28 TAC §§5.2001 - 5.2006
The Commissioner of Insurance adopts amendments to §§5.2001
- 5.2006 concerning the plan of operation of the Texas Medical Liability Insurance
Underwriting Association (JUA). The amended sections are adopted without changes
to §§5.2001 - 5.2003 and 5.2005 - 5.2006 and with one nonsubstantive
typographical correction to §5.2004 as published in the November 5, 2004,
issue of the
Texas Register
(29 TexReg 10175).
The amendments are necessary to conform to and implement amendments to
Insurance Code Article 21.49-3 enacted by the 77th Legislature in Senate Bill
1839 and the 78th Legislature in Senate Bills 14, 421, 339, and 891. Further,
the amendments update, streamline, and clarify various terms and provisions
and conform the plan of operation to the federal Servicemembers Civil Relief
Act of 2003 (50 U.S.C. App. §§501, et seq.).
Senate Bill 1839, enacted by the 77th Legislature, among other matters,
establishes eligibility requirements for the addition of for-profit nursing
homes; adds language relating to a deficit sustained by the JUA; establishes
separate stabilization reserve funds with respect to physicians, health care
providers, other than nursing homes, and to nursing homes; and requires each
policyholder to have contingent liability for a proportionate share of any
assessment of policyholders as specified within the applicable group of providers.
Senate Bills 14, 339, 421 and 891, enacted by the 78th Legislature, among
other matters, address participation by JUA members, procedures, policyholder
stabilization reserve funds, eligibility of other health care practitioners
and facilities, and assisted living facilities, and issuance of general liability
coverage in connection with medical liability insurance coverage. Senate Bill
14 amends Article 21.49-3 to provide that assessments and contributions paid
to the association by JUA members shall be reimbursed to the state to the
extent that members have recouped their assessments using premium tax credits.
Senate Bill 339 amends Article 21.49-3 to allow the JUA to offer installment
payment plans for coverage and to permit payment of the stabilization reserve
fund charge on an installment basis or as an annual lump sum if required by
the JUA. Senate Bill 421 amends Article 21.49-3 to add "assisted living facility"
to the definition of "health care provider"; establish assisted living facilities
as eligible for JUA coverage subject to the same provisions of Article 21.49-3
as nursing homes; add definitions of "health care," "health care facility,"
and "health care practitioner"; and establish health care practitioners and
facilities as eligible for JUA coverage subject to specific procedures, including
a determination and order by the commissioner. Senate Bill 891 amends Article
21.49-3 to allow the JUA to provide general liability insurance coverage to
be issued in connection with medical liability insurance issued by the JUA.
The Servicemembers Civil Relief Act, signed into federal law on December
19, 2003 as Public Law 108-189, amended the Soldiers' and Sailors' Civil Relief
Act (50 U.S.C. App. §§501, et seq.). This Act, under 50 U.S.C. app. §593,
requires an insurance carrier to suspend professional liability insurance
coverage provided to a servicemember described under the Act upon receiving
a written request from the servicemember.
Overall, amendments to §§5.2001 - 5.2006 eliminate unnecessary
language, including requirements that are detailed in the statute and not
necessary to repeat in the rule, and update, clarify, and streamline various
terms and provisions. Throughout the amendments, references to the commissioner
or the department, as applicable, replace references to the State Board of
Insurance. In several instances, citations to recodified statutes replace
old statutory references.
Amendments to §5.2001 add definitions of "association," "commissioner,"
and "department," delete the definition of "board," and amend the definition
of "application" by including general liability insurance issued in connection
with medical liability insurance.
Amendments to subsection (c) of §5.2002, change notice provisions
to conform with open meeting requirements under the Government Code, Chapter
551. Amendments to subsection (d) clarify that directors of the JUA take office
on October 1 of each year and shall hold office until the next election of
directors or until a successor has been selected and qualified. In addition,
amendments to subsection (d)(2) combine representation of the elected directors
from the National Association of Independent Insurers (NAII) and the Alliance
of American Insurers (AAI) to provide for a single representative from either
the NAII or the AAI, at the choice of the Property Casualty Insurers Association
of America (PCI). This amendment was made in recognition of the merger between
NAII and AAI forming PCI. Further, amendments to subsection (d)(2) substitute
the Insurance Council of Texas for the directorship previously held solely
by a member of the AAI.
Amendments to subsection (c) of §5.2003 add references to eligibility
of coverage for health care practitioners and facilities not otherwise defined
as health care providers and provisions for two separate policyholder's stabilization
reserve funds, one for physicians and certain health care providers under §4A
of Article 21.49-3, and one for nursing homes and assisted living facilities
under §4B of Article 21.49-3. Amendments to subsection (d) add references
to nursing homes and assisted living facilities as appropriate and provide
that the JUA shall reimburse the state to the extent that the members have
recouped their assessments using premium tax credits pursuant to subsection
(e), with interest at a rate to be approved by the commissioner.
Amendments to subsection (a) of §5.2004 provide that: the procedures
regarding rates, rating plans, rating rules, rating classifications, territories,
and policy forms applicable to insurance written by the association and related
statistics shall be in accord with §4 of Article 21.49-3; policies issued
by the JUA shall be written for a term of one year or less, as determined
by the JUA; the JUA may offer an installment plan for coverage or for payment
of the stabilization reserve fund charge; the JUA may require the policyholder
to pay the stabilization reserve fund charge as an annual lump sum; and general
liability limits must be the same as medical liability limits subject to the
JUA's maximum policy limits. In addition, amendments to subsection (a) add
references to general liability insurance and excess general liability insurance,
health care practitioners, and health care facilities, and clarify that policies
of excess medical liability and excess general liability insurance terminate
automatically in the event that the underlying primary policy of medical liability
or underlying primary general liability insurance is not maintained.
Amendments to subsection (b) of §5.2004 add references to health care
practitioners and health care facilities; provide that a nursing home or assisted
living facility not otherwise eligible for coverage is eligible for coverage
if the nursing home or assisted living facility, in accordance with JUA requirements,
made a verifiable effort to obtain coverage from authorized insurers and eligible
surplus lines insurers, as evidenced by two rejections, and was unable to
obtain substantially equivalent coverage and rates; provide that the JUA may
issue a general liability insurance policy only if the applicant is issued
a medical liability insurance policy by the JUA; include a self-insurance
trust created under Article 21.49-4 as an authorized insurer for purposes
of evidence of a rejection for medical liability coverage; require all nursing
home and assisted living facility applicants to provide evidence of inability
to obtain coverage from authorized insurers and eligible surplus lines insurers
for substantially equivalent coverage and rates; add physicians and other
health care providers to those applicants and policyholders required to comply
with all significant loss control or risk management recommendations; provide
that noncompliance with reasonable loss control or risk management recommendations
may be a reason for cancellation of a JUA policy; provide that a policy of
general liability insurance issued by the JUA shall automatically terminate
on the same effective date and time as the termination of the medical liability
policy; provide that the JUA shall suspend a policy, upon written request
from a policyholder subject to the Servicemembers Civil Relief Act of 2003
(50 U.S.C. §§501, et seq.); and add a self-insurance trust, established
under Article 21.49-4, as an entity that may write a JUA risk as regular business
upon the insured's written consent filed with the JUA, in which event the
JUA shall cancel its policy pro rata.
The amendment to paragraph (1) of §5.2006 provides that general liability
insurance, in addition to medical liability insurance, is a coverage for which
the JUA may develop a reinsurance program.
No comments were received.
The amendments are adopted under the Insurance Code Article 21.49-3, §31.007
and §36.001. Article 21.49-3, §3(c) specifies that amendments to
the plan of operation shall be made by the directors of the association, subject
to the approval of the commissioner, or at the direction of the commissioner.
Pursuant to §31.007, a reference in the Insurance Code or other law to
the State Board of Insurance, the Board of Insurance Commissioners, or an
individual commissioner means the commissioner or the department as consistent
with the respective duties of the commissioner and the department under this
code and other insurance laws. Among other things, Article 21.49-3, §3(c)
specifies that the plan of operation shall provide for economic, fair, and
nondiscriminatory administration and for the prompt and efficient provision
of medical liability insurance, and shall contain other provisions including,
but not limited to, preliminary assessment of all members for initial expenses
necessary to commence operations, establishment of necessary facilities, management
of the JUA, assessment of members and assessment of policyholders to defray
losses and expenses, administration of the policyholder's stabilization reserve
fund, commission arrangements, reasonable and objective underwriting standards,
acceptance, assumption, and cession of reinsurance, appointment of servicing
carriers, and procedures for determining amounts of insurance to be provided
by the JUA. Section 36.001 provides that the Commissioner of Insurance may
adopt any rules necessary and appropriate to implement the powers and duties
of the Texas Department of Insurance under the Insurance Code and other laws
of this state.
§5.2004.Medical Liability Insurance and General Liability Insurance.
(a)
The policy.
(1)
Approval. The procedures regarding rates, rating plans,
rating rules, rating classifications, territories, and policy forms applicable
to insurance written by the association and statistics relating thereto shall
be in accord with the Act, §4.
(2)
Duration of policies. All policies issued by the association
shall be written for a term of one year or less, as determined by the association,
to commence at 12:01 a.m. on their respective effective dates. No policies
may be issued by the association with an effective date after the date fixed
in the Act for a plan of suspension to become effective and operative. All
policies shall be written upon forms approved by the department, and shall
contain a provision which requires, as a condition precedent to settlement
or compromise of any claim, the consent or acquiescence of the insured. If,
however, the insured refuses to consent to any settlement recommended in writing
by the association and elects to contest or continue any legal proceedings,
the liability of the association shall not exceed the amount for which the
claim could have been settled plus the cost and expenses incurred up to the
date of such refusal.
(3)
Installment payment plan. The association may offer an
installment plan for coverage obtained through the association or for payment
of the stabilization reserve fund charge. The association may require the
policyholder to pay the stabilization reserve fund charge as an annual lump
sum.
(4)
Limits of liability.
(A)
No individual or organization may be insured by a policy
issued, or caused to be issued, by the association for an amount exceeding
a total of $1 million per occurrence (for all coverages combined) and $3 million
aggregate per annum (for all coverages combined). As used in this paragraph,
the terms "individual" and "organization" mean each physician, health care
provider, health care practitioner, and health care facility holding a separate
license or accreditation from the appropriate licensing or accrediting agency
as applicable.
(B)
If provided, general liability limits must be the same
as medical liability limits subject to the maximum policy limits specified
in subparagraph (A) of this paragraph.
(5)
Special provisions.
(A)
Policies with deductibles may be issued by the association.
(B)
Policies subject to retrospective rating plans may be issued
by the association.
(C)
Policies of excess medical liability insurance and excess
general liability insurance written by the association shall:
(i)
be on a following form basis to the underlying medical
liability insurance or underlying general liability insurance coverage over
which it is written;
(ii)
be issued subject to review of the underlying coverage
if review is deemed necessary by the association or its representatives;
(iii)
not be issued in those cases where the net retention
at risk by the primary carrier is less than $100,000 per occurrence or less
than $300,000 aggregate per annum after the application of any applicable
deductible;
(iv)
be issued only when the underlying insurance coverage
is underwritten by a member of the association and such underlying insurance
coverage does not have a deductible in excess of $25,000; and
(v)
terminate automatically in the event the underlying primary
policy of medical liability insurance or underlying primary general liability
insurance is not maintained for any reason, except exhaustion by payment of
a loss or losses. If the aggregate underlying primary medical liability insurance
or general liability insurance is exhausted by the payment of a loss or losses
occurring during the policy period, the insurance provided by the excess policy
shall apply in the same manner as if the underlying primary insurance was
in full force and effect;
(vi)
not be accepted for a hospital or other institutional
health care provider or health care facility if the applicant does not provide
evidence that all physicians, surgeons, podiatrists, dentists, pharmacists,
chiropractors, or other health care providers or health care practitioners
with staff privileges are insured for their individual medical liability with
limits of liability of at least $100,000 per occurrence and $300,000 aggregate
per annum; and
(vii)
not be accepted for physicians, surgeons, podiatrists,
dentists, pharmacists, chiropractors, or other health care providers or health
care practitioners who employ or contract with other physicians, surgeons,
podiatrists, dentists, pharmacists, chiropractors, or other health care providers
or health care practitioners if the applicant does not provide evidence that
all employed physicians, surgeons, podiatrists, dentists, pharmacists, chiropractors,
or other health care providers or health care practitioners who are eligible
to obtain coverage from the association are insured for their individual medical
liability with limits of liability of at least $100,000 per occurrence and
$300,000 aggregate per annum.
(D)
No hospital or other institutional health care provider,
health care facility or physicians, surgeons, podiatrists, dentists, pharmacists,
chiropractors, or other health care providers or health care practitioners
that have employed or contracted physicians, surgeons, podiatrists, dentists,
pharmacists, chiropractors, or other health care providers or health care
practitioners can be accepted for coverage in the association without evidence
that all physicians, surgeons, podiatrists, dentists, pharmacists, chiropractors,
or other health care providers or health care practitioners with staff privileges
or employed or contracted by the applicant are insured for their individual
medical liability with limits of at least $100,000 per occurrence and $300,000
aggregate per annum.
(E)
For purposes of this section, the term health care providers
or health care practitioners shall not include personnel at or below the level
of employed registered nurse. Insurance required for physicians, surgeons,
podiatrists, dentists, pharmacists, chiropractors, health care practitioners
or other health care providers with hospital staff privileges or employed
or contracted by the applicant shall be limited to any one of the following
entities:
(i)
an insurance company authorized and licensed to write and
writing health care liability or medical liability insurance in Texas, pursuant
to the authority of the Insurance Code, Chapter 801;
(ii)
an insurance company eligible to write and writing health
care liability or medical liability insurance in Texas as a surplus lines
carrier, pursuant to the authority of the Insurance Code, Chapter 981;
(iii)
the Texas Medical Liability Insurance Underwriting Association,
established under the Insurance Code Article 21.49-3;
(iv)
a self-insurance trust created to provide health care
liability or medical liability insurance, established under the Insurance
Code Article 21.49-4;
(v)
a risk retention group or purchasing group writing health
care liability or medical liability insurance in Texas registered, pursuant
to the authority of the Insurance Code Article 21.54;
(vi)
a plan of self-insurance of an institution of higher education
that provides health care liability or medical liability coverage, established
under the Education Code, Chapter 59; or
(vii)
a plan of self-insurance that meets each of the following
criteria:
(I)
the plan's liabilities must be fully funded and the plan
must be solvent. The plan must have a minimum net worth equal to the lesser
of $1 million or that amount of net worth that results in a capitalization
ratio of 5.0%. As used in this subclause, "net worth" shall be calculated
by determining the excess, if any, of the plan's total assets over the plan's
total liabilities. As used in this subclause, "capitalization ratio" means
the ratio of the plan's net worth (as the numerator) to the plan's total assets
(as the denominator). Notwithstanding the preceding, the net worth requirements
contained in this subclause do not apply to a plan that lawfully has taxing
authority over a segment of the Texas public provided that the taxing authority
may be utilized to meet the plan's liabilities and other obligations; and
(II)
the plan must annually obtain an actuarial analysis which
reflects that its operations are viable from a qualified actuary who is a
member in good standing of the American Academy of Actuaries. Notwithstanding
the preceding, an actuarial opinion filed with the Texas Department of Insurance
pursuant to Texas Insurance Code Article 802.002 may be accepted for purposes
of this subsection; and
(III)
financial statements of the plan must annually be audited
by an independent certified public accountant who is a member in good standing
of the American Institute of Certified Public Accountants (AICPA). The audits
must utilize generally accepted auditing standards and must result in a report
which attests to whether the financial statements comply with generally accepted
accounting principals adopted by the AICPA. Notwithstanding the preceding,
an audit report filed with the Texas Department of Insurance pursuant to Texas
Insurance Code Article 1.15A may be accepted for purposes of this subsection;
and
(IV)
the plan must have competent and trustworthy management
who is generally knowledgeable of insurance matters. In no event shall a plan
be 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
shall be those established pursuant to the Act, §4.
(b)
Application, underwriting standards, and acceptance or
rejection.
(1)
Eligibility and forms.
(A)
Any physician and any health care provider (as defined
in the Act, §2) and any health care practitioner and health care facility
(as defined in the Act, §3B) which 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, shall be entitled
to apply to the association for a policy of medical liability insurance; provided,
that if the applicant is a partnership, professional association, or corporation
(other than a nonprofit corporation certified under Chapter 162, Occupations
Code) comprised 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. 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, it is
determined by the commissioner 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. All applications for medical liability and general liability insurance
shall be made on forms prescribed by the board of directors of the association
and approved by the department. The application forms shall 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 pursuant to
the Insurance Code Article 21.14. Such 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 that applicant is issued a medical liability insurance policy by the association.
(2)
Licensed agent. If a policy of liability insurance is written
through a licensed agent then:
(A)
the commission paid to the licensed agent shall be 10%
of the first $1,000 of such policy premium, 5.0% of the next $9,000 of such
policy premiums, and 2.0% of the policy premium in excess of $10,000 with
respect to policies written by the association on the form approved for physicians
and noninstitutional health care providers;
(B)
the commission paid to the licensed agent shall be 12.5%
of the first $2,000 of such policy premium, 7.5% of the next $3,000 of such
policy premium, 5.0% of the next $15,000 of such policy premium, and 2.0%
of the policy premium in excess of $20,000 with respect to policies written
by the association on the form approved for hospitals and other institutional
health care providers;
(C)
with respect to an excess liability insurance policy written
by the association for a physician or any other health care provider (as those
terms are defined in the Act) the commission paid to the licensed agent shall
be 10% of the policy premium, provided, however, that the commission shall
not exceed $250 with respect to a policy written on the form approved for
physicians and other noninstitutional health care providers, and shall not
exceed $500 with respect to a policy written on the form approved for hospitals
and other institutional health care providers; and
(D)
no commission shall be payable in respect to any assessment
payable by the policyholder by reason of a deficit incurred by the association,
including charges for the stabilization reserve funds. Upon cancellation,
the agent shall refund any unearned portion of the commission to the association.
(3)
Submission. Application for medical liability or general
liability insurance on the prescribed form shall 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)
The following underwriting standards shall apply with respect
to policies of medical liability insurance written by the association:
(i)
all applicants to the association shall 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 shall provide evidence of inability
to obtain medical liability coverage. Two rejections by carriers, including
insurers licensed and engaged in writing the coverage applied for in Texas
or a self-insurance trust created under Insurance Code Article 21.49-4, shall
be deemed adequate to show inability and rejections may be evidenced by valid
notification from the insurers or trust or by sworn affidavit of the applicant
or the applicant's agent that the rejections have occurred;
(iii)
all for-profit and not-for-profit nursing home and assisted
living facility applicants to the association shall provide evidence of inability
to obtain coverage from authorized insurers and eligible surplus lines insurers
for substantially equivalent coverage and rates. Two rejections by insurers
licensed and engaged in writing the coverage applied for in Texas or eligible
surplus lines insurers shall be deemed adequate to show inability and rejections
may be evidenced by valid notification from the insurers or by sworn affidavit
of the applicant or the applicant's agent that the rejections have occurred;
(iv)
any material misrepresentation in the application for
coverage shall be cause to decline coverage upon discovery by the association
or its authorized representative;
(v)
each application shall be accompanied by authorization
for and consent to investigations of material information bearing upon 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 with respect to 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 upon 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 cancelled, revoked, or suspended; provided, that if the order
has been probated by the appropriate regulatory body or licensing agency 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,
shall comply with all significant recommendations arising out of a loss control
or risk management report either prior to binding coverage or as soon as practicable
concurrently with coverage;
(viii)
there shall be no unpaid, uncontested premium, assessment,
or charge due from the applicant.
(B)
For the purpose of this section, a rejection shall have
occurred if the applicant is accepted in the admitted voluntary market at
a rate higher than those rates approved by the commissioner from time to time
under this plan.
(5)
Receipt of the application. Upon receipt of the application,
the required deposit premium and the applicable stabilization reserve fund
charge, the association shall, within 30 days:
(A)
cause a binder or policy of insurance to be issued; or
(B)
advise the agent or applicant that the applicant does not
meet the underwriting standards of the association, in which case the association
shall indicate the reasons the applicant does not meet the underwriting standards.
(c)
Cancellation, nonrenewal, and notice.
(1)
Cancellation by the association. The association may not
cancel a policy of insurance except for:
(A)
nonpayment of premium; or
(B)
nonpayment of the applicable stabilization reserve fund
charge; or
(C)
nonpayment of assessment; or
(D)
evidence of fraud or material misrepresentation; or
(E)
cause which would have been grounds for nonacceptance of
the risk under this subchapter had such cause been known to the association
at the time the policy was issued; or
(F)
any cause arising subsequent to the issuance of the policy
which would have been grounds for nonacceptance of the risk under this subchapter
had such cause existed at the time of acceptance; or
(G)
noncompliance with reasonable loss control or risk management
recommendations in accordance with subsection (b)(4)(A)(vii) of this section.
Upon cancellation of a policy of insurance by the association, the association
shall refund to the insured the unearned portion of any paid premium and,
if cancelled within the 90th day of coverage, the unearned portion of the
paid §4A fund or §4B fund charge on a pro rata basis provided all
assessments and §4A fund or §4B fund charges earned have been fully
paid; otherwise, only that portion of unearned premium over any unpaid assessment
and §4A fund or §4B fund charge will be refunded. Policyholder assessments
and §4A fund or §4B fund charges are fully earned upon payment;
therefore, except as provided in the Act, or §5.2003(c)(2) of this title
(relating to Members and Policyholders Participation in the Texas Medical
Liability Insurance Underwriting Association), no portion is refundable.
(2)
Cancellation by the insured. A policy of insurance may
be cancelled at any time:
(A)
by the insured upon written request for cancellation of
the policy; or
(B)
by an insurance premium finance company in accordance with
the provisions contained in the Insurance Code Article 24.17.
(3)
Refund of unearned portion of paid premium. The association
shall refund the unearned portion of any paid premium, and if cancelled within
the 90th day of coverage, the unearned portion of the paid §4A fund or §4B
fund charge according to the approved short rate table, provided all assessments
and §4A fund or §4B fund charges earned have been fully paid; otherwise,
only that portion of the unearned premium over any unpaid assessment and §4A
fund or §4B fund charge will be refunded. Policyholder assessments and §4A
fund or §4B fund charges are fully earned upon payment; therefore, except
as provided in the Act, or §5.2003(c)(2) of this title no portion is
refundable.
(4)
Exhausted policy limits. If there is outstanding a claim
or claims under any policy of insurance on which a reserve or reserves have
been established, which in the aggregate or when combined with losses previously
paid under such policy, equal or exceed the aggregate limits of coverage under
such policy, then the association shall notify the insured and at the option
of the insured the policy may be cancelled and, if cancelled, the premium
shall be fully earned and the insured may apply for a new policy to be effective
concurrently with the termination date of the cancelled policy.
(5)
Notice of cancellation, nonrenewal, or premium increase.
(A)
The association may cancel a policy of medical liability
insurance and general liability insurance or decline to renew such policy
for any reason listed in paragraph (1) of this subsection at any time within
the first 90 days from the effective date of the policy by sending 90 days
written notice to the insured.
(B)
The association may cancel a policy of medical liability
insurance and general liability insurance or decline to renew such policy
for nonpayment of premium, assessments, or §4A fund or §4B fund
charges or loss of license, charter, certification, or accreditation at any
time during the policy period by sending 10 days' written notice to the insured.
(C)
Notice of cancellation or nonrenewal pursuant to subparagraphs
(A) and (B) of this paragraph shall contain a statement of the reason for
such cancellation or nonrenewal and a statement that the insured has the right
to appeal pursuant to the Act, §7.
(D)
The association shall give at least 90 days' written notice
to an insured before increasing the premium by reason of a rate increase on
the insured's medical liability insurance policy. The notice shall state the
amount of the increase.
(6)
General liability insurance. A policy of general liability
insurance issued by the association pursuant to the Act, §3(d) shall
automatically terminate on the same effective date and time as the termination
of the medical liability insurance policy.
(d)
Suspension of policy. The association shall, upon written
request from a policyholder subject to the Servicemembers Civil Relief Act
of 2003 (50 United States Code App. §§501, et seq.), suspend the
policy issued by the association, in accordance with the Servicemembers Civil
Relief Act of 2003.
(e)
Removal of risks. Any member, or self-insurance trust established
under the Insurance Code Article 21.49-4, at any time, upon written consent
from the insured filed with the association may write the risk as regular
business, in which event the association shall cancel its policy pro rata
as of a date and time specified by the manager of the association. The association
will require written confirmation that the member or self-insurance trust
is taking the risk out of the association before allowing pro rata cancellation.
(f)
Payment of claims.
(1)
Report of loss. All losses shall be reported to the association
in the manner prescribed by the board of directors.
(2)
Adjustment of loss. All losses shall be adjusted in the
manner designated by the board of directors subject to the provisions of this
plan and the insurance laws of Texas.
This agency hereby certifies that the adoption has been
reviewed by legal counsel and found to be a valid exercise of the agency's
legal authority.
Filed with the Office of
the Secretary of State on January 3, 2005.
TRD-200500007
Gene C. Jarmon
General Counsel and Chief Clerk
Texas Department of Insurance
Effective date: January 23, 2005
Proposal publication date: November 5, 2004
For further information, please call: (512) 463-6327