| (IV) the plan must have competent and trustworthy management
who are generally knowledgeable of insurance matters. A plan is not
eligible if a plan officer or member of the plan's board of directors
or similar governing body has been convicted of a felony involving
moral turpitude or breach of fiduciary duty.
(6) Rates, rating plans, and rating rules applicable.
The rates, rating plans, rating rules, rating classifications, and
territories applicable must be those established under Insurance Code
Chapter 2203, Subchapter E.
(b) Application, underwriting standards, and acceptance
or rejection.
(1) Eligibility and forms.
(A) Any physician and any health care provider as defined
in Insurance Code §2203.002 and any health care practitioner
and health care facility as defined in Insurance Code §2203.103
that falls within any of the categories of physicians, health care
providers, health care practitioners, or health care facilities established
by order of the Commissioner from time to time as being eligible to
obtain coverage from the association is entitled to apply to the association
for a medical liability insurance policy. However, if the applicant
is a partnership, professional association, or corporation (other
than a nonprofit corporation certified under Occupations Code Chapter
162) composed of eligible health care providers or health care practitioners
(such as physicians, dentists, or podiatrists), all of the partners,
professional association members, or shareholders must also be individually
insured in the association.
(i) Any category of physician or health care provider,
which by order of the Commissioner has been excluded from eligibility
to obtain coverage from the association, may be eligible for coverage
in the association if, after at least 10 days' notice and an opportunity
for a hearing, the Commissioner determines that medical liability
insurance is not available for the category of physician or health
care provider. In addition, a for-profit or not-for-profit nursing
home or assisted living facility not otherwise eligible for coverage
from the association is eligible for coverage if the nursing home
or assisted living facility demonstrates, in accordance with the requirements
of the association, that the nursing home or assisted living facility
made a verifiable effort to obtain coverage from authorized insurers
and eligible surplus lines insurers and was unable to obtain substantially
equivalent coverage and rates.
(ii) All applications for medical liability and general
liability insurance must be made on forms prescribed by the board
of directors of the association and approved by the department. The
application forms must contain a statement as to whether or not there
are any unpaid premiums, assessments, or stabilization reserve fund
charges due from the applicant for prior insurance. Application may
be made on behalf of the applicant by an agent authorized under Insurance
Code Chapter 4051. The agent need not be appointed by a servicing
company.
(B) The association may issue a general liability insurance
policy to an applicant specified in subparagraph (A) of this paragraph
only if the association issues to that applicant a medical liability
insurance policy.
(2) Licensed agent. If a liability insurance policy
is written through a licensed agent, then:
(A) the commission paid to the licensed agent must
be 10% of the first $1,000 of the policy premium, 5% of the next $9,000
of the policy premium, and 2% of the policy premium in excess of $10,000
for policies written by the association on the form approved for physicians
and noninstitutional health care providers;
(B) the commission paid to the licensed agent must
be 12.5% of the first $2,000 of the policy premium, 7.5% of the next
$3,000 of the policy premium, 5% of the next $15,000 of the policy
premium, and 2% of the policy premium in excess of $20,000 for policies
written by the association on the form approved for hospitals and
other institutional health care providers;
(C) the commission paid to the licensed agent must
be 10% of the policy premium for an excess liability insurance policy
written by the association for a physician or any other health care
provider as defined in Insurance Code §2203.002. The commission,
however, may not exceed $250 for a policy written on the form approved
for physicians and other noninstitutional health care providers, and
may not exceed $500 for a policy written on the form approved for
hospitals and other institutional health care providers; and
(D) no commission may be payable for any assessment
payable by the policyholder by reason of a deficit incurred by the
association, including charges for the stabilization reserve funds.
On cancellation, the agent must refund any unearned portion of the
commission to the association.
(3) Submission. Application for medical liability or
general liability insurance on the prescribed form must be accompanied
by tender of the amount of the deposit premium and the charge for
the stabilization reserve fund required to bind the policy.
(4) Underwriting standards.
(A) On initial application and every reapplication
to the association, the following underwriting standards must apply
for policies of medical liability insurance written by the association:
(i) all applicants to the association must be currently
licensed, chartered, certified, or accredited to practice or provide
their respective health care services in Texas;
(ii) all health care provider, practitioner and facility
and physician applicants to the association must provide evidence
of inability to obtain medical liability coverage. The evidence must
be two written rejections by carriers licensed and engaged in writing
the coverage applied for in Texas or by a self-insurance trust created
under Insurance Code Chapter 2212;
(iii) all for-profit and not-for-profit nursing home
and assisted living facility applicants to the association must provide
evidence of inability to obtain coverage from authorized insurers
and eligible surplus lines insurers for substantially equivalent coverage
and rates. The evidence must be two written rejections by insurers
licensed and engaged in writing the coverage applied for in Texas
or by eligible surplus lines insurers. For purposes of this subsection,
a rejection has occurred if the applicant:
(I) made a verifiable effort to obtain insurance coverage
from authorized insurers and eligible surplus lines insurers; and
(II) was unable to obtain substantially equivalent
insurance coverage and rates.
(iv) any material misrepresentation in the application
for coverage must be cause to decline coverage on discovery by the
association or its authorized representative;
(v) each application must be accompanied by authorization
for and consent to investigations of material information bearing
on the moral character, professional reputation, and fitness to engage
in the activities embraced by the applicant's license with respect
to applicants who are to be provided coverage on the form approved
for physicians and noninstitutional health care providers, or the
reputation, method of operation, accident prevention programs, and
fitness to engage in the activities embraced by the applicant's license,
charter, certificate, or accreditation for applicants who are to be
provided coverage on the form approved for hospitals and other institutional
health care providers, including authorization to every person or
entity, public or private, to release to the association any documents,
records, or other information bearing on this information;
(vi) no coverage may be afforded either by binder or
by policy issuance to any applicant whose license, charter, certificate,
or accreditation has been ordered canceled, revoked, or suspended,
provided that, if the order has been probated by the appropriate regulatory
body or licensing agency, then the probation may be reviewed by the
association for a determination whether and on what basis coverage
may be afforded in the association;
(vii) the applicant, to be eligible for coverage in
the association, must comply with all significant recommendations
arising out of a loss control or risk management report either before
binding coverage or as soon as practicable concurrently with coverage;
(viii) there must be no unpaid, uncontested premium;
assessment; or charge due from the applicant; and
(ix) there must be no unpaid deductible, in whole or
part, owed to the association.
(5) Receipt of the application. On receipt of the application,
the required deposit premium, and the applicable stabilization reserve
fund charge, the association must, within 30 days:
(A) cause a binder or insurance policy to be issued;
or
Cont'd... |
