CHAPTER 2209. TEXAS NONPROFIT ORGANIZATIONS LIABILITY POOL
INSURANCE CODE
TITLE 10. PROPERTY AND CASUALTY INSURANCE
SUBTITLE G. POOLS, GROUPS, PLANS, AND SELF-INSURANCE
CHAPTER 2209. TEXAS NONPROFIT ORGANIZATIONS LIABILITY POOL
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 2209.001. DEFINITIONS. In this chapter:
(1) "Board" means the board of trustees of the pool.
(2) "Fund" means the Texas nonprofit organizations liability
fund.
(3) "Nonprofit organization" means an organization that is
exempt from federal income taxation under Section 501(a),
Internal Revenue Code of 1986, by being described as an exempt
organization by Section 501(c)(3) or (4), Internal Revenue Code
of 1986.
(4) "Pool" means the Texas Nonprofit Organizations Liability
Pool.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2209.002. POOL NOT ENGAGED IN BUSINESS OF INSURANCE. (a)
Except as provided by this section and Section 2209.003(b), the
pool is not engaged in the business of insurance under this code
or other laws of this state, and this code, including Chapter
462, and other insurance laws of this state do not apply to the
pool.
(b) The pool is subject to:
(1) this chapter;
(2) the requirements of this code or the commissioner relating
to reporting liability claims data; and
(3) the requirements of Chapter 2251 and Article 5.13-2 relating
to making, filing, and approving rates.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2209.003. DEPARTMENT AND COMMISSIONER SUPERVISION. (a)
The pool is subject to the department's continuing supervision
relating to the pool's solvency.
(b) The commissioner may set certain minimum requirements to
ensure the capability of the pool to satisfy the pool's
obligations.
(c) The department shall charge the pool reasonable fees for
services performed by the department under this chapter.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
SUBCHAPTER B. CREATION OF POOL
Sec. 2209.051. CREATION OF POOL. (a) The Texas Nonprofit
Organizations Liability Pool is created on the written agreement
of the chief executive officers of 15 or more nonprofit
organizations.
(b) The pool provides primary and excess liability insurance
coverage as provided by this chapter.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2209.052. PARTICIPATION IN POOL. A nonprofit organization
is entitled to coverage from the pool if the organization:
(1) submits a complete application;
(2) provides other information required by the pool;
(3) meets the underwriting standards 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.
Sec. 2209.053. SELECTION OF TEMPORARY BOARD. At the time the
chief executive officers of the nonprofit organizations enter
into the written agreement under Section 2209.051, the officers
shall select nine individuals to:
(1) serve as the temporary board; and
(2) draft the plan of operation for the pool.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
SUBCHAPTER C. PLAN OF OPERATION
Sec. 2209.101. TIME FOR CREATION OF PLAN OF OPERATION. (a) Not
later than the 30th day after the date the temporary board is
selected, the temporary board shall meet to prepare a detailed
plan of operation for the pool.
(b) The temporary board shall complete and adopt the plan of
operation not later than the 90th day after the date the
temporary board is selected.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2209.102. 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, including:
(A) the method of selecting the board;
(B) the board's method of procedure and operation; and
(C) a summary of the method for managing and operating the pool;
(2) a description of the contributions and other 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 standards and procedures for evaluating risks,
including a requirement that all participants in the pool receive
ongoing training in the methods of controlling liability losses;
(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;
(B) negotiating and paying settlements, defending claims, and
paying judgments; and
(C) 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.
Sec. 2209.103. APPROVAL OF PLAN. (a) On completion of the plan
of operation, the temporary board shall submit the plan to the
department for examination, suggested changes, and final
approval.
(b) The department shall approve the plan of operation only if
the department is satisfied that the pool is able and will
continue to be able to pay valid claims made against the pool.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
SUBCHAPTER D. BOARD OF TRUSTEES
Sec. 2209.151. GOVERNANCE OF POOL; BOARD MEMBERSHIP. (a) The
pool is governed by a board of trustees composed of nine members
selected as provided by the plan of operation.
(b) Not later than the 15th day after the date the department
approves the plan of operation, the initial regular board must be
selected as provided by the plan of operation. The members of
the initial regular board shall take office not later than the
30th day after the date the plan of operation is adopted.
(c) Four board members must be representatives of the public. A
public representative may not:
(1) be an officer, director, or employee of an insurer,
insurance agency, agent, broker, solicitor, adjuster, or other
business entity regulated by the department;
(2) be a person required to register under Chapter 305,
Government Code; or
(3) be related to a person described by Subdivision (1) or (2)
within the second degree by consanguinity or affinity.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2209.152. TERMS; VACANCY. (a) Board members serve
staggered two-year terms. The terms of four members expire in
odd-numbered years as provided by the plan of operation.
(b) A vacancy on the board shall be filled as provided by the
plan of operation.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2209.153. PERFORMANCE BOND REQUIRED. (a) Each board
member shall execute a bond in the amount required by the plan of
operation. The bond must be payable to the pool and conditioned
on the faithful performance of the member's duties.
(b) The pool shall pay the cost of the bond executed under this
section.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2209.154. 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. 2209.155. OFFICERS; MEETINGS. (a) The board shall select
from the board members a presiding officer, an assistant
presiding officer, and a secretary, who serve one-year terms that
expire as provided by the plan of operation.
(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. 2209.156. 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 insurance contracts issued by
the pool to nonprofit organizations;
(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) with the department's approval, 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. 2209.157. 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 nonprofit organization
covered by the pool.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
SUBCHAPTER E. OPERATION OF POOL
Sec. 2209.201. GENERAL POWERS AND DUTIES OF POOL. (a) The pool
shall:
(1) issue primary and excess liability coverage to each
nonprofit organization entitled to coverage under this chapter;
(2) collect premiums for coverage issued or renewed by the pool;
(3) process and pay valid claims;
(4) maintain detailed data regarding the pool; and
(5) establish a plan to conduct loss control training or
contract with an outside organization or individual to establish
ongoing training and facilities inspection programs designed to
reduce the potential liability losses of pool participants.
(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 carry out 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. 2209.202. POOL MANAGER; PERFORMANCE BOND REQUIRED. (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.
(c) The pool manager shall execute a bond in the amount
determined by the board. The bond must be payable to the pool
and conditioned on the faithful performance of the pool manager's
duties.
(d) The pool shall pay the cost of the bond executed under this
section.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2209.203. 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 liability 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
nonprofit organization 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. 2209.204. PERSONNEL. (a) The pool manager shall employ or
contract with persons necessary to assist the board and the pool
manager in carrying out 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. 2209.205. PERFORMANCE BOND AUTHORIZED. The board may
require an employee or a person with whom the pool manager
contracts under Section 2209.204 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. 2209.206. IMMUNITY OF EMPLOYEES AND CONTRACTORS FROM
CERTAIN LIABILITIES. An employee or a person with whom the pool
manager contracts under Section 2209.204 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 nonprofit organization
covered by the pool.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2209.207. RECORDS. 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 NONPROFIT ORGANIZATIONS LIABILITY FUND
Sec. 2209.251. FUND CREATION; MANAGEMENT. (a) On creation of
the pool, the initial regular board shall create the Texas
nonprofit organizations liability fund.
(b) The fund is composed of:
(1) premiums paid by nonprofit organizations for coverage
provided by the pool;
(2) contributions and other money received by the pool to cover
the initial 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. 2209.252. CONTRIBUTIONS. The board shall determine the
amount of any contributions necessary to meet the initial
expenses of the pool. The board shall make this determination
based on the data provided by the plan of operation.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2209.253. USES OF FUND. (a) Administrative expenses of
the pool may be paid from the fund. Payments for administrative
expenses during a fiscal year of the pool may not exceed 10
percent of the total amount of the money in the fund during that
fiscal year.
(b) Money in the fund may not be used to pay:
(1) punitive damages; or
(2) a fine or penalty imposed for a violation of:
(A) a statute;
(B) an administrative rule of a state agency; or
(C) an ordinance or order of a local government.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2209.254. DEPOSITORY BANK. (a) The board may select one
or more banks to serve as a 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. 2209.301. SCOPE OF COVERAGE. (a) The pool shall insure a
nonprofit organization and the organization's officers and
employees against liability for acts and omissions under the laws
of this state.
(b) The pool shall provide to a nonprofit organization that
qualifies under this chapter and the plan of operation:
(1) primary liability insurance coverage in an amount not to
exceed $250,000; and
(2) excess liability insurance coverage in an amount that the
board finds is actuarially sound.
(c) The pool may participate in evaluating, settling, and
defending a claim against a nonprofit organization insured by the
pool if the claim is covered by pool coverage.
(d) The pool is liable in an amount not to exceed the limit of
coverage provided to a nonprofit organization on a claim made
against the organization.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2209.302. COVERAGE ON CLAIMS-MADE BASIS. The pool may
provide liability insurance coverage on a claims-made basis on
forms approved by the department.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2209.303. PUNITIVE DAMAGES NOT COVERED. Liability
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. 2209.304. 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 coverage provided.
(b) The pool manager, for the board's consideration, shall:
(1) collect and compile statistical data relating to the
liability 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 coverage.
(c) The board shall periodically reexamine the rate schedules
and the maximum limits of coverage as conditions change.
(d) The pool manager shall make available to the public the
information described by Subsection (b)(1).
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2209.305. COVERAGE PERIOD. A nonprofit organization that
accepts coverage provided by the pool shall maintain that
coverage for at least 24 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. 2209.306. NONRENEWAL OF COVERAGE. (a) Except as provided
by Subsection (b), the pool may refuse to renew the coverage of a
nonprofit organization that fails to comply with the pool's
underwriting standards.
(b) The pool may not refuse to renew the coverage of a nonprofit
organization during the first 24 calendar months following the
month in which the nonprofit organization is first provided
coverage by the pool if the organization maintains the
underwriting standards established by the plan of operation.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2209.307. SUBSEQUENT COVERAGE. (a) A nonprofit
organization that voluntarily discontinues coverage provided by
the pool may not subsequently obtain coverage from the pool for
at least 12 calendar months following the month in which the
organization discontinues the coverage.
(b) A nonprofit organization whose coverage is not renewed under
Section 2209.306 is not eligible to subsequently apply for
coverage during the 12 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. 2209.308. 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 pool shall pay in the next fiscal year 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.