Texas Administrative Code › Title 28 - INSURANCE › Part 1 - TEXAS DEPARTMENT OF INSURANCE › Chapter 13 - MISCELLANEOUS INSURERS AND OTHER REGULATED ENTITIES › Subchapter A - STATEWIDE MUTUAL ASSESSMENT COMPANIES, LOCAL MUTUAL AID ASSOCIATIONS, AND BURIAL ASSOCIATIONS › Section 13.1 - Creation of New Groups, Clubs or Classes

Current through Reg. 49, No. 28; July 12, 2024
No new group, club, or class may be created and made a part
					 of any company or association unless the company or association applying for
					 such new group, club, or class first receives the approval of the State Board
					 of Insurance; nor shall a new group, club, or class be created unless the same
					 is authorized by the Insurance Code. All applications for the creation of a new
					 group, club, or class shall be made in writing to the State Board of Insurance,
					 only when first authorized by proper action taken by the board of directors of
					 the company or association making the application. Such application shall
					 contain at least the following:
(1) A
				  detailed plan for the creation of the proposed new group, club, or
				  class.
(2) A statement setting
				  forth the purposes for the creation of a new group, club, or class and the
				  advantages to result to any and all company or association members who may be
				  affected by the creation of the proposed new group, club, or class.
(3) If a new group, club, or class is to be
				  created and formed from the members, or from a part of the members, of an
				  existing group, club, or class, a full and complete statement and explanation
				  must be submitted to the State Board of Insurance to establish that any
				  proposed division of the mortuary fund or any proposed division of the expense
				  funds owned by the members of all groups, clubs and classes to be affected will
				  be made on a just, fair and equitable basis insofar as such proposed division
				  of funds will affect the rights and interests of all policyholders
				  concerned.
(4) If a new group,
				  club, or class is to be created, it must be established that the same will
				  inure to the best interests of each group, club, or class as may be affected,
				  and that it will not damage the association.
(5) Before the creation of a new group, club,
				  or class is approved, it must first be established:
(A) that the group, club, or class will be
				  able to pay its policy benefits in full within the period of time provided by
				  law;
(B) that the group, club, or
				  class will limit its policy benefits on any one policy to an amount not to
				  exceed $500 ($150 for burial associations) to be paid on any such policy issued
				  by it during the period of its organization; except that the group, club, or
				  class may provide for the payment of benefits up to $5,000 (not including
				  burial associations) if it establishes in advance that it has and will
				  continuously maintain adequate funds with which it can lawfully make full and
				  complete payment of all benefits that may become due and payable during the
				  period of organization;
(C) that
				  the group, club, or class will obtain at least 500 members within the period of
				  six months following the date of its organization, and will maintain at least
				  500 members at all times thereafter; and
(D) that adequate provision has been made to
				  make refunds of any and all funds collected from applicants for membership in
				  the event that at least 500 bona fide, premium-paying applicants for membership
				  in the proposed new group, club, or class are not received within the six-month
				  period organization.