Sec. 1306.102. REIMBURSEMENT INSURANCE POLICY

(a) A reimbursement insurance policy that a provider uses to comply with Sections 1306.053 and 1306.101(a)(1) must state that:

(1) the insurer that issued the policy shall:

(A) reimburse or pay on behalf of the provider any covered amount the provider is legally obligated to pay; or

(B) provide the service that the provider is legally obligated to perform according to the provider's contractual obligations under the insured identity recovery service contract;

(2) if the covered service is not provided to an identity recovery service contract holder before the 61st day after the date of proof of loss, the insurer shall pay the covered amount directly to the identity recovery service contract holder or provide the required service; and

(3) if a refund is not paid to the identity recovery service contract holder or credited to the identity recovery service contract holder's account as required by Section 1306.108, the insurer, after receiving written notice, shall pay the refund amount directly to the identity recovery service contract holder.

(b) For a reimbursement insurance policy to comply with Section 1306.101(a)(1), the insurer issuing the policy must:

(1) maintain surplus as to policyholders and paid-in capital of at least $15 million and annually file with the executive director copies of the insurer's audited financial statements, National Association of Insurance Commissioners annual statement, and actuarial certification if the certification is required and filed in the insurer's state of domicile; or

(2) maintain surplus as to policyholders and paid-in capital of at least $10 million but not more than $15 million, demonstrate to the satisfaction of the executive director that the insurer maintains a ratio of net written premiums, wherever written, to surplus as to policyholders and paid-in capital of not more than three to one, and annually file with the executive director copies of the insurer's audited financial statements, National Association of Insurance Commissioners annual statement, and actuarial certification if the certification is required and filed in the insurer's state of domicile.

(c) The insurer may not cancel the reimbursement insurance policy until the insurer delivers to the provider and the executive director a written notice of cancellation that complies with the notice requirements prescribed by Subchapters B and C, Chapter 551, Insurance Code, for cancellation of an insurance policy under those subchapters. Cancellation of the policy does not affect the insurer's liability for an identity recovery service contract issued by the provider and insured under the policy before the effective date of the cancellation.

(d) If the insurer or provider cancels the reimbursement insurance policy, the provider named on the policy may not issue a new identity recovery service contract after the effective date of the cancellation unless:

(1) the provider files with the executive director a copy of a new policy that meets the requirements of this section and that provides coverage after that date; or

(2) the provider complies with other financial security requirements provided by Section 1306.101(a).

(e) A provider is considered the agent of an insurer that issues a reimbursement insurance policy for purposes of obligating the insurer to the identity recovery service contract holder in accordance with the identity recovery service contract and this chapter. The insurer issuing the reimbursement insurance policy is considered to have received the premium for the policy on the date the identity recovery service contract holder pays the purchase price of the identity recovery service contract.

(f) This chapter does not prevent or limit the right of the insurer to seek indemnification or subrogation against a provider for any amount the insurer pays or is obligated to pay to an identity recovery service contract holder on behalf of the provider.

(g) In this section, "net written premiums" means the sum of direct written premiums and assumed reinsurance premiums, minus ceded reinsurance premiums.

Added by Acts 2009, 81st Leg., R.S., Ch. 36 , Sec. 3, eff. September 1, 2009.