Texas Administrative Code › Title 28 - INSURANCE › Part 1 - TEXAS DEPARTMENT OF INSURANCE › Chapter 5 - PROPERTY AND CASUALTY INSURANCE › Subchapter D - FIRE AND ALLIED LINES INSURANCE › Division 2 - RATE DEVIATIONS AND THE PAYMENT OF DIVIDENDS TO POLICYHOLDERS FOR FIRE AND ALLIED LINES INSURANCE › Section 5.3104 - Policyholder Dividends

Current through Reg. 49, No. 28; July 12, 2024
(a) On policies
					 written on and after July 1, 1970, by all stock and mutual insurance companies
					 writing fire and allied lines of insurance in Texas within the contemplation of
					 the Insurance Code of 1951, Chapter 5, Subchapter C, as amended, the company
					 may not under such policies pay policyholder dividends until and unless the
					 company proposing to pay such dividends shall have first applied to and secured
					 the approval of the State Board of Insurance authorizing such payments in the
					 amount proposed to be disbursed. Applications for such approvals shall be filed
					 at least 60 days prior to the commencement of the period in which disbursements
					 are proposed to be made. Approvals will be issued for periods no longer than 12
					 consecutive months.
(b) Pertinent
					 and primary statutory provisions applicable to dividends are the Insurance
					 Code, Article 5.41, dealing with rebating and discrimination, and the Insurance
					 Code, Article 21.31 and Article 21.32, concerning unlawful dividends.
(c) To avoid unlawful discrimination, the
					 same company may not contemporaneously issue both participating and
					 nonparticipating policies on fire and allied lines, and any company utilizing
					 as its plan of operation the issuance of participating policies must include in
					 all of its contracts on fire and allied lines the uniform provisions relative
					 to profit sharing which have heretofore been prescribed by the board.
(d) In order that the board may be certain
					 that the company possesses appropriate surplus profits from which proposed
					 policyholder dividends can be disbursed, companies shall include with such
					 applications an analysis of its surplus account of the company upon forms
					 prescribed by the board.
(e) In
					 addition, to satisfy the board that the dividends will not discriminate between
					 individuals or between classes, each application for permission to disburse
					 policyholder dividends shall set forth in detail the basis upon which such
					 dividends are proposed to be allocated. As a part of each application a giving
					 effect balance sheet shall be submitted reflecting the effect that the payments
					 of dividends will have upon the company, and the continued solvency of the
					 company in the event of approval of the dividend payment. If the company
					 proposes to pay a uniform percentage rate of dividend on all expiring fire and
					 allied lines coverages, including coverages under the Texas Standard Policy and
					 the fire and allied lines portions of the Texas Standard Farm and Ranchowners
					 Policy, the board must find on the basis of the facts presented to it that such
					 proposed dividends comply with the requirements of Article 5.41 as it relates
					 to discrimination.
(f) If the
					 company applying for permission to disburse policyholder dividends on fire and
					 allied lines desires to pay dividends on some classes and not on other classes,
					 or desires to pay rates of dividends which will vary as between different
					 classes, the board will require the company to furnish appropriate factual data
					 showing that its plan for disbursing dividends to its policyholders does not
					 unlawfully discriminate between individuals or between classes.
(g) These sections of the State Board of
					 Insurance, and all applicable statutes, relating to the payment of dividends to
					 policyholders on policies issued hereunder, are applicable to all such policies
					 of insurance in this state irrespective of the domicile of the insurer.
					 Dividends based on experience rating of individual risks are not precluded by
					 these sections.
(h) These sections
					 will be construed and applied by the board with respect to each application
					 presented hereunder in such manner as to give protection, to the fullest extent
					 possible, to the policyholder, and in such manner as to comply with the duty of
					 the board to protect the public interest.
(i) An application form for approval of the
					 payment of dividends for fire and allied lines insurance is adopted herein by
					 reference. Copies of that form may be obtained by contacting the Property
					 Division, State Board of Insurance, 1110 San Jacinto Street, Austin, Texas
					 78786.