CHAPTER 2208. TEXAS PUBLIC ENTITY EXCESS INSURANCE POOL

INSURANCE CODE

TITLE 10. PROPERTY AND CASUALTY INSURANCE

SUBTITLE G. POOLS, GROUPS, PLANS, AND SELF-INSURANCE

CHAPTER 2208. TEXAS PUBLIC ENTITY EXCESS INSURANCE POOL

SUBCHAPTER A. GENERAL PROVISIONS

Sec. 2208.001. DEFINITIONS. In this chapter:

(1) "Board" means the board of trustees of the pool.

(2) "Fund" means the Texas public entity excess insurance fund.

(3) "Insurance" means liability insurance or workers'

compensation insurance.

(4) "Pool" means the Texas public entity excess insurance pool.

(5) "Public entity" means one or more municipalities that have

formed an insurance pool under Chapter 791, Government Code.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2208.002. POOL NOT ENGAGED IN BUSINESS OF INSURANCE. (a)

Except as provided by Subsection (b), the pool is not engaged in

the business of insurance under this code or other laws of this

state, and the department has no jurisdiction over the pool.

(b) The pool is subject to Chapter 541 and Subchapter D, Chapter

38.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

SUBCHAPTER B. CREATION OF POOL

Sec. 2208.051. CREATION OF POOL. (a) The Texas Public Entity

Excess Insurance Pool is created on the written agreement of the

presiding officers of 25 or more public entities in this state.

(b) The pool provides excess liability and workers' compensation

insurance coverage to a public entity and the entity's officers

and employees as provided by this chapter.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2208.052. PARTICIPATION IN POOL. A public entity is

entitled to coverage from the pool if the entity:

(1) submits a complete application;

(2) provides other relevant information required by the pool;

(3) meets the underwriting guidelines established by the pool;

and

(4) pays the premiums required for the coverage.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

SUBCHAPTER C. BOARD OF TRUSTEES

Sec. 2208.101. ADMINISTRATION OF POOL; BOARD MEMBERSHIP. (a) A

board of trustees shall administer the pool.

(b) The board is composed of the members of the governing board

of an association that:

(1) on September 2, 1987, had been providing pooled

self-insurance in this state for more than five years; and

(2) has as the association's members the public entities that

entered into the written agreement under Section 2208.051.

(c) Board members shall represent members of the pool.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2208.102. COMPENSATION. A board member is not entitled to

compensation for the member's service on the board.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2208.103. OFFICERS; MEETINGS. (a) Each individual who

serves as an officer of the governing board of the association

described by Section 2208.101(b) serves as an officer of the

board.

(b) The board shall hold meetings at the call of the presiding

officer and at times established by the board's rules.

(c) A majority of the board members constitutes a quorum.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2208.104. GENERAL POWERS AND DUTIES OF BOARD. (a) In

addition to other duties provided by the plan of operation, the

board shall:

(1) approve contracts other than excess insurance contracts

issued to public entities by the pool;

(2) adopt premium rate schedules and policy forms for the pool;

and

(3) receive service of summons on behalf of the pool.

(b) The board may:

(1) adopt necessary rules, including rules to implement this

chapter;

(2) delegate specific responsibilities to the pool manager; and

(3) amend the plan of operation to ensure the orderly management

and operation of the pool.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2208.105. IMMUNITY OF BOARD MEMBERS FROM CERTAIN

LIABILITIES. A board member is not liable:

(1) with respect to a claim or judgment for which coverage is

provided by the pool; or

(2) for a claim or judgment against a public entity covered by

the pool.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

SUBCHAPTER D. PLAN OF OPERATION

Sec. 2208.151. TIME FOR CREATION OF PLAN OF OPERATION. Not

later than the 30th day after the date the pool is created, the

board shall meet to prepare a detailed plan of operation for the

pool.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2208.152. CONTENTS OF PLAN OF OPERATION. (a) Subject to

the requirements of this chapter, the plan of operation must

include:

(1) the organizational structure of the pool, the board's method

of procedure and operation, and a summary of the method for

managing and operating the pool;

(2) a description of the financial arrangements necessary to

cover the initial expenses of the pool and estimates, supported

by statistical data, of the amounts of those contributions or

other financial arrangements;

(3) underwriting guidelines and procedures for evaluating risks;

(4) procedures for purchasing reinsurance;

(5) methods, procedures, and guidelines for:

(A) establishing premium rates for and maximum limits of excess

coverage available from the pool; and

(B) managing and investing the fund;

(6) procedures for processing and paying claims;

(7) methods and procedures for defraying losses and expenses of

the pool; and

(8) guidelines for nonrenewal of coverage.

(b) The plan of operation may include any matter relating to the

organization and operation of the pool or to the pool's finances.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

SUBCHAPTER E. OPERATION OF POOL

Sec. 2208.201. GENERAL POWERS AND DUTIES OF POOL. (a) The pool

shall:

(1) issue insurance coverage to each public entity entitled to

coverage under this chapter;

(2) collect premiums for coverage issued or renewed by the pool;

(3) process and pay valid claims; and

(4) maintain detailed data regarding the pool.

(b) The pool may:

(1) enter into contracts;

(2) purchase reinsurance;

(3) cancel or refuse to renew coverage; and

(4) perform any other act necessary to implement this chapter,

the plan of operation, or a rule adopted by the board.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2208.202. POOL MANAGER. (a) The board shall appoint a

pool manager who serves at the pleasure of the board, and the

board shall supervise the pool manager's activities.

(b) The pool manager is entitled to receive compensation as

authorized by the board.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2208.203. GENERAL POWERS AND DUTIES OF POOL MANAGER. (a)

The pool manager shall manage and conduct the affairs of the pool

under the general supervision of the board and shall perform any

other duties as directed by the board.

(b) In addition to any other duties provided by the board, the

pool manager shall:

(1) receive and pass on applications for insurance coverage from

the pool;

(2) negotiate contracts for the pool; and

(3) prepare, and submit to the board for approval, proposed

policy forms for coverage from the pool.

(c) The pool manager may refuse to renew the coverage of a

public entity insured by the pool based on the guidelines

included in the plan of operation.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2208.204. PERSONNEL. (a) The pool manager shall employ or

contract with persons necessary to assist the board and the pool

manager in implementing the powers and duties of the pool.

(b) The board must approve:

(1) the compensation paid to a pool employee; and

(2) a contract made with a person under this section.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2208.205. PERFORMANCE BOND AUTHORIZED. The board may

require an employee or a person with whom the pool manager

contracts under Section 2208.204 to execute a bond in an amount

determined by the board. The bond must be payable to the board

and conditioned on the faithful performance of the employee's or

other person's duties to the pool.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2208.206. IMMUNITY OF EMPLOYEES AND CONTRACTORS FROM

CERTAIN LIABILITIES. An employee or a person with whom the pool

manager contracts under Section 2208.204 is not liable:

(1) with respect to a claim or judgment for which coverage is

provided by the pool; or

(2) for a claim or judgment against a public entity covered by

the pool.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2208.207. OFFICE; RECORDS. (a) The pool shall maintain

the pool's principal office in Austin, Texas.

(b) Records, files, and other documents and information relating

to the pool must be maintained in the pool's principal office.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

SUBCHAPTER F. TEXAS PUBLIC ENTITY EXCESS INSURANCE FUND

Sec. 2208.251. FUND CREATION; MANAGEMENT. (a) On creation of

the pool, the board shall create the Texas public entity excess

insurance fund.

(b) The fund is composed of:

(1) premiums paid by public entities for coverage provided by

the pool;

(2) proceeds from bonds and other money received by the pool to

cover the expenses of the fund;

(3) investments of the fund and money earned from those

investments; and

(4) any other money received by the pool.

(c) The pool manager shall manage the fund under the general

supervision of the board. The fund manager, under the general

supervision of the board, shall manage and invest the money in

the fund in the manner provided by the plan of operation.

(d) Money earned by the investment of money in the fund must be

deposited in the fund or reinvested for the fund.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2208.252. USES OF FUND. (a) Administrative expenses of

the pool may be paid from the fund.

(b) Money in the fund may not be used to pay:

(1) punitive damages;

(2) a fine or penalty imposed for a violation of:

(A) a statute;

(B) an administrative rule or regulation; or

(C) an order or ordinance of a public entity; or

(3) a claim under excess insurance coverage until all benefits

payable under any other underlying policy or self-insurance

covering the claim or judgment are exhausted.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2208.253. DEPOSITORY. (a) The board may select one or

more banks to serve as depository for money in the fund.

(b) A depository bank must execute a bond or provide other

security before the pool manager may deposit fund money in the

bank in an amount that exceeds the maximum amount secured by the

Federal Deposit Insurance Corporation. The bond or other

security must be in an amount sufficient to secure the excess

amount of the deposit.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

SUBCHAPTER G. POOL COVERAGE

Sec. 2208.301. SCOPE OF COVERAGE. (a) Except as provided by

Subsection (b), under the excess insurance coverage, the pool

shall pay any portion of a claim against a public entity and the

entity's officers and employees that:

(1) exceeds $1 million; and

(2) is finally determined or settled or is included in a final

judgment of a court.

(b) The amount paid by the pool under this section may not

exceed the amount the board determines is actuarially sound for

the pool.

(c) The pool may participate in evaluating or defending a claim

made under the insurance coverage.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2208.302. BASIS OF COVERAGE. The pool may provide excess

insurance coverage on a claims-made basis or an occurrence basis.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2208.303. PUNITIVE DAMAGES NOT COVERED. Excess insurance

coverage provided by the pool may not include coverage for

punitive damages.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2208.304. RATES AND LIMITS OF COVERAGE. (a) To ensure

that the pool is actuarially sound, the board shall:

(1) set the premium rates charged; and

(2) determine the maximum limits of insurance coverage provided.

(b) The pool manager, for the board's consideration, shall:

(1) collect and compile statistical data relating to the

insurance coverage provided by the pool, including relevant loss,

expense, and premium data and other information;

(2) prepare the proposed premium rate schedules for the approval

of the board; and

(3) prepare the maximum limits of insurance coverage.

(c) The board shall periodically reexamine the rate schedules

and the maximum limits of insurance coverage as conditions

change.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2208.305. USE OF PUBLIC MONEY FOR POOL COVERAGE AUTHORIZED.

A public entity may use the entity's money to pay any

contributions or premiums required by the pool to purchase excess

insurance coverage from the pool.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2208.306. COVERAGE PERIOD. A public entity that accepts

coverage provided by the pool shall maintain that coverage for at

least 35 calendar months following the month in which the pool

issued the coverage.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2208.307. NONRENEWAL OF COVERAGE. The pool may refuse to

renew the insurance coverage of a public entity that fails to

comply with the pool's underwriting or risk management

guidelines.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2208.308. SUBSEQUENT COVERAGE. (a) A public entity that

voluntarily discontinues insurance coverage provided by the pool

may not subsequently obtain coverage from the pool for at least

36 calendar months following the month in which the entity

discontinues the coverage.

(b) A public entity whose insurance coverage is not renewed by

the pool is not eligible to subsequently apply for coverage

during the 11 calendar months following the month in which the

pool gives written notice of nonrenewal.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2208.309. PAYMENT OF CLAIMS AND JUDGMENTS. (a) If money

in the fund would be exhausted by the payment of all final and

settled claims and final judgments during a fiscal year, the pool

shall prorate the amount paid to each person having the claim or

judgment.

(b) If the amount paid by the pool is prorated under this

section, each person described by Subsection (a) shall receive an

amount equal to the percentage that the amount owed to that

person by the pool bears to the total amount owed, outstanding,

and payable by the pool.

(c) The public entity incurring the original liability shall pay

the remaining amount that is due and unpaid to a person who

receives a prorated payment under this section.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.