reglab/statecodes huggingface dataset:
2023 Texas Statutes › Insurance Code › Title 6 - Organization of Insurers and Related Entities › Subtitle E - Mutual and Fraternal Companies and Related Entities › Chapter 887 - Provisions Applicable to Certain Mutual Assessment Companies › Subchapter F. Contents of Applications and Insurance Certificates › Section 887.255. Life Insurance Benefit Reductions and Exclusions

Sec. 887.255.  LIFE INSURANCE BENEFIT REDUCTIONS AND EXCLUSIONS.  (a)  An association may, with the commissioner's approval, issue an insurance certificate that provides for:
(1)  reduced benefits if the insured:
(A)  dies or is injured while engaged in:
(i)  military, naval, or aerial service or aerial flight during peace or war;  or
(ii)  a hazardous occupation specified in the certificate;
(B)  dies by the insured's own hand, regardless of whether the insured was sane or insane;  or
(C)  dies or is injured by mob violence or legal execution;  or
(2)  reduced or excluded benefits for sickness from certain causes specified in the certificate.
(b)  The front page of an insurance certificate must call attention to any reduction or exclusion of benefits provided by the certificate.  The circumstances or conditions under which the reduction or exclusion applies must be stated plainly in the certificate.
(c)  If an insurance certificate that provides natural death benefits contains a provision for reducing the greatest death benefit provided by the certificate for a specified insured for a reason other than a reason specified by Subsection (a):
(1)  the reduced death benefit for the insured must at all times when the reduction is in effect equal or exceed 120 percent of the total premium paid on that certificate by the insured;  and
(2)  the reduction must end before the fifth anniversary of the date the certificate is issued.
(d)  Subsection (c) does not apply to a life insurance certificate on which the reduction of the death benefit does not apply at the time of the death of the specified insured.
(e)  If a life insurance certificate provides for an increase of the initial amount of the death benefit for a specified insured one or more times during the first five years of the certificate, the amount of the death benefit for the insured must at all times during the period of the increasing benefit equal at least 120 percent of the premiums paid on that certificate by the insured during the period of the increase.
(f)  Subsection (e) does not apply to a life insurance certificate that has been in force for more than five years from the date the certificate was issued.
(g)  Subsections (c)-(f) do not apply to a family group life insurance certificate described by Section 887.402.
(h)  This section does not apply to health and accident insurance policies.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003.
2023 Texas Statutes › Insurance Code › Title 6 - Organization of Insurers and Related Entities › Subtitle E - Mutual and Fraternal Companies and Related Entities › Chapter 887 - Provisions Applicable to Certain Mutual Assessment Companies › Subchapter F. Contents of Applications and Insurance Certificates › Section 887.256. Form Approval

Sec. 887.256.  FORM APPROVAL.  (a)  The commissioner shall approve the form and language of an insurance certificate before the certificate is used by an association.  The commissioner shall, in cooperation with the several associations, ensure that the certificate forms are as uniform as feasible.  Forms for all associations are not required to be uniform.
(b)  An insurance certificate form used by an association after May 12, 1939, must comply with this chapter and with any other laws regulating the association.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003.
2023 Texas Statutes › Insurance Code › Title 6 - Organization of Insurers and Related Entities › Subtitle E - Mutual and Fraternal Companies and Related Entities › Chapter 887 - Provisions Applicable to Certain Mutual Assessment Companies › Subchapter G. Assessments and Revenue › Section 887.301. Assessments Required

Sec. 887.301.  ASSESSMENTS REQUIRED.  (a)  An association shall levy regular and periodic assessments on its membership in amounts and at intervals necessary to:
(1)  meet the reasonable operating expenses of the association;  and
(2)  allow the association to pay in full any claims arising under its insurance certificates.
(b)  An association may also levy an assessment for surplus funds.
(c)  An association shall specify the purpose of an assessment.
(d)  An assessment on a life insurance certificate issued after May 21, 1965, insuring the life of one or more individuals must be:
(1)  in accordance with the reserve standard adopted by the association and approved by the commissioner, except that an association may use the 1956 Chamberlain Reserve Table with interest not to exceed 3-1/2 percent a year;  and
(2)  in an amount sufficient to deposit in the mortuary fund an amount at least equal to the renewal net premiums computed in accordance with the reserve standard adopted by the association and approved by the commissioner.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003.
2023 Texas Statutes › Insurance Code › Title 6 - Organization of Insurers and Related Entities › Subtitle E - Mutual and Fraternal Companies and Related Entities › Chapter 887 - Provisions Applicable to Certain Mutual Assessment Companies › Subchapter G. Assessments and Revenue › Section 887.302. Authority to Increase Assessment Rates on Certain Insurance Certificates

Sec. 887.302.  AUTHORITY TO INCREASE ASSESSMENT RATES ON CERTAIN INSURANCE CERTIFICATES.  (a)  An association's board of directors may by resolution increase assessment rates on life insurance certificates in force up to the rate on an attained age basis in accordance with the 1956 Chamberlain Reserve Table, with interest at 3-1/2 percent a year, or any other reasonable, equitable, or necessary increase.  The board may also adjust assessment rates on accident, health, and hospitalization insurance certificates in force.
(b)  An assessment rate increase or adjustment under this section on insurance certificates in force applies to all classes of the same or similar certificates.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003.
2023 Texas Statutes › Insurance Code › Title 6 - Organization of Insurers and Related Entities › Subtitle E - Mutual and Fraternal Companies and Related Entities › Chapter 887 - Provisions Applicable to Certain Mutual Assessment Companies › Subchapter G. Assessments and Revenue › Section 887.303. Approval Required for Certain Rate Increases

Sec. 887.303.  APPROVAL REQUIRED FOR CERTAIN RATE INCREASES.  An association may not implement a rate increase on insurance certificates in force before the commissioner approves the rate increase as complying with this chapter.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003.
2023 Texas Statutes › Insurance Code › Title 6 - Organization of Insurers and Related Entities › Subtitle E - Mutual and Fraternal Companies and Related Entities › Chapter 887 - Provisions Applicable to Certain Mutual Assessment Companies › Subchapter G. Assessments and Revenue › Section 887.304. Limit on Rate Increases

Sec. 887.304.  LIMIT ON RATE INCREASES.  Notwithstanding any other provision of this chapter, on a life insurance certificate issued after May 21, 1965, an association may not during any consecutive five-year period increase the rate to more than double the rate charged the insured at the time of the rate increase.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003.
2023 Texas Statutes › Insurance Code › Title 6 - Organization of Insurers and Related Entities › Subtitle E - Mutual and Fraternal Companies and Related Entities › Chapter 887 - Provisions Applicable to Certain Mutual Assessment Companies › Subchapter G. Assessments and Revenue › Section 887.305. Expense Loading on Certain Insurance Certificates

Sec. 887.305.  EXPENSE LOADING ON CERTAIN INSURANCE CERTIFICATES.  If an association increases a life insurance assessment rate at any age other than at age of issue, the expense loading on the new assessments may not, on 50 years of age or greater, exceed 25 percent of the gross assessment charged, unless an additional expense loading is approved by the commissioner as reasonable and necessary.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003.
2023 Texas Statutes › Insurance Code › Title 6 - Organization of Insurers and Related Entities › Subtitle E - Mutual and Fraternal Companies and Related Entities › Chapter 887 - Provisions Applicable to Certain Mutual Assessment Companies › Subchapter G. Assessments and Revenue › Section 887.306. Assessment-as-Needed Associations: Payments on Certain Insurance Certificates

Sec. 887.306.  ASSESSMENT-AS-NEEDED ASSOCIATIONS:  PAYMENTS ON CERTAIN INSURANCE CERTIFICATES.  (a)  This section applies only to an association operating on an assessment-as-needed basis.
(b)  If the members' payments on insurance certificates issued and in force before May 12, 1939, or on the reinsurance or renewals of those certificates, are not sufficient to pay matured death and disability claims in the maximum amount stated in the certificates and to provide for the creation and maintenance of the funds required by the association's bylaws, the association may, with the commissioner's approval and after proper hearing before the commissioner, provide for meeting the deficiency by additional, increased, or extra rates of payment.
(c)  The association may give the members the option of agreeing to reduced maximum benefits or making increased payments.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003.
2023 Texas Statutes › Insurance Code › Title 6 - Organization of Insurers and Related Entities › Subtitle E - Mutual and Fraternal Companies and Related Entities › Chapter 887 - Provisions Applicable to Certain Mutual Assessment Companies › Subchapter G. Assessments and Revenue › Section 887.307. Revenue of Association; Deposit

Sec. 887.307.  REVENUE OF ASSOCIATION;  DEPOSIT.  (a)  The revenue of an association must be derived from:
(1)  membership fees;  and
(2)  assessments.
(b)  Not later than the fifth day after the date an association collects revenue, the association shall deposit the revenue in a state or national bank.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003.
2023 Texas Statutes › Insurance Code › Title 6 - Organization of Insurers and Related Entities › Subtitle E - Mutual and Fraternal Companies and Related Entities › Chapter 887 - Provisions Applicable to Certain Mutual Assessment Companies › Subchapter G. Assessments and Revenue › Section 887.308. Suspension of Member for Nonpayment

Sec. 887.308.  SUSPENSION OF MEMBER FOR NONPAYMENT.  Before suspending a member from membership for nonpayment of assessments or membership fees, an association shall send notice to the member by first class mail stating the final date of payment.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003.
2023 Texas Statutes › Insurance Code › Title 6 - Organization of Insurers and Related Entities › Subtitle E - Mutual and Fraternal Companies and Related Entities › Chapter 887 - Provisions Applicable to Certain Mutual Assessment Companies › Subchapter G. Assessments and Revenue › Section 887.309. Failure to Comply With Certain Commissioner Orders

Sec. 887.309.  FAILURE TO COMPLY WITH CERTAIN COMMISSIONER ORDERS.  If an association refuses to comply with an order of the commissioner regarding rates or assessments under this chapter, the commissioner shall treat the association as insolvent.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003.
2023 Texas Statutes › Insurance Code › Title 6 - Organization of Insurers and Related Entities › Subtitle E - Mutual and Fraternal Companies and Related Entities › Chapter 887 - Provisions Applicable to Certain Mutual Assessment Companies › Subchapter H. Mortuary and Expense Funds › Section 887.351. Mortuary and Expense Funds

Sec. 887.351.  MORTUARY AND EXPENSE FUNDS.  An association's bylaws must provide for the method and procedure for allocating assessments between the association's mortuary and expense funds.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003.
2023 Texas Statutes › Insurance Code › Title 6 - Organization of Insurers and Related Entities › Subtitle E - Mutual and Fraternal Companies and Related Entities › Chapter 887 - Provisions Applicable to Certain Mutual Assessment Companies › Subchapter H. Mortuary and Expense Funds › Section 887.352. Limits on Use of Funds

Sec. 887.352.  LIMITS ON USE OF FUNDS.  An association may spend or invest money from a mortuary fund or expense fund only as provided for each fund by this subchapter.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003.
2023 Texas Statutes › Insurance Code › Title 6 - Organization of Insurers and Related Entities › Subtitle E - Mutual and Fraternal Companies and Related Entities › Chapter 887 - Provisions Applicable to Certain Mutual Assessment Companies › Subchapter H. Mortuary and Expense Funds › Section 887.353. Division of Funds: Certain Life Insurance Certificates

Sec. 887.353.  DIVISION OF FUNDS:  CERTAIN LIFE INSURANCE CERTIFICATES.  (a)  This section applies to a life insurance certificate insuring the life of one or more individuals issued:
(1)  after December 31, 1965;  or
(2)  before December 31, 1965, and on which the assessment rate has been increased based on an age other than age on the date the certificate was issued.
(b)  To the extent consistent with this subchapter, an association shall divide collected assessments into at least two funds.
(c)  An association shall deposit in a mortuary fund a portion of the association's assessments at least equal to the renewal net premium computed at the age of issue or some other advanced age in accordance with the reserve standard adopted by the association.  The association may pay from the mortuary fund only:
(1)  fund claims under insurance certificates;
(2)  dividends to certificate holders as provided by Section 887.064;  and
(3)  any other expenditures permitted by law.
(d)  An association shall deposit in an expense fund the remaining portion of the assessments not deposited under Subsection (c).  The association may pay expenses from the expense fund.
(e)  This section does not apply to an association operating on an assessment-as-needed basis.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003.
2023 Texas Statutes › Insurance Code › Title 6 - Organization of Insurers and Related Entities › Subtitle E - Mutual and Fraternal Companies and Related Entities › Chapter 887 - Provisions Applicable to Certain Mutual Assessment Companies › Subchapter H. Mortuary and Expense Funds › Section 887.354. Division of Funds: Accident and Health Insurance Certificates and Certain Life Insurance Certificates

Sec. 887.354.  DIVISION OF FUNDS:  ACCIDENT AND HEALTH INSURANCE CERTIFICATES AND CERTAIN LIFE INSURANCE CERTIFICATES.  (a)  This section applies to:
(1)  a life insurance certificate in force on December 31, 1965, to which Section 887.353 does not apply;  and
(2)  an accident, health, or hospitalization insurance certificate.
(b)  An association shall deposit in a mortuary fund an amount equal to at least 60 percent of the association's assessments, not including membership fees.
(c)  An association shall deposit in an expense fund:
(1)  membership fees;  and
(2)  the remaining portion of the assessments not deposited under Subsection (b).
(d)  This section does not apply to an association operating on an assessment-as-needed basis.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003.
2023 Texas Statutes › Insurance Code › Title 6 - Organization of Insurers and Related Entities › Subtitle E - Mutual and Fraternal Companies and Related Entities › Chapter 887 - Provisions Applicable to Certain Mutual Assessment Companies › Subchapter H. Mortuary and Expense Funds › Section 887.355. Division of Funds: Certain Life Insurance Certificates With No Rate Increase

Sec. 887.355.  DIVISION OF FUNDS:  CERTAIN LIFE INSURANCE CERTIFICATES WITH NO RATE INCREASE.  (a)  This section applies to a life insurance certificate in force on December 31, 1965, on which the assessment rate has not been increased.
(b)  An association may:
(1)  deposit in a mortuary fund at least the net renewal premium, based on the reserve table adopted by the association;  and
(2)  deposit in an expense fund the remaining portion of the premium.
(c)  This section does not apply to an association operating on an assessment-as-needed basis.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003.
2023 Texas Statutes › Insurance Code › Title 6 - Organization of Insurers and Related Entities › Subtitle E - Mutual and Fraternal Companies and Related Entities › Chapter 887 - Provisions Applicable to Certain Mutual Assessment Companies › Subchapter H. Mortuary and Expense Funds › Section 887.356. Division of Funds: Assessment-as-Needed Associations

Sec. 887.356.  DIVISION OF FUNDS:  ASSESSMENT-AS-NEEDED ASSOCIATIONS.  (a)  An association operating on an assessment-as-needed basis shall divide collected assessments into at least:
(1)  a mortuary fund;  and
(2)  an expense fund.
(b)  An association under this section shall deposit into a mortuary fund an amount equal to at least 60 percent of the association's assessments, not including membership fees.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003.
2023 Texas Statutes › Insurance Code › Title 6 - Organization of Insurers and Related Entities › Subtitle E - Mutual and Fraternal Companies and Related Entities › Chapter 887 - Provisions Applicable to Certain Mutual Assessment Companies › Subchapter H. Mortuary and Expense Funds › Section 887.357. Investment of Funds

Sec. 887.357.  INVESTMENT OF FUNDS.  (a)  An association may invest money from a mortuary fund only in securities and investments that are a legal investment for the reserve funds of a domestic life, accident, and health insurance company operating under Chapter 841.
(b)  An association may invest money from an expense fund only in securities and investments that are a legal investment for the surplus funds of a domestic life, accident, and health insurance company operating under Chapter 841.
(c)  An association may invest surplus funds belonging to the association only in securities that are a legal investment for the surplus funds of a domestic life, accident, and health insurance company operating under Chapter 841.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003.
2023 Texas Statutes › Insurance Code › Title 6 - Organization of Insurers and Related Entities › Subtitle E - Mutual and Fraternal Companies and Related Entities › Chapter 887 - Provisions Applicable to Certain Mutual Assessment Companies › Subchapter H. Mortuary and Expense Funds › Section 887.358. Payment of Taxes on Mortuary Fund Income

Sec. 887.358.  PAYMENT OF TAXES ON MORTUARY FUND INCOME.  An association may pay from a mortuary fund any taxes that are assessed against income on the fund and required to be paid by the association.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003.
2023 Texas Statutes › Insurance Code › Title 6 - Organization of Insurers and Related Entities › Subtitle E - Mutual and Fraternal Companies and Related Entities › Chapter 887 - Provisions Applicable to Certain Mutual Assessment Companies › Subchapter H. Mortuary and Expense Funds › Section 887.359. Payment of Reinsurance Premium

Sec. 887.359.  PAYMENT OF REINSURANCE PREMIUM.  An association may pay from a mortuary fund the premiums for any reinsurance under Section 887.210.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003.
2023 Texas Statutes › Insurance Code › Title 6 - Organization of Insurers and Related Entities › Subtitle E - Mutual and Fraternal Companies and Related Entities › Chapter 887 - Provisions Applicable to Certain Mutual Assessment Companies › Subchapter H. Mortuary and Expense Funds › Section 887.360. Cost of Defending Contested Claims

Sec. 887.360.  COST OF DEFENDING CONTESTED CLAIMS.  An association authorized to write accident, health, or hospitalization insurance may pay the reasonable costs of defending a contested claim on an accident, health, or hospitalization insurance certificate from the mortuary fund of the association if:
(1)  the expenditure is approved by the commissioner;  and
(2)  the association has the reserves required by Subchapter I.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003.
2023 Texas Statutes › Insurance Code › Title 6 - Organization of Insurers and Related Entities › Subtitle E - Mutual and Fraternal Companies and Related Entities › Chapter 887 - Provisions Applicable to Certain Mutual Assessment Companies › Subchapter I. Reserves › Section 887.401. Reserves on Individual Life Insurance Certificates

Sec. 887.401.  RESERVES ON INDIVIDUAL LIFE INSURANCE CERTIFICATES.  (a)  An association shall reserve an individual life insurance certificate insuring one or more persons at individual premiums for each person as provided by this section.
(b)  An association shall maintain reserves on each of its individual life insurance certificates in accordance with the reserve standard adopted by the association and approved by the commissioner.  The standard must provide reserves that in the aggregate are at least equal to the reserve amounts computed using the 1956 Chamberlain Reserve Table with interest not to exceed 3-1/2 percent a year.  An association may use the 1956 Chamberlain Reserve Table with interest not to exceed 3-1/2 percent a year.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003.
2023 Texas Statutes › Insurance Code › Title 6 - Organization of Insurers and Related Entities › Subtitle E - Mutual and Fraternal Companies and Related Entities › Chapter 887 - Provisions Applicable to Certain Mutual Assessment Companies › Subchapter I. Reserves › Section 887.402. Reserves on Family Group Life Insurance Certificates

Sec. 887.402.  RESERVES ON FAMILY GROUP LIFE INSURANCE CERTIFICATES.  (a)  An association shall reserve a family group life insurance certificate on which the association charges a group premium that is not reduced on the death of an insured as provided by this section.
(b)  An association shall maintain reserves on each of its family group life insurance certificates using one of the following methods:
(1)  the reserves must be equal to the reserves that would be required under Section 887.401 on individual life insurance certificates on the lives of the two oldest living members of the family group, with the amount of insurance for those two members determined assuming that the elder of the two will die first;
(2)  the reserves must be equal to the reserves required under Section 887.401 on individual life insurance certificates on the lives of the living members of the family group, with the amount of insurance for each member of the family group determined assuming that each member will die first;  or
(3)  any other table or method of computing reserves approved in advance by the commissioner.
(c)  An association may select the method to be used to compute the reserves under Subsection (b).
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003.
2023 Texas Statutes › Insurance Code › Title 6 - Organization of Insurers and Related Entities › Subtitle E - Mutual and Fraternal Companies and Related Entities › Chapter 887 - Provisions Applicable to Certain Mutual Assessment Companies › Subchapter I. Reserves › Section 887.403. Issue Year and Issue Age in Certain Insurance Certificates

Sec. 887.403.  ISSUE YEAR AND ISSUE AGE IN CERTAIN INSURANCE CERTIFICATES.  (a)  In this section, "gross premium" means the renewal net premium plus any expense loading designated by the association or as otherwise regulated by this chapter.
(b)  For an individual or family group life insurance certificate in force on December 31, 1965, or an individual or family group life insurance certificate with a rate increase effective after December 31, 1965, the reserves may be computed as if:
(1)  the issue year is the last calendar year that the gross premium computed using the reserve table and interest rate adopted by the association at the insured's age in that calendar year is equal to or less than the premium rate charged by the association on the reserved certificate;  and
(2)  the issue age is the insured's age in the calendar year under Subdivision (1).
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003.
2023 Texas Statutes › Insurance Code › Title 6 - Organization of Insurers and Related Entities › Subtitle E - Mutual and Fraternal Companies and Related Entities › Chapter 887 - Provisions Applicable to Certain Mutual Assessment Companies › Subchapter I. Reserves › Section 887.404. Reserves on Accident, Health, and Hospitalization Insurance Certificates

Sec. 887.404.  RESERVES ON ACCIDENT, HEALTH, AND HOSPITALIZATION INSURANCE CERTIFICATES.  An association shall maintain reserves on each of its accident, health, and hospitalization insurance certificates in the manner required of a company authorized to issue that type of coverage under Chapter 841.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003.
2023 Texas Statutes › Insurance Code › Title 6 - Organization of Insurers and Related Entities › Subtitle E - Mutual and Fraternal Companies and Related Entities › Chapter 887 - Provisions Applicable to Certain Mutual Assessment Companies › Subchapter I. Reserves › Section 887.405. Computation of Reserve Liability

Sec. 887.405.  COMPUTATION OF RESERVE LIABILITY.  (a)  Each year, an association shall compute its reserve liability on all outstanding insurance certificates.
(b)  To make the computation, an association:
(1)  shall use the net premium basis in accordance with the reserve table and interest rate adopted by the association and approved by the commissioner;  and
(2)  may use group methods and approximate averages for fractions of a year.
(c)  The reserve liability may be computed on not more than a one-year preliminary term.
(d)  As soon as practical each year, the commissioner shall compute or cause to be computed the reserve liability of each association.  To make the computation, the commissioner may use group methods and approximate averages for fractions of a year.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003.
2023 Texas Statutes › Insurance Code › Title 6 - Organization of Insurers and Related Entities › Subtitle E - Mutual and Fraternal Companies and Related Entities › Chapter 887 - Provisions Applicable to Certain Mutual Assessment Companies › Subchapter I. Reserves › Section 887.406. Increase of Reserves

Sec. 887.406.  INCREASE OF RESERVES.  (a)  If an association does not have in its mortuary fund the reserves required by this subchapter, the association's board of directors by appropriate action shall increase assessment rates on insurance certificates in force by advancing the age of each insured from the age at the date the certificate is issued or from the age previously advanced or otherwise equitably or reasonably adjust assessment rates to correct the reserve inadequacy.  The board shall take that action not later than the 30th day after the date the reserves are computed.
(b)  An association may make an assessment rate adjustment under Subsection (a) at any time if it appears that a reserve inadequacy will exist as of December 31 of the year in which the rate adjustment is made.
(c)  The commissioner shall order an association to comply with this chapter.
(d)  If the board of directors does not comply with Subsection (a), the commissioner shall treat the association as insolvent.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003.
2023 Texas Statutes › Insurance Code › Title 6 - Organization of Insurers and Related Entities › Subtitle E - Mutual and Fraternal Companies and Related Entities › Chapter 887 - Provisions Applicable to Certain Mutual Assessment Companies › Subchapter I. Reserves › Section 887.407. Nonapplicability to Assessment-as-Needed Associations

Sec. 887.407.  NONAPPLICABILITY TO ASSESSMENT-AS-NEEDED ASSOCIATIONS.  This subchapter does not apply to an association operating on an assessment-as-needed basis.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003.
2023 Texas Statutes › Insurance Code › Title 6 - Organization of Insurers and Related Entities › Subtitle E - Mutual and Fraternal Companies and Related Entities › Chapter 887 - Provisions Applicable to Certain Mutual Assessment Companies › Subchapter J. Conversion to Legal Reserve Insurance Company › Section 887.451. Authorization to Convert or Reinsure

Sec. 887.451.  AUTHORIZATION TO CONVERT OR REINSURE.  Subject to the requirements of this subchapter, an association may convert or reinsure itself to a legal reserve insurance company operating under Chapter 882.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003.
2023 Texas Statutes › Insurance Code › Title 6 - Organization of Insurers and Related Entities › Subtitle E - Mutual and Fraternal Companies and Related Entities › Chapter 887 - Provisions Applicable to Certain Mutual Assessment Companies › Subchapter J. Conversion to Legal Reserve Insurance Company › Section 887.452. Proposal for Conversion or Reinsurance

Sec. 887.452.  PROPOSAL FOR CONVERSION OR REINSURANCE.  An association's board of directors may determine by majority vote to submit a proposed conversion or reinsurance under Section 887.451 to the members of the association.  Before the proposed conversion or reinsurance may be submitted to the members, the board must prepare detailed plans for the conversion or reinsurance and submit the plans to the commissioner.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003.
Sec. 887.453.  MEMBERS MEETING;  NOTICE.  (a)  On receipt of the commissioner's written approval of proposed plans under Section 887.452 or of the plans as amended to meet the commissioner's requirements in accordance with Chapter 882, an association's board of directors or an officer of the association authorized by its bylaws to call a meeting of its members shall:
(1)  call a meeting of the association's members for voting on ratification of the proposed conversion or reinsurance;  and
(2)  mail to each member of the association:
(A)  a copy of the proposed plans;  and
(B)  a notice of the meeting.
(b)  The meeting may not be held before the 16th day after the date the notice is mailed under Subsection (a)(2).
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003.
2023 Texas Statutes › Insurance Code › Title 6 - Organization of Insurers and Related Entities › Subtitle E - Mutual and Fraternal Companies and Related Entities › Chapter 887 - Provisions Applicable to Certain Mutual Assessment Companies › Subchapter J. Conversion to Legal Reserve Insurance Company › Section 887.454. Members Meeting; Procedures

Sec. 887.454.  MEMBERS MEETING;  PROCEDURES.  (a)  In a meeting called under Section 887.453, a member may vote in person, by proxy, or by mail.
(b)  All votes must be cast by ballot.  A majority vote of the members participating in the election is required to ratify the conversion or reinsurance.
(c)  The person presiding at the meeting shall supervise and direct the procedure of the meeting and appoint an adequate number of inspectors to conduct the voting.
(d)  Under rules adopted by the commissioner, the inspectors may determine all questions concerning the qualifications of the voters and the verification, canvassing, and validity of the ballots.  The inspectors shall certify the result of the election to the commissioner and to the association.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003.
2023 Texas Statutes › Insurance Code › Title 6 - Organization of Insurers and Related Entities › Subtitle E - Mutual and Fraternal Companies and Related Entities › Chapter 887 - Provisions Applicable to Certain Mutual Assessment Companies › Subchapter J. Conversion to Legal Reserve Insurance Company › Section 887.455. Completion and Legal Effect of Conversion or Reinsurance

Sec. 887.455.  COMPLETION AND LEGAL EFFECT OF CONVERSION OR REINSURANCE.  (a)  An association's conversion or reinsurance is complete when the association has:
(1)  complied with all laws regulating the incorporation of a mutual legal reserve insurance company;  and
(2)  received from the commissioner its charter and certificate of authority to engage in business as a mutual insurance company.
(b)  An association that converts or reinsures to a mutual legal reserve insurance company:
(1)  is considered by law to have each right, privilege, power, or authority of any other mutual legal reserve company;
(2)  is considered by law to be a continuation of the business of the association;  and
(3)  succeeds to and is invested with:
(A)  each right or privilege of the former association that is not inconsistent with Chapter 882;
(B)  each franchise or other interest of the former association;  and
(C)  all property of the former association, including debts due on any account and all choses in action.
(c)  On conversion or reinsurance of an association to a mutual legal reserve insurance company, the title to any real estate by deed or otherwise vested in the former association vests in the company, and the title is not in any way impaired because of the conversion or reinsurance.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003.
2023 Texas Statutes › Insurance Code › Title 6 - Organization of Insurers and Related Entities › Subtitle E - Mutual and Fraternal Companies and Related Entities › Chapter 887 - Provisions Applicable to Certain Mutual Assessment Companies › Subchapter J. Conversion to Legal Reserve Insurance Company › Section 887.456. Continuing Obligations of Converted or Reinsured Association

Sec. 887.456.  CONTINUING OBLIGATIONS OF CONVERTED OR REINSURED ASSOCIATION.  (a)  The standing of each claim against an association that converts or reinsures under this subchapter must be preserved unimpaired under the reorganized company or the company reinsuring the membership of the association.
(b)  Each debt, liability, and duty of a converted or reinsured association attaches to the reorganized company or the company reinsuring the membership of the association and may be enforced against it to the same extent as if the debt or liability had been incurred or contracted by the company, except that a reorganized company or reinsuring company may alter a liability created under the terms of an insurance certificate outstanding at the date of conversion or reinsurance in accordance with the plan approved by the commissioner under this subchapter.
(c)  Notwithstanding Subsection (b), the company may not alter the renewability or noncancellability of an insurance certificate issued before the date of conversion or reinsurance.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003.
2023 Texas Statutes › Insurance Code › Title 6 - Organization of Insurers and Related Entities › Subtitle E - Mutual and Fraternal Companies and Related Entities › Chapter 887 - Provisions Applicable to Certain Mutual Assessment Companies › Subchapter J. Conversion to Legal Reserve Insurance Company › Section 887.457. Disbursement of Mortuary Fund

Sec. 887.457.  DISBURSEMENT OF MORTUARY FUND.  (a)  The mortuary fund belonging to an association that converts or reinsures under this subchapter is the property of the reorganized company or the company reinsuring the membership of the former association.  Money in the mortuary fund may be disbursed to:
(1)  pay a valid claim outstanding and arising after the date of conversion or reinsurance from an insurance policy issued by the company to the association's members under an approved plan;
(2)  establish the legal reserve on new insurance policies issued by the company to the association's members under an approved plan;  or
(3)  pay the appropriate actuarial portion of the mortuary fund to a member of the association who refuses to accept a new insurance policy offered by the company.
(b)  A member must request payment under Subsection (a)(3) not later than the 60th day after the date of the conversion or reinsurance.
(c)  The effective date of a mutual legal reserve company's insurance policy may be the effective date of the reinsurance contract.  On conversion, 10 percent of the mortuary fund credit allocated to each policy may be credited to the contingency reserve fund of the company for the benefit of the policyholders.  The balance of the mortuary fund credit may be applied as:
(1)  a reserve credit to permit the company's policy to be backdated to the earliest date the reserve credit allows;  or
(2)  an annuity to reduce the required premium either for a given term or for the whole of life.
(d)  A company may not change the manner in which a mortuary fund credit is applied under Subsections (c)(1) and (2) without the prior approval of the commissioner.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003.
2023 Texas Statutes › Insurance Code › Title 6 - Organization of Insurers and Related Entities › Subtitle E - Mutual and Fraternal Companies and Related Entities › Chapter 887 - Provisions Applicable to Certain Mutual Assessment Companies › Subchapter K. Conversion to Stock Legal Reserve Life Insurance Company › Section 887.501. Applicability of Subchapter

Sec. 887.501.  APPLICABILITY OF SUBCHAPTER.  This subchapter applies only to a local mutual aid association or statewide mutual assessment company or association engaging in business in this state on January 1, 1955.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003.
2023 Texas Statutes › Insurance Code › Title 6 - Organization of Insurers and Related Entities › Subtitle E - Mutual and Fraternal Companies and Related Entities › Chapter 887 - Provisions Applicable to Certain Mutual Assessment Companies › Subchapter K. Conversion to Stock Legal Reserve Life Insurance Company › Section 887.502. Authorization to Convert

Sec. 887.502.  AUTHORIZATION TO CONVERT.  An association may convert to a stock legal reserve life insurance company if the association:
(1)  has at least $100,000 in the association's mortuary fund at the time of conversion;  and
(2)  except as provided by Section 887.508, possesses:
(A)  capital in an amount equal to at least $700,000 cash;  and
(B)  surplus in an amount equal to at least $700,000 cash.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003.
2023 Texas Statutes › Insurance Code › Title 6 - Organization of Insurers and Related Entities › Subtitle E - Mutual and Fraternal Companies and Related Entities › Chapter 887 - Provisions Applicable to Certain Mutual Assessment Companies › Subchapter K. Conversion to Stock Legal Reserve Life Insurance Company › Section 887.503. Approval by Membership

Sec. 887.503.  APPROVAL BY MEMBERSHIP.  An association may convert under this subchapter only if the association's membership votes to approve the conversion at a meeting called for that purpose.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003.
2023 Texas Statutes › Insurance Code › Title 6 - Organization of Insurers and Related Entities › Subtitle E - Mutual and Fraternal Companies and Related Entities › Chapter 887 - Provisions Applicable to Certain Mutual Assessment Companies › Subchapter K. Conversion to Stock Legal Reserve Life Insurance Company › Section 887.504. Amendment of Charter or Articles of Association Required

Sec. 887.504.  AMENDMENT OF CHARTER OR ARTICLES OF ASSOCIATION REQUIRED.  On authorization under Section 887.503, the board of directors and officers of the association shall amend the association's charter or articles of association to comply with Sections 841.051, 841.052, and 841.053.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003.
2023 Texas Statutes › Insurance Code › Title 6 - Organization of Insurers and Related Entities › Subtitle E - Mutual and Fraternal Companies and Related Entities › Chapter 887 - Provisions Applicable to Certain Mutual Assessment Companies › Subchapter K. Conversion to Stock Legal Reserve Life Insurance Company › Section 887.505. Exchange of Insurance Certificates; Reserves

Sec. 887.505.  EXCHANGE OF INSURANCE CERTIFICATES;  RESERVES.  (a)  An association that converts to a stock legal reserve life insurance company shall exchange each insurance certificate in force on the date of the conversion for a legal reserve policy as provided by Section 887.457.
(b)  On the exchange of mutual assessment insurance certificates for legal reserve policies as provided by Subsection (a), an association shall establish and maintain the reserves required for a company organized under Chapter 841 for legal reserve policies.
(c)  After the reserves are established, the association's capital must remain unimpaired and in an amount equal to at least $700,000.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003.
2023 Texas Statutes › Insurance Code › Title 6 - Organization of Insurers and Related Entities › Subtitle E - Mutual and Fraternal Companies and Related Entities › Chapter 887 - Provisions Applicable to Certain Mutual Assessment Companies › Subchapter K. Conversion to Stock Legal Reserve Life Insurance Company › Section 887.506. Completion of Conversion

Sec. 887.506.  COMPLETION OF CONVERSION.  An association becomes a stock legal reserve life insurance company on:
(1)  compliance with this subchapter;  and
(2)  approval by the commissioner.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003.
2023 Texas Statutes › Insurance Code › Title 6 - Organization of Insurers and Related Entities › Subtitle E - Mutual and Fraternal Companies and Related Entities › Chapter 887 - Provisions Applicable to Certain Mutual Assessment Companies › Subchapter K. Conversion to Stock Legal Reserve Life Insurance Company › Section 887.507. Legal Effect of Conversion

Sec. 887.507.  LEGAL EFFECT OF CONVERSION.  Except as provided by this subchapter, an association that converts to a stock legal reserve life insurance company under this subchapter is subject to Chapter 841.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003.
2023 Texas Statutes › Insurance Code › Title 6 - Organization of Insurers and Related Entities › Subtitle E - Mutual and Fraternal Companies and Related Entities › Chapter 887 - Provisions Applicable to Certain Mutual Assessment Companies › Subchapter K. Conversion to Stock Legal Reserve Life Insurance Company › Section 887.508. Exemption From Capital and Surplus Requirements

Sec. 887.508.  EXEMPTION FROM CAPITAL AND SURPLUS REQUIREMENTS.  (a)  An association is exempt from the capital and surplus requirements of Section 887.502(2) if the association:
(1)  possesses capital in an amount equal to at least $100,000 and unencumbered surplus in an amount equal to at least $100,000;  and
(2)  converted to a stock legal reserve life insurance company before September 1, 1999.
(b)  An association that is exempt under Subsection (a) and that converts on or after September 1, 1989, shall immediately increase its capital and surplus to amounts that satisfy Section 887.502(2) on:
(1)  a change of control of at least 50 percent of the voting securities of the converted company;  or
(2)  if the converted company or the holding company that controls the converted company, if any, is not controlled by voting securities, a change of at least 50 percent of the ownership of the converted company or its holding company.
(c)  For purposes of Subsection (b), a transfer of ownership because of death, regardless of whether the decedent died testate or intestate, is not considered a change of control of a converted company or its holding company if ownership is transferred only to one or more individuals, each of whom would have been an heir of the decedent had the decedent died intestate.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003.
2023 Texas Statutes › Insurance Code › Title 6 - Organization of Insurers and Related Entities › Subtitle E - Mutual and Fraternal Companies and Related Entities › Chapter 887 - Provisions Applicable to Certain Mutual Assessment Companies › Subchapter K. Conversion to Stock Legal Reserve Life Insurance Company › Section 887.509. Limits on Operation of Converted Association

Sec. 887.509.  LIMITS ON OPERATION OF CONVERTED ASSOCIATION.  Unless the association increases the association's capital and surplus to the minimum capital and surplus required for the organization of a stock legal reserve life insurance company under Chapter 841, an association that converts to a stock legal reserve life insurance company under this subchapter may not:
(1)  operate in a territory as to which the association was not authorized under the converted association's previous charter or articles of association;
(2)  insure a life for more than $5,000 in event of death;  or
(3)  declare or pay cash dividends.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003.
2023 Texas Statutes › Insurance Code › Title 6 - Organization of Insurers and Related Entities › Subtitle E - Mutual and Fraternal Companies and Related Entities › Chapter 887 - Provisions Applicable to Certain Mutual Assessment Companies › Subchapter K. Conversion to Stock Legal Reserve Life Insurance Company › Section 887.510. Increase of Capital and Surplus Required

Sec. 887.510.  INCREASE OF CAPITAL AND SURPLUS REQUIRED.  (a)  An association that converts to a stock legal reserve life insurance company under this subchapter shall, not later than the 10th anniversary of the date of conversion, increase its capital and surplus to the minimum capital and surplus required for a stock legal reserve life insurance company organized under Chapter 841.
(b)  The commissioner shall revoke a converted association's certificate of authority to engage in the business of insurance if the association does not comply with Subsection (a).
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003.
2023 Texas Statutes › Insurance Code › Title 6 - Organization of Insurers and Related Entities › Subtitle E - Mutual and Fraternal Companies and Related Entities › Chapter 887 - Provisions Applicable to Certain Mutual Assessment Companies › Subchapter L. General Financial Regulation › Section 887.551. Hazardous Financial Condition, Supervision, Conservatorship, and Liquidation

Sec. 887.551.  HAZARDOUS FINANCIAL CONDITION, SUPERVISION, CONSERVATORSHIP, AND LIQUIDATION.  The following provisions apply to an association engaged in the business of insurance in this state:
(1)  Subchapter A, Chapter 404;
(2)  Chapter 441; and
(3)  Chapter 443.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003.
Amended by:
Acts 2007, 80th Leg., R.S., Ch. 730 (H.B. 2636), Sec. 2E.104, eff. April 1, 2009.
2023 Texas Statutes › Insurance Code › Title 6 - Organization of Insurers and Related Entities › Subtitle E - Mutual and Fraternal Companies and Related Entities › Chapter 887 - Provisions Applicable to Certain Mutual Assessment Companies › Subchapter O. Penalties › Section 887.701. Unlawful Conversion; Criminal Penalty

Sec. 887.701.  UNLAWFUL CONVERSION;  CRIMINAL PENALTY.  (a)  A director, officer, agent, employee, attorney at law, or attorney in fact of an association commits an offense if the person:
(1)  fraudulently takes, misapplies, or converts to the person's own use any money, property, or other item of value belonging to the association or coming into the person's custody, control, or possession by virtue of the person's office, agency, or employment;
(2)  conceals any item described by Subdivision (1) with the intent to take, misapply, or convert the item to the person's own use;  or
(3)  pays or delivers any item described by Subdivision (1) to any other person, knowing that the other person is not entitled to receive the item.
(b)  An offense under this section is punishable by imprisonment in the Texas Department of Criminal Justice for a term of not more than 10 years or less than 2 years.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003.
Amended by:
Acts 2009, 81st Leg., R.S., Ch. 87 (S.B. 1969), Sec. 25.123, eff. September 1, 2009.