| (a) Powers of the association. The association is created
by the Act and will be governed by the provisions of the Act and this
subchapter.
(b) Collection and investment of funds.
(1) Collection. The treasurer is responsible for the
collection of all the premiums received by the association, all assessments
levied against the members, all assessments and charges levied against
policyholders (including contributions to the stabilization reserve
funds), and all proceeds from the investment of funds.
(2) Investment.
(A) All funds collected by the association must be
retained in appropriate accounts in any bank or banks doing business
in Texas and may be invested only in the following:
(i) interest-bearing time deposits or certificates
of deposit in any bank or banks doing business in Texas that are members
of the Federal Deposit Insurance Corporation;
(ii) treasury bills, notes, or bonds of the government
of the United States of America; or
(iii) other investments as may be proposed by the board
of directors and approved by the Commissioner.
(B) The board of directors must determine what portion
of such funds should be retained in a checking account or accounts
and what portion of such funds should be invested in the investments
set forth in subparagraph (A) of this paragraph, as well as which
specific investments, if any, should be made.
(c) Stabilization reserve funds. Insurance Code §2203.301
creates a policyholder's stabilization reserve fund for physicians
and certain health care providers (§2203.301 fund), and Insurance
Code §2203.303 creates a stabilization reserve fund for for-profit
and not-for-profit nursing homes and assisted living facilities (§2203.303
fund) and further provides that these funds must be administered as
provided in Insurance Code Chapter 2203 and this subchapter and that
the advisory directors must be chosen as provided in this subchapter.
(1) General provisions.
(A) In accordance with Insurance Code §2203.101
and §2203.103, the Commissioner will establish by order the categories
of physicians and other health care providers, including health care
practitioners, and health care facilities, who are eligible to obtain
coverage from the association. The order may indicate the stabilization
reserve fund appropriate to the new category and may be revised from
time to time to include or exclude from eligibility some categories
of health care providers and physicians.
(B) The following provisions also govern the stabilization
reserve funds under Insurance Code §2203.301 and §2203.303:
(i) Within 15 days after the effective date of any
Commissioner order establishing eligibility, the board of directors
must extend invitations to the appropriate Texas organizations representing
eligible §2203.301 fund health care providers and physicians
and §2203.303 fund for-profit and not-for-profit nursing homes
and assisted living facilities to each designate an advisory director
to represent each eligible category of §2203.301 fund health
care provider and physician and §2203.303 fund for-profit and
not-for-profit nursing home and assisted living facility, and advise
the association of its choice of director.
(ii) Each designated advisory director has a vote on
any matter coming before any meeting of the entire body of advisory
directors for the §2203.301 fund or §2203.303 fund to which
the advisory director has been designated. That vote will be weighted
in the proportion that the net written premium collected during the
most recent calendar year from policies issued to each category of §2203.301
fund health care provider and physician or §2203.303 fund for-profit
or not-for-profit nursing home and assisted living facility bears
to the total net written premiums collected from all categories of §2203.301
fund health care providers and physicians or to all categories of §2203.303
fund for-profit and not-for-profit nursing homes and assisted living
facilities as applicable during the same calendar year. The proportion
of weighting of the advisory directors' votes for the §2203.301
fund and the §2203.303 fund respectively must be determined annually
by the association, not later than August 31.
(iii) The designated advisory directors for the §2203.301
fund and the §2203.303 fund respectively must meet not later
than September 15 of each year, at a place in Texas stipulated by
the board of directors to consider the amount of funds available and
the status of the respective §2203.301 fund or §2203.303
fund. The designated advisory directors for the respective §2203.301
fund and §2203.303 fund must inform the board of directors of
the percentage to be charged to all policyholders of all policies
issued or renewed by the association for the respective §2203.301
fund or §2203.303 fund during the next calendar year. This percentage
must be communicated to the board of directors no later than September
20, annually.
(iv) If any organization described in clause (i) of
this subparagraph fails to designate an advisory director, the directors
designated by the remaining organizations constitute the entire body
of advisory directors for the respective §2203.301 fund or §2203.303
fund, and their establishment of the respective §2203.301 fund
or §2203.303 fund charge must be accepted as valid by the association
and imposed pursuant to the operational procedures of the association,
upon approval of the department.
(v) In the event that the advisory directors fail to
establish a specific percentage charge for the respective §2203.301
fund or §2203.303 fund to be collected for the coming calendar
year before the applicable deadline, the board of directors must immediately
submit for approval by the Commissioner a charge to be collected from
the respective §2203.301 fund or §2203.303 fund policyholders
of each new and renewal policy during the upcoming calendar year in
accordance with the provisions of the Insurance Code.
(vi) The advisory directors serve without salary or
other fee, and they may not be reimbursed for any expenses. The advisory
directors, in the performance of their duties, will be afforded the
protection of §5.2002(h) of this title (relating to Operation
of the Texas Medical Liability Insurance Underwriting Association).
(C) The respective §2203.301 fund or §2203.303
fund charge must be collected annually from each policyholder of the
applicable §2203.301 or §2203.303 fund, as may be appropriate,
and must be stated as a percentage of the annual premium due for all
coverages on all policies issued or renewed on or after the effective
date of the charge. The percentage charge will remain in effect until
changed in accordance with subparagraph (B) of this paragraph.
(D) The respective §2203.301 fund or §2203.303
fund charge must be separately stated in the policy, but may not constitute
a part of premium or be subject to premium taxation, servicing fees,
acquisition costs, commissions, or any other such charges. Further,
the respective fund charge will not be considered premiums for the
purpose of any assessments levied under subsection (d) of this section.
(E) The respective §2203.301 fund or §2203.303
fund charges must be collected and administered by the association
and must be treated as a liability of the association along with and
in the same manner as premium and loss reserves. The §2203.301
fund and the §2203.303 fund must be valued annually by the board
of directors within 90 days of the last day of the preceding calendar
year.
(F) Collections of the respective §2203.301 fund
or §2203.303 fund charge must continue throughout each calendar
year for which they are established, provided that no charge will
be made during the next succeeding calendar year if the net balance
in the respective fund after recoupment of any prior year's deficit
equals or exceeds the association's estimate of the projected sum
of premiums to be written in the calendar year following the valuation
date of the respective fund.
(2) §2203.301 fund or §2203.303 fund charge.
The respective proportionate §2203.301 fund or §2203.303
fund charge must be based on the total annual written premium for
all coverages provided by the association to the applicable §2203.301
fund or §2203.303 fund policyholders. The respective §2203.301
fund or §2203.303 fund charges are not be refundable if the policy
is cancelled after the 90th day of coverage. If cancelled within the
90th day of coverage, the earned charge will be based on the same
earned percentage charged for the insurance premium.
Cont'd... |
