OR ASSESSMENT. (a) A farm

mutual insurance company's bylaws must:

(1) state the time and manner of the levy and payment of a

premium or assessment for policies written by the company;

(2) in addition to the regular premium or assessment under

Subdivision (1), establish the contingent liability of a

policyholder for all losses accrued while a policy is in force in

the amount of at least $1 for each $100 of insurance coverage,

except as provided by Subsection (b); and

(3) state the time and manner of payment of a policyholder's

contingent liability established under Subdivision (2).

(b) A company's bylaws may provide for the issuance of policies

without contingent liability as required by Subsection (a)(2) if

the company has policyholder surplus in the amount of at least

$1,000,000.

(c) As required by its bylaws, a farm mutual insurance company

shall establish and levy premiums and assessments, including the

contingent liability of a policyholder, for all insurance written

by the company.

(d) A policyholder shall pay premiums and assessments as

required by the company's bylaws.

(e) The premium or assessment for a policy shall be secured by a

lien on each item of real or personal property, other than a

homestead, covered by the policy, including the land on which an

insured building is located. The lien remains on the property

while the insured owns the property.

(f) A conservator, receiver, or liquidator of a farm mutual

insurance company may not make an assessment against a

policyholder for the contingent liability established under

Subsection (a)(2).

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

2003.

Sec. 911.202. NONPAYMENT OF PREMIUMS OR ASSESSMENTS: FILING OF

ACTION. (a) A farm mutual insurance company may bring an action

in the county in which the company's home office is located

against a policyholder who defaults on the payment of a premium

or an assessment.

(b) The company is entitled to judgment against the policyholder

for:

(1) delinquent premiums or assessments;

(2) foreclosure of the lien described by Section 911.201; and

(3) the costs of an action, including a reasonable attorney's

fee.

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

2003.

Sec. 911.203. POLICYHOLDER LIABILITY. A policyholder is liable

for the losses of a farm mutual insurance company only as

provided by the company's constitution and bylaws, and only in

proportion to the amount that the premium or assessment for the

policyholder's policy bears to the total amount of premiums or

assessments for all policies written by the company in the class

to which the policyholder's policy belongs.

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

2003.

SUBCHAPTER F. AGENTS

Sec. 911.251. LICENSING AND APPOINTMENT OF CERTAIN AGENTS. (a)

An individual or firm may not solicit, write, sign, execute, or

deliver insurance policies, bind insurance risks, collect

premiums, or otherwise act on behalf of a farm mutual insurance

company in the capacity of an insurance agent in the solicitation

or sale of crop insurance unless the individual or firm holds a

license issued under Title 13.

(b) A farm mutual insurance company may not appoint and act

through an agent under Subchapter F, Chapter 4051.

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

2003. Amended by Acts 2003, 78th Leg., ch. 1276, Sec. 10A.223(a),

eff. Sept. 1, 2003.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

730, Sec. 2E.107, eff. April 1, 2009.

SUBCHAPTER G. REGULATION OF FARM MUTUAL INSURANCE COMPANY;

FINANCIAL REQUIREMENTS

Sec. 911.301. GENERAL OPERATING REQUIREMENTS. (a) In this

section, "rural property" means property located outside an area

of land subject to the taxing authority of a municipality with a

population of more than 2,500.

(b) A farm mutual insurance company shall:

(1) maintain a majority of the company's total insurance in

force on rural property at all times the insurance is written;

and

(2) operate on a regular and special assessment basis.

(c) Except as otherwise approved by the commissioner, a farm

mutual insurance company may not use more than 33 percent of the

company's gross income for expenses.

(d) Property that is rural property at the time the property is

originally insured continues to be classified as rural property

if:

(1) the policy or policies that insure the property are written

by the same farm mutual insurance company; and

(2) the coverage continues in effect without lapse of coverage

for more than 60 days.

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

2003.

Sec. 911.302. LOCATION OF BUSINESS. (a) Except as provided by

Subsection (b), a farm mutual insurance company may write

insurance in:

(1) the county in which the company's home office is located at

the time of incorporation and in any county adjoining the county

in and for which the company is organized;

(2) any county in which another farm mutual insurance company is

not organized; and

(3) any county in this state if the company's reserve fund

exceeds $200,000 in cash or securities in which the reserve fund

of a stock fire insurance company may be invested.

(b) This section does not apply to a farm mutual insurance

company organized and operating in this state under a certificate

of authority issued before May 21, 1973, under former Chapter 16

of this code.

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

2003.

Sec. 911.303. REINSURANCE. (a) A farm mutual insurance company

may reinsure the company's risks with another company against any

hazard against which the farm mutual insurance company is

permitted to insure.

(b) The farm mutual insurance company may contract for mutual or

reciprocal reinsurance with another company on the mutual or

cooperative plan subject to the following conditions:

(1) the farm mutual company may assume the reinsurance on the

risks of the other company only if the other company reinsures

the risks of the farm mutual insurance company; and

(2) the farm mutual company may write or assume the reinsurance

only on property that the company is authorized to insure and

that is located in this state.

(c) A farm mutual insurance company that reinsures another

company's property is liable for the losses of the other company

only as specified in the reinsurance contract. The farm mutual

insurance company does not become a member or partner of the

other company as a result of the reinsurance.

(d) A farm mutual insurance company may pay or collect

additional assessments or premiums for the purpose of a contract

described by Subsection (b).

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

2003.

Sec. 911.304. ANNUAL REPORTS REQUIRED. (a) A farm mutual

insurance company shall annually prepare a written report as

required by this section and submit the report to the company's

policyholders.

(b) The annual report must show:

(1) the total amount of premiums paid during the year for the

policyholders' insurance;

(2) the company's operating expenses; and

(3) the total amount of claims paid and the amount paid for each

covered peril.

(c) Repealed by Acts 2007, 80th Leg., R.S., Ch. 47, Sec. 2, eff.

May 8, 2007.

(d) The company shall make available to each policyholder a copy

of the annual report at the time and in the manner prescribed by

the company's bylaws.

(e) A farm mutual insurance company shall make annual reports to

the department as required by the commissioner or by law.

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

2003.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

47, Sec. 1, eff. May 8, 2007.

Acts 2007, 80th Leg., R.S., Ch.

47, Sec. 2, eff. May 8, 2007.

Sec. 911.305. EXAMINATION OF COMPANY. The department shall

examine each farm mutual insurance company as often as the

department determines necessary.

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

2003.

Sec. 911.306. SOLVENCY REQUIREMENTS. (a) A farm mutual

insurance company is solvent if:

(1) the company's assets, including the policyholders'

contingent liability for the company's losses, are reasonably

sufficient to pay the company's losses according to the terms of

the policies; and

(2) the company's required unencumbered surplus, if any, has not

been impaired in excess of 16-2/3 percent of the required

unencumbered surplus.

(b) A company that is solvent as provided by this section may

continue to engage in the business of insurance.

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

2003.

Sec. 911.307. RESERVE REQUIREMENTS. (a) A farm mutual

insurance company's board of directors may provide for the

accumulation of reserve funds.

(b) The company shall invest the reserve funds in the same type

of securities in which the reserve funds of other fire insurance

companies are required to be invested by law.

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

2003.

Sec. 911.308. SURPLUS REQUIREMENTS. (a) A farm mutual

insurance company organized between January 1, 1955, and May 21,

1973, shall maintain an unencumbered surplus of $2 for each $100

of insurance in force or an unencumbered surplus of $200,000,

whichever amount is less.

(b) A farm mutual insurance company organized under this chapter

on or after May 21, 1973, shall maintain an unencumbered surplus

in cash of $2 for each $100 of insurance in force or an

unencumbered surplus of $200,000, whichever amount is greater.

(c) A company described by Subsection (b) shall invest the

minimum unencumbered surplus as provided by Section 822.204. The

company may invest funds in excess of the minimum unencumbered

surplus as provided by the provisions of Subchapter B, Chapter

424, other than Sections 424.052, 424.072, and 424.073.

(d) A company described by Subsection (b) shall, without delay,

restore the minimum unencumbered surplus if the surplus is

impaired. The department shall proceed as provided by Subchapter

B, Chapter 404.

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

2003.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

730, Sec. 2E.108, eff. April 1, 2009.