82R3362 TRH-F
	By: Carona	S.B. No. 425

	A BILL TO BE ENTITLED
	AN ACT
	relating to property and casualty certificates of insurance and
	approval of property and casualty certificate of insurance forms by
	the Texas Department of Insurance; providing penalties.
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
	SECTION 1.  Subtitle A, Title 10, Insurance Code, is amended
	by adding Chapter 1811 to read as follows:
	CHAPTER 1811.  CERTIFICATES OF PROPERTY AND CASUALTY INSURANCE
	SUBCHAPTER A. GENERAL PROVISIONS
	Sec. 1811.001.  DEFINITIONS. In this chapter:
	(1)  "Agent" means a person required to hold a license
	as a property and casualty agent or surplus lines agent.
	(2)  "Certificate of insurance" means a document,
	instrument, or record, including an electronic record, no matter
	how titled or described, that is prepared by an insurer or agent and
	issued to a third person not a party to the subject insurance
	contract, as a statement or summary of property or casualty
	insurance coverage. The term does not include an insurance binder
	or policy form.
	(3)  "Certificate holder" means a person, other than a
	policyholder:
	(A)  who is designated on a certificate of
	insurance as a certificate holder; or
	(B)  to whom a certificate of insurance has been
	issued by an insurer or agent at the request of the policyholder.
	(4)  "Electronic record" has the meaning assigned by
	Section 322.002, Business & Commerce Code.
	(5)  "Insurance" means an insurance contract for
	property or casualty insurance.
	(6)  "Insurer" means a company or insurance carrier
	regulated by the department and engaged in the business of making
	property or casualty insurance contracts. The term includes:
	(A)  a stock fire or casualty insurance company;
	(B)  a mutual fire or casualty insurance company;
	(C)  a Mexican casualty insurance company;
	(D)  a Lloyd's plan;
	(E)  a reciprocal or interinsurance exchange;
	(F)  a county mutual insurance company;
	(G)  a farm mutual insurance company;
	(H)  a risk retention group;
	(I)  a certified self-insurer under Chapter 407,
	Labor Code;
	(J)  a certified self-insurance group under
	Chapter 407A, Labor Code;
	(K)  the Medical Liability Insurance Joint
	Underwriting Association under Chapter 2203;
	(L)  the Texas Windstorm Insurance Association
	under Chapter 2210;
	(M)  the FAIR Plan Association under Chapter 2211;
	(N)  an eligible surplus lines insurer; and
	(O)  any other insurer authorized to write
	property or casualty insurance in this state.
	(7)  "Lender" has the meaning assigned by Section
	549.001.
	(8)  "Person" means:
	(A)  an individual; or
	(B)  a partnership, corporation, limited
	liability company, association, trust, or other legal entity,
	including an insurer or a political subdivision or agency of this
	state.
	(9)  "Policyholder" means a person who has contracted
	with a property or casualty insurer for insurance coverage.
	(10)  "Record" has the meaning assigned by Section
	322.002, Business & Commerce Code.
	Sec. 1811.002.  APPLICABILITY. (a) This chapter applies to
	a certificate holder, policyholder, insurer, or agent with regard
	to a certificate of insurance issued on property or casualty
	operations or a risk located in this state, regardless of where the
	certificate holder, policyholder, insurer, or agent is located.
	(b)  This chapter may not be construed to apply to:
	(1)  a statement or summary of insurance required by a
	lender in a lending transaction involving:
	(A)  a mortgage;
	(B)  a lien;
	(C)  a deed of trust; or
	(D)  any other security interest in real or
	personal property as security for a loan;
	(2)  a certificate issued under:
	(A)  a group or individual policy for:
	(i)  life insurance;
	(ii)  credit insurance;
	(iii)  accident and health insurance;
	(iv)  long-term care benefit insurance; or
	(v)  Medicare supplement insurance; or
	(B)  an annuity contract; or
	(3)  standard proof of motor vehicle liability
	insurance under Section 601.081, Transportation Code.
	Sec. 1811.003.  RULES. The commissioner may adopt rules as
	necessary or proper to accomplish the purposes of this chapter.
	Sec. 1811.004.  FILING FEE. (a) The department may collect a
	fee in an amount determined by the commissioner for the filing of a
	new or amended certificate of insurance form under this chapter.
	(b)  The fee may not exceed $100.
	[Sections 1811.005-1811.050 reserved for expansion]
	SUBCHAPTER B. PROHIBITED ACTS AND PRACTICES
	Sec. 1811.051.  ALTERING, AMENDING, OR EXTENDING THE TERMS
	OF AN INSURANCE POLICY; CONTRACTUAL RIGHTS OF CERTIFICATE HOLDER.
	(a)  A property or casualty insurer or agent may not issue a
	certificate of insurance or any other type of document purporting
	to be a certificate of insurance if the certificate or document
	alters, amends, or extends the coverage or terms and conditions
	provided by the insurance policy referenced on the certificate or
	document.
	(b)  A certificate of insurance or any other type of document
	may not convey a contractual right to a certificate holder.
	Sec. 1811.052.  USE OF APPROVED CERTIFICATE OF INSURANCE
	FORMS. (a)  An insurer or an agent may not issue a certificate of
	insurance unless the form of the certificate:
	(1)  has been filed with and approved by the department
	under Section 1811.101; or
	(2)  is a standard form deemed approved by the
	department under Section 1811.103.
	(b)  A person may not prepare, issue, or require the issuance
	of a certificate of insurance for risks located in this state,
	unless the certificate of insurance form has been filed with and
	approved by the department.
	Sec. 1811.053.  ALTERATION OR MODIFICATION OF APPROVED
	CERTIFICATE OF INSURANCE FORMS. A person may not alter or modify a
	certificate of insurance form approved under Section 1811.101
	unless the alteration or modification is approved by the
	department.
	Sec. 1811.054.  ISSUANCE OF FALSE OR MISLEADING CERTIFICATE
	OF INSURANCE. A person may not require the issuance of a
	certificate of insurance from an insurer, agent, or policyholder
	that contains any false or misleading information concerning the
	policy of insurance to which the certificate refers.
	Sec. 1811.055.  REQUEST FOR DOCUMENTS IN LIEU OF CERTIFICATE
	OF INSURANCE. A person may not require an agent or insurer, either
	in addition to or in lieu of a certificate of insurance, to issue
	any other document or correspondence, instrument, or record,
	including an electronic record, that is inconsistent with this
	chapter.
	Sec. 1811.056.  USE OF DISAPPROVED CERTIFICATE OF INSURANCE
	FORMS. A person who receives written notice under Section 1811.102
	that a certificate of insurance form filed under this chapter has
	been disapproved by the commissioner shall immediately stop using
	the form.
	[Sections 1811.057-1811.100 reserved for expansion]
	SUBCHAPTER C. CERTIFICATE OF INSURANCE FORMS
	Sec. 1811.101.  FILING AND APPROVAL OF FORMS. (a) Except as
	provided by Subsection (b), an insurer or agent may not deliver or
	issue for delivery in this state a certificate of insurance unless
	the certificate's form:
	(1)  has been filed with and approved by the
	commissioner; and
	(2)  contains the phrase "for information purposes
	only" or similar language.
	(b)  If a certificate of insurance form does not contain the
	language required by Subsection (a)(2), the commissioner may
	approve the form if the form states:
	(1)  that the certificate of insurance does not confer
	any rights or obligations other than the rights and obligations
	conveyed by the policy referenced on the form; and
	(2)  that the terms of the policy control over the terms
	of the certificate of insurance.
	(c)  A filed form is approved at the expiration of 60 days
	after the date the form is filed unless the commissioner by order
	approves or disapproves the form during the 60-day period beginning
	the date the form is filed.  The commissioner's approval of a filed
	form constitutes a waiver of any unexpired portion of the 60-day
	period.
	(d)  The commissioner may extend by not more than 10 days the
	60-day period described by Subsection (c) during which the
	commissioner may approve or disapprove a form filed by an insurer or
	agent.  The commissioner shall notify the insurer or agent of the
	extension before the expiration of the 60-day period.
	(e)  A filed form for which an extension has been granted
	under Subsection (d) is considered approved at the expiration of
	the extension period described by that subsection absent an earlier
	approval or disapproval of the form.
	Sec. 1811.102.  DISAPPROVAL OF FORMS; WITHDRAWAL OF
	APPROVAL.  (a)  The commissioner shall disapprove a form filed under
	Section 1811.101 or withdraw approval of a form if the form:
	(1)  contains a provision or has a title or heading that
	is misleading, is deceptive, or violates public policy;
	(2)  violates any state law, including a rule adopted
	under this code; or
	(3)  requires an agent to provide certification of
	insurance coverage that is not available in the line or type of
	insurance coverage referenced on the form.
	(b)  The commissioner may not disapprove a form filed under
	Section 1811.101 or withdraw approval of a form based solely on the
	fact that the form contains language described by Section
	1811.101(b).
	(c)  An order issued by the commissioner disapproving a form,
	or a notice of the commissioner's intention to withdraw approval of
	a form, must state the grounds for the disapproval or withdrawal of
	approval in sufficient detail to reasonably inform the person
	filing the form of those grounds and the changes to the form
	necessary to obtain approval.
	(d)  An order disapproving a form or withdrawing approval of
	a form takes effect on the date prescribed by the commissioner in
	the order.  The commissioner may not prescribe a date earlier than
	the 30th day after the effective date of the order, as prescribed by
	the commissioner.
	Sec. 1811.103.  STANDARD CERTIFICATE OF INSURANCE FORMS. An
	insurer or agent may file a standard certificate of insurance form
	promulgated by the Association for Cooperative Operations Research
	and Development, the American Association of Insurance Services, or
	the Insurance Services Office (ISO). A standard form filed under
	this section is deemed approved on the date the form is filed with
	the department. Notwithstanding this section, the commissioner may
	withdraw approval of a standard form under Section 1811.102.
	Sec. 1811.104.  PUBLIC INSPECTION OF INFORMATION. A
	certificate of insurance form and any supporting information filed
	with the department under this subchapter is open to public
	inspection as of the date of the filing.
	[Sections 1811.105-1811.150 reserved for expansion]
	SUBCHAPTER D. EFFECT OF APPROVAL OF CERTIFICATE OF INSURANCE FORM
	Sec. 1811.151.  CONFIRMATION OF POLICY ISSUANCE. A
	certificate of insurance form that has been approved by the
	commissioner and properly executed and issued by a property and
	casualty insurer or an agent constitutes a confirmation that the
	referenced insurance policy has been issued or that coverage has
	been bound.  This section applies regardless of whether the face of
	the certificate includes the phrase "for information purposes only"
	or similar language.
	Sec. 1811.152.  CERTIFICATE OF INSURANCE NOT POLICY OF
	INSURANCE. A certificate of insurance is not a policy of insurance
	and does not amend, extend, or alter the coverage afforded by the
	referenced insurance policy.
	Sec. 1811.153.  RIGHTS CONFERRED BY CERTIFICATE OF
	INSURANCE. A certificate of insurance does not confer to a
	certificate holder new or additional rights beyond what the
	referenced policy or any executed endorsement of insurance
	provides.
	Sec. 1811.154.  REFERENCE TO OTHER CONTRACTS. A certificate
	of insurance may not contain a reference to a legal or insurance
	requirement contained in a contract other than the underlying
	contract of insurance, including a contract for construction or
	services.
	Sec. 1811.155.  NOTICE. (a)  A person may have a legal right
	to notice of cancellation, nonrenewal, or material change or any
	similar notice concerning a policy of insurance only if:
	(1)  the person is named within the policy or an
	endorsement to the policy; and
	(2)  the policy or endorsement or a law, including a
	rule, of this state requires notice to be provided.
	(b)  A certificate of insurance may not alter the terms and
	conditions of the notice required by a policy of insurance or the
	law of this state.
	Sec. 1811.156.  CERTIFICATE OF INSURANCE ISSUED IN VIOLATION
	OF CHAPTER.  A certificate of insurance that is prepared, issued, or
	required and that is in violation of this chapter is void and has no
	effect.
	[Sections 1811.157-1811.200 reserved for expansion]
	SUBCHAPTER E. ENFORCEMENT AND REMEDIES
	Sec. 1811.201.  POWERS OF COMMISSIONER. (a)  If the
	commissioner has reason to believe that an insurer or agent has
	violated or is threatening to violate this chapter or a rule adopted
	under this chapter, the commissioner may:
	(1)  issue a cease and desist order;
	(2)  seek an injunction under Section 1811.203;
	(3)  request that the attorney general recover a civil
	penalty under Section 1811.203;
	(4)  impose sanctions on the insurer or agent as
	provided by Chapter 82; or
	(5)  take any combination of those actions.
	(b)  This section does not prevent or limit any action by or
	remedy available to the commissioner under applicable law.
	Sec. 1811.202.  HEARING; NOTICE. (a)  The commissioner may
	hold a hearing on whether to issue a cease and desist order under
	Section 1811.201 if the commissioner has reason to believe that:
	(1)  an insurer or agent has violated or is threatening
	to violate this chapter or a rule adopted under this chapter; or
	(2)  an insurer or agent has engaged in or is
	threatening to engage in an unfair act related to a certificate of
	insurance.
	(b)  The commissioner shall serve on the insurer or agent a
	statement of charges and a notice of hearing in the form provided by
	Section 2001.052, Government Code.
	(c)  A hearing under this section is a contested case under
	Chapter 2001, Government Code.
	Sec. 1811.203.  CIVIL PENALTY; INJUNCTION.  (a)  A person,
	including an insurer or agent, who wilfully violates this chapter
	is subject to a civil penalty of not more than $1,000 for each
	violation.
	(b)  The commissioner may request that the attorney general
	institute a civil suit in a district court in Travis County for
	injunctive relief to restrain a person, including an insurer or
	agent, from continuing a violation or threat of violation of
	Subchapter B. On application for injunctive relief and a finding
	that a person, including an insurer or agent, is violating or
	threatening to violate Subchapter B, the district court shall grant
	the injunctive relief and issue an injunction without bond.
	(c)  On request by the commissioner, the attorney general
	shall institute and conduct a civil suit in the name of the state
	for injunctive relief, to recover a civil penalty, or for both
	injunctive relief and a civil penalty, as authorized under this
	subchapter.
	Sec. 1811.204.  INVESTIGATION OF COMPLAINTS. (a)  The
	commissioner may:
	(1)  investigate a complaint or allegation of specific
	violations by a person, including an insurer or agent, who has
	allegedly engaged in an act or practice prohibited by Subchapter B;
	and
	(2)  enforce the provisions of this chapter.
	(b)  If the commissioner has reason to believe that a person,
	including an insurer or agent, is performing an act in violation of
	Subchapter B, the person shall immediately provide to the
	commissioner, on written request of the commissioner, information
	relating to that act.
	SECTION 2.  The changes in law made by this Act apply only to
	a certificate of insurance issued on or after January 1, 2012. A
	certificate of insurance issued before January 1, 2012, is governed
	by the law in effect on that date, and that law is continued in
	effect for that purpose.
	SECTION 3.  This Act takes effect September 1, 2011.