CHAPTER 1805. JOINT UNDERWRITING AND ADVISORY ORGANIZATIONS

State Codes and Statutes

Statutes > Texas > Insurance-code > Title-10-property-and-casualty-insurance > Chapter-1805-joint-underwriting-and-advisory-organizations

INSURANCE CODE

TITLE 10. PROPERTY AND CASUALTY INSURANCE

SUBTITLE A. GENERAL PROVISIONS

CHAPTER 1805. JOINT UNDERWRITING AND ADVISORY ORGANIZATIONS

SUBCHAPTER A. GENERAL PROVISIONS

Sec. 1805.001. APPLICABILITY OF CHAPTER. This chapter applies

to the kinds of insurance and insurers subject to:

(1) Section 403.002;

(2) Section 941.003 with respect to the application of a law

described by Section 941.003(b)(1) or (c);

(3) Section 942.003 with respect to the application of a law

described by Section 942.003(b)(1) or (c);

(4) Subchapter A, B, or C, Chapter 5;

(5) Subchapter H, Chapter 544;

(6) Subchapter A, Chapter 2301;

(7) Chapter 252, 253, 254, 255, 426, 1806, 1807, 2001, 2002,

2003, 2004, 2005, 2006, 2008, 2051, 2052, 2053, 2055, 2171, 2251,

or 2252;

(8) Subtitle B or C, Title 10; or

(9) Chapter 2154, Occupations Code.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Amended by:

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

730, Sec. 2H.001, eff. April 1, 2009.

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

730, Sec. 3B.0591(e), eff. September 1, 2007.

SUBCHAPTER B. ADVISORY ORGANIZATIONS

Sec. 1805.051. LICENSE APPLICATION. (a) A corporation,

unincorporated association, partnership, or individual may file

with the commissioner an application for an advisory organization

license for the kinds of insurance specified in the application.

(b) The applicant must:

(1) file with the commissioner:

(A) a copy of the applicant's:

(i) constitution and bylaws;

(ii) article of agreement or association or certificate of

incorporation; and

(iii) rules governing the applicant's activities as an advisory

organization; and

(B) a statement of qualifications to act as an advisory

organization; and

(2) pay a $100 license fee.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 1805.052. ISSUANCE OF LICENSE; TERM. (a) The commissioner

shall issue a license to an applicant the commissioner determines

is qualified, without regard to:

(1) the state of domicile or residence of the applicant; or

(2) the location of the applicant's place of business.

(b) The commissioner shall grant or deny a license to an

applicant not later than the 60th day after the date the

commissioner receives the application.

until the commissioner suspends or revokes the license.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 1805.053. INFORMATION REPORTED BY ADVISORY ORGANIZATION.

(a) An advisory organization may file with the commissioner

prospective loss costs, supplementary rating information, and

policy forms. A filing made by an advisory organization under

this section is subject to the provisions of this code or other

insurance laws of this state governing rate filings.

(b) An advisory organization at least quarterly shall file with

the commissioner a list of:

(1) each subscriber company engaging in business in this state;

and

(2) the products or information the subscriber company

purchases.

shall provide to the department a summary of the actuarial

assumptions, trend factors, economic factors, and other criteria

used in trending data for companies engaging in business in this

state.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 1805.054. INSURER'S AUTHORITY TO SUBSCRIBE TO ADVISORY

ORGANIZATION. An insurer engaging in business in this state may

subscribe to an advisory organization.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 1805.055. SUBMISSION, RECEIPT, AND USE OF INFORMATION BY

INSURER. (a) Except as provided by Subsection (b), an insurer

may submit to or receive from an advisory organization the

following only if the advisory organization holds a license

issued under this subchapter:

(1) statistical plans;

(2) historical data;

(3) prospective loss costs;

(4) supplementary rating information;

(5) policy forms and endorsements;

(6) research;

(7) rates of individual insurers that are effective at the time

the information is submitted or received or that were previously

in effect; and

(8) performance of inspections.

(b) An insurer may not:

(1) accept from an advisory organization recommendations for

rates; or

(2) submit to or receive from an advisory organization

recommendations for profit or expenses other than loss adjustment

expenses.

use prospective loss costs, supplementary rating information, and

policy forms filed by the advisory organization under Section

1805.053(a) and may incorporate the information into the

insurer's filings.

(d) Notwithstanding any other law, an insurer that reports data

under this subchapter is not relieved of the responsibility of

reporting that data directly to the department at the

department's request.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 1805.056. AUDIT. (a) The department shall require an

annual audit of an advisory organization that provides statistics

or other information to the department in a proceeding to set

rates.

(b) The audit must:

(1) be conducted at the expense of the advisory organization

under rules adopted by the commissioner; and

(2) examine the advisory organization's method of collecting,

analyzing, and reporting data to ensure the accuracy of data.

companies.

(d) Except for individual company information, an audit is

public information.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 1805.057. RATE FILING REVIEW. The commissioner may:

(1) review the rate filing of an insurer that relies on the

prospective loss costs provided by an advisory organization; and

(2) require the insurer to provide the insurer's actual data and

loss experience in addition to the information provided by the

advisory organization.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 1805.058. PROHIBITED ACTS. (a) An advisory organization

may not compile or distribute recommendations for:

(1) rates; or

(2) profit or expenses other than loss adjustment expenses.

(b) An insurer or advisory organization may not:

(1) attempt to monopolize, combine, or conspire with another

person to monopolize an insurance market;

(2) engage in a boycott, on a concerted basis, of an insurance

market; or

(3) make an agreement with another insurer, advisory

organization, or person if the agreement has the purpose or

effect of restraining trade unreasonably or substantially

lessening competition in the business of insurance.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 1805.059. DISCIPLINARY ACTION. (a) If, after a hearing,

the commissioner determines that the furnishing of specified

services by an advisory organization involves an act or practice

that is unfair, unreasonable, or otherwise inconsistent with this

chapter or other applicable laws of this state, the commissioner

may issue a written order:

(1) specifying the manner in which the act or practice is

unfair, unreasonable, or inconsistent with the applicable law;

and

(2) requiring the advisory organization to discontinue the act

or practice.

(b) In addition to any other remedies available at law, the

commissioner may impose a sanction authorized under Chapter 82.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 1805.060. SUNSET REVIEW. During the period in which the

Sunset Advisory Commission performs its review of the department

under Chapter 325, Government Code, the commission shall review

the authority granted under this subchapter.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 1805.061. CONFLICT WITH OTHER LAW. To the extent this

subchapter conflicts with Section 2053.052(c), 2053.055,

2053.151, 2053.152, or 2053.153, or Subchapter A or C, Chapter

2053, with respect to the setting of rates for workers'

compensation insurance, the referenced provision of Chapter 2053

controls.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

SUBCHAPTER C. EXAMINATIONS

Sec. 1805.101. EXAMINATION AUTHORIZED. (a) As often as the

department determines expedient, the department may examine a

group, association, or other organization referred to in this

chapter, including an advisory organization described by

Subchapter B.

(b) An officer, manager, agent, or employee of the group,

association, or organization may be examined at any time under

oath and shall make available any book, record, account,

document, or agreement governing the method of operation of the

group, association, or organization.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 1805.102. EXAMINATION COSTS. The group, association, or

other organization shall pay the reasonable costs of an

examination under this subchapter on presentation of a detailed

account of the costs.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 1805.103. OUT-OF-STATE EXAMINATION. In lieu of an

examination under this subchapter, the department may accept the

report of an examination made by the insurance supervisory

official of another state in accordance with the laws of that

state.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

SUBCHAPTER D. CERTAIN PRACTICES IN JOINT UNDERWRITING OR JOINT

REINSURANCE

Sec. 1805.151. AUTHORITY OF COMMISSIONER. If, after a hearing,

the commissioner determines that an activity or practice of a

group, association, or other organization of insurers engaging in

joint underwriting or joint reinsurance is unfair, unreasonable,

or otherwise inconsistent with this chapter or other applicable

law, the commissioner may issue a written order:

(1) specifying the manner in which the activity or practice is

unfair, unreasonable, or inconsistent with the applicable law;

and

(2) requiring the group, association, or organization to

discontinue the activity or practice.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

State Codes and Statutes

State Codes and Statutes

State Codes and Statutes

State Codes and Statutes

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