CHAPTER 911. FARM MUTUAL INSURANCE COMPANIES
INSURANCE CODE
TITLE 6. ORGANIZATION OF INSURERS AND RELATED ENTITIES
SUBTITLE F. FARM AND COUNTY MUTUAL INSURANCE COMPANIES
CHAPTER 911. FARM MUTUAL INSURANCE COMPANIES
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 911.001. LIMITED EXEMPTION FROM INSURANCE LAWS;
APPLICABILITY OF CERTAIN LAWS. (a) A provision of this code,
other than this chapter, does not apply to a farm mutual
insurance company holding a certificate of authority under this
chapter unless farm mutual insurance companies are expressly
mentioned in the other law.
(b) A law enacted after May 20, 1973, does not apply to a farm
mutual insurance company unless the law states that it applies to
a farm mutual insurance company.
(c) Except to the extent of any conflict with this chapter, the
following provisions apply to a farm mutual insurance company:
(1) Subchapter A, Chapter 32;
(2) Subchapter D, Chapter 36;
(3) Sections 31.002(2), 32.021(c), 32.023, 32.041, 33.002,
38.001, 81.001-81.004, 201.005, 201.055, 401.051, 401.052,
401.054-401.062, 401.103-401.106, 401.151, 401.152, 401.155,
401.156, 421.001, 801.051-801.055, 801.057, 801.101, 801.102,
822.204, 841.004, 841.251, 841.252, 862.101, 1806.001, 1806.101,
1806.103(b), and 1806.104-1806.107;
(4) Chapter 86;
(5) Subchapter A, Chapter 401;
(6) Subchapter B, Chapter 404;
(7) Chapter 422;
(8) Subchapter B, Chapter 424, other than Section 424.052,
424.072, or 424.073;
(9) Chapter 441;
(10) Chapter 443;
(11) Chapter 462;
(12) Chapter 481;
(13) Chapter 541;
(14) Chapter 802;
(15) Subchapter A, Chapter 805;
(16) Chapter 824; and
(17) Article 1.09-1.
(d) After hearing, the commissioner may adopt rules regarding
the application of a law referred to in Subsection (c) to farm
mutual insurance companies. The department may enforce rules
adopted under this subsection.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Amended by:
Acts 2005, 79th Leg., Ch.
631, Sec. 3, eff. September 1, 2005.
Acts 2007, 80th Leg., R.S., Ch.
730, Sec. 2E.106, eff. April 1, 2009.
Sec. 911.002. GENERAL RULEMAKING AUTHORITY; ENFORCEMENT. After
hearing, the commissioner may adopt rules to clarify and augment
this chapter as determined by the commissioner to be necessary to
accomplish the purposes of this chapter. The department may
enforce rules adopted under this section.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 911.003. FEES. (a) The department shall charge and
collect the following fees:
(1) $10 for an amendment to a farm mutual insurance company's
charter; and
(2) $1 for the issuance of a company's certificate of authority.
(b) The department shall charge and the comptroller shall
collect a fee of $20 for the filing of an annual statement
required by the department.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
SUBCHAPTER B. ORGANIZATION OF FARM MUTUAL INSURANCE COMPANY;
DIRECTORS
Sec. 911.051. APPLICABILITY OF TEXAS NON-PROFIT CORPORATION ACT.
Except to the extent of any conflict with this chapter, the
Texas Non-Profit Corporation Act (Article 1396-1.01 et seq.,
Vernon's Texas Civil Statutes) applies to a farm mutual insurance
company. The commissioner has each power and duty of, and shall
perform each act to be performed by, the secretary of state under
that Act with respect to farm mutual insurance companies.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 911.052. FORMATION OF COMPANY: INCORPORATION REQUIRED. To
form a farm mutual insurance company, an association of
individuals that does not hold a certificate of authority issued
by the department must obtain a charter as required by this
subchapter.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 911.053. INCORPORATION REQUIREMENTS. (a) In this section,
"separate risk" means one or more items of real property and the
property's contents, if any, that is not exposed to any other
property on which insurance is applied for in the association
seeking the charter.
(b) To be granted a charter as a farm mutual insurance company,
an association must:
(1) demonstrate that the association:
(A) has existed as an association of individuals for at least
three years;
(B) has at least 100 individual members;
(C) operates for the purpose of membership recreation or welfare
under a system of subordinate lodges, locals, or districts;
(D) does not have capital stock;
(E) is organized and operates solely for the mutual benefit of
its members and not for profit;
(F) has a representative form of government; and
(G) has decided by a majority vote of the association's members
to apply for a charter as a farm mutual insurance company under
this chapter; and
(2) have:
(A) at least 100 written applications for insurance on at least
400 separate risks; and
(B) an unencumbered surplus as required by Section 911.308(b).
(c) Coverage for a risk described by Subsection (b)(2)(A) may
not be in an amount that exceeds one percent of the total amount
of insurance coverage to be issued by the association as stated
in its application for a charter.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 911.054. CHARTER AND ARTICLES OF INCORPORATION. (a) The
charter and articles of incorporation of an association that
wants to form a farm mutual insurance company must state the
names and post office addresses of at least 25 charter members of
the company, all of whom are residents of one or more adjoining
counties in this state and each of whom must:
(1) be a member of the association;
(2) own at least $5,000 of insurable property for which the
member has applied in writing for insurance coverage from the
company to be formed; and
(3) sign the charter and articles of incorporation.
(b) In addition to the requirements of Subsection (a), the
charter must:
(1) be acknowledged before a notary public by at least five of
the charter members described by Subsection (a);
(2) state:
(A) the name of the company, which must include the words "Farm
Mutual" or "Farmers Mutual";
(B) the location of the company's principal office;
(C) the number, names, and post office addresses of each of the
company's first directors, of which there must be at least five;
and
(D) the type of property the company will insure and the risk to
be insured against; and
(3) include any other provision the incorporators want
consistent with this chapter.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 911.055. APPLICATION FOR PERMIT TO SOLICIT INSURANCE. (a)
At least 10 residents described by Section 911.054(a) that want
to form a farm mutual insurance company may apply to the
department for a permit to solicit insurance on the mutual or
cooperative plan.
(b) The application for a permit to solicit insurance must:
(1) state:
(A) that at least 100 individuals are members of an association
described by Section 911.053(b)(1);
(B) that the association has indicated, by majority vote, that
the association wants to:
(i) insure property of the association's members under this
chapter; and
(ii) be chartered as a farm mutual insurance company;
(C) the name of the company, which must include the words "Farm
Mutual" or "Farmers Mutual";
(D) the location of the company's principal office;
(E) the risks the company proposes to insure; and
(F) the names and places of residence of at least 10 of the
applicants; and
(2) be accompanied by:
(A) affidavits of at least two of the applicants, each of whom
must:
(i) state the applicant's name and residence; and
(ii) verify the facts stated in the application; and
(B) a filing fee in the amount of $25.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 911.056. ISSUANCE OF PERMIT TO SOLICIT INSURANCE; TERM.
(a) The department shall approve or deny an application for a
permit to solicit insurance under Section 911.055. If the
department finds that the application complies with this chapter,
the department shall issue to the applicants a permit to solicit
insurance.
(a-1) If the department finds that the application does not
comply with this chapter, the department shall deny the
application. On the applicant's request, the commissioner shall
hold a hearing on a denial. Not later than the 30th day after
the date of the applicant's request for a hearing, the
commissioner shall request a hearing date.
(b) A permit issued under this section authorizes the permit
holders to solicit insurance on the mutual or cooperative plan in
accordance with the terms of the application. The permit does not
authorize the permit holders to:
(1) issue insurance policies; or
(2) pay losses.
(c) A permit issued under this section is valid for six months.
On receipt of an application for renewal and a fee in the amount
of $10, the department may renew a permit issued under Section
911.055 as frequently and for the period as the department
determines necessary.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Amended by:
Acts 2009, 81st Leg., R.S., Ch.
1022, Sec. 16, eff. June 19, 2009.
Sec. 911.057. COLLECTION AND REFUND OF MONEY FROM CERTAIN
INDIVIDUALS APPLYING FOR INSURANCE. An association described by
Section 911.053(b)(1) of which the applicants for a permit to
solicit insurance are members shall hold in trust money collected
from an individual applying for insurance in the association
until the association is incorporated. If the association's
incorporation is not perfected, the association shall refund the
money to the individual applying for the insurance.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 911.058. MEMBERSHIP CONTROL OF COMPANY. (a) The control
of a farm mutual insurance company must be ultimately vested as
provided by this chapter in the company's members through a
supreme legislative or governing body, the members of which must
be elected directly by the company's members or by delegates
elected by the company's members.
(b) Through the company's governing body, the company's members
may establish local chapters, branches, lodges, or similar
organizations.
(c) The methods provided by this section for the control of a
farm mutual insurance company are exclusive.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 911.059. ELIGIBILITY OF BOARD OF DIRECTORS; TERM. (a) An
individual is eligible to serve as a director of a farm mutual
insurance company if the individual is a policyholder who
maintains insurance coverage in the amount of at least $3,000
written by the company on the individual's property.
(b) Except as otherwise provided by the company's bylaws or
constitution, a director serves for a term of one year or until
the director's successor qualifies for office.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 911.060. GENERAL POWERS OF BOARD OF DIRECTORS. The board
of directors of a farm mutual insurance company has the powers
provided by:
(1) this chapter; and
(2) the company's charter, constitution, and bylaws to the
extent those powers do not conflict with this chapter.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 911.061. AUTHORITY TO BORROW MONEY. (a) The board of
directors of a farm mutual insurance company, acting through its
authorized officers, may borrow money in an amount determined to
be necessary to pay the company's accrued or unaccrued losses.
(b) The board may pledge as security for a loan the assets of
the company, including the contingent liability of its
policyholders.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 911.062. REMOVAL OF OFFICER OR DIRECTOR. (a) The board of
directors of a farm mutual insurance company, at a meeting, may
remove an officer or director of the company if, by a two-thirds
majority vote of all the company's directors, the board
determines that the removal of the individual is in the best
interest of the company. The board may remove an officer or
director under this subsection without stating a reason for the
removal.
(b) The board may appoint one or more individuals to assume the
duties and serve the unexpired term of an officer or director
removed under this section.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 911.063. CREATION OF LOCAL CHAPTERS AND DISTRICTS. (a) A
farm mutual insurance company's bylaws may provide for:
(1) the organization of local chapters to transact the company's
business; and
(2) the creation of districts in and for which directors may be
elected.
(b) The bylaws may also provide that delegates from the
company's local chapters are the company's supreme governing
body.
(c) The company may consider the hazards against which the
company insures and the company's classes of risks and territory
of operation in organizing the local chapters and creating the
districts.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 911.064. POLICYHOLDER MEETINGS. (a) A farm mutual
insurance company shall hold a policyholder meeting to elect
directors and transact business at the time and place and in the
manner prescribed by the company's bylaws.
(b) A special meeting of a company's policyholders may be called
by:
(1) the president, the general manager, or one-third of the
company's directors; or
(2) the commissioner.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 911.065. VOTING BY POLICYHOLDER. (a) Each policyholder of
a farm mutual insurance company is entitled to only one vote at a
policyholders' meeting.
(b) A policyholder may not vote by proxy.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 911.066. AUTHORITY TO PROHIBIT WAIVER OF BYLAWS. A farm
mutual insurance company may provide in its bylaws that a company
adjuster, representative appointed by the company, or local
chapter or officer or agent elected by the local chapter may not
waive a provision in the company's constitution or bylaws or in a
policy issued by the company.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 911.067. APPLICATION FOR EXTENSION OF CHARTER FOR CERTAIN
COMPANIES; TERM. (a) Before a farm mutual insurance company's
charter expires, the company may apply to the department for an
extension of the company's charter if:
(1) the company was chartered, holding a certificate of
authority, and operating before May 21, 1973, under Chapter 16,
Insurance Code, as it existed on that date; or
(2) the company was organized and engaging in business before
April 6, 1937, and the company continues to engage in business.
(b) A farm mutual insurance company described by Subsection (a)
and whose charter has expired may apply to the department to have
the charter extended perpetually if the company is engaged in
business in this state.
(c) The term of the charter begins on the date that the charter
is extended or, if the original charter expired before the
charter is extended, the date the original charter expired.
(d) An application for an extension must be authorized by either
a two-thirds majority vote of the company's directors or by a
simple majority vote of those voting at a policyholders' meeting
and must:
(1) state in full the charter to be extended;
(2) state the period for which the charter is to be extended;
and
(3) be signed and acknowledged by the president and secretary of
the company.
(e) A company whose charter is extended retains the rights,
privileges, and immunities granted the company under the
company's original charter.
(f) The department shall charge and collect a fee of $10 for the
extension of a farm mutual insurance company's charter.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
SUBCHAPTER C. AUTHORITY TO ENGAGE IN BUSINESS IN THIS STATE
Sec. 911.101. AUTHORITY TO ENGAGE IN BUSINESS. Except to the
extent of any conflict with this chapter, a farm mutual insurance
company must hold a certificate of authority under Section
801.051 to engage in the business of insurance in this state
under this chapter.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
SUBCHAPTER D. POLICIES AND COVERAGE
Sec. 911.151. KINDS OF INSURANCE AUTHORIZED. (a) A farm mutual
insurance company may insure property against loss or damage by:
(1) fire, lightning, explosion, theft, windstorm, hurricane,
hail, riot, civil commotion, smoke, aircraft, or land vehicles;
or
(2) any other hazard against which any other fire or windstorm
insurance company operating in this state under Chapter 862 may
write insurance on property described by Subsection (b).
(b) The company may write insurance against the hazards
described by Subsection (a) on:
(1) a rural or urban dwelling and attendant outhouses and yard
buildings and all their contents for home and personal use,
musical instruments and libraries, barns and ranch buildings of
any description and vehicles and implements used on or about
barns or ranch buildings;
(2) agricultural products that are produced or kept on farms or
ranches;
(3) a church building, fraternal lodge hall, private or church
school, or nonindustrial use building owned by a nonprofit
organization, regardless of the location;
(4) a trailer or mobile home; and
(5) growing crops if the insurance is reinsured by:
(A) the Federal Crop Insurance Corporation under Section 508,
Federal Crop Insurance Act (7 U.S.C. Section 1508); or
(B) a property and casualty insurance company that:
(i) is authorized to write insurance in this state; and
(ii) has a rating by the A.M. Best Company of A- or better.
(c) An insurance policy written by a farm mutual insurance
company against loss or damage by windstorm, hurricane, or hail,
as described by Subsection (a), may include coverage for:
(1) a building or other structure that is built wholly or
partially over water; and
(2) the corporeal movable property contained in a building or
structure described by Subdivision (1).
(d) The farm mutual insurance company may impose appropriate
limits of coverage and deductibles for coverage described by
Subsection (c).
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Amended by:
Acts 2005, 79th Leg., Ch.
1153, Sec. 4, eff. September 1, 2005.
Sec. 911.152. PROPERTY AND HAZARDS AGAINST WHICH COMPANY MAY NOT
INSURE. (a) A farm mutual insurance company may not insure:
(1) a building, or the building's contents, with more than 40
percent of the building's floor space or more than 500 square
feet of floor space, whichever is less, used for business
purposes, except as provided by Section 911.151(b)(3); or
(2) any type of commercial or private passenger motor vehicle,
except as provided by Section 911.151(b)(4).
(b) A farm mutual insurance company may not assume or issue an
insurance policy that:
(1) indemnifies an insured for liability to a third party the
insured incurs in committing a tortious act; or
(2) covers an insured for liability the insured incurs under a
contract to maintain, hold, or store property belonging to
another.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 911.153. CONTRACT TERMS: INCORPORATION OF BYLAWS. (a) A
farm mutual insurance company's bylaws are part of each contract
between the company and an insured.
(b) Each policy issued by the company must state that the
company's bylaws are part of the contract.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 911.154. CONTRACT TERMS: ADOPTION OF ADDITIONAL PROVISIONS.
(a) A farm mutual insurance company may adopt as part of the
company's bylaws and insurance policies any provision contained
in the standard policies of companies writing fire or windstorm
insurance as adopted by the commissioner to the extent the
provision applies to a farm mutual insurance company.
(b) A company that adopts a provision as provided by Subsection
(a) shall state in the company's bylaws or in each policy issued
by the company that the provision has been adopted as provided by
Subsection (a).
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 911.155. REPAIR OR REPLACEMENT OF INSURED PROPERTY. The
company's bylaws may authorize the company to require, at its
option, that all or a percentage of the money paid for a loss be
used to replace or repair the damaged or destroyed property. The
requirement may apply equally to personal and real property,
including personal and real property exempt from execution, such
as a homestead or a building on the homestead. The company may
provide in its bylaws that the requirements of Section 862.053 do
not apply to its insurance policies.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
SUBCHAPTER E. CHARGES, PREMIUMS, AND ASSESSMENTS
Sec. 911.201. PAYMENT OF PREMIUM OR ASSESSMENT. (a) A farm
mutual insurance company's bylaws must:
(1) state the time and manner of the levy and payment of a
premium or assessment for policies written by the company;
(2) in addition to the regular premium or assessment under
Subdivision (1), establish the contingent liability of a
policyholder for all losses accrued while a policy is in force in
the amount of at least $1 for each $100 of insurance coverage,
except as provided by Subsection (b); and
(3) state the time and manner of payment of a policyholder's
contingent liability established under Subdivision (2).
(b) A company's bylaws may provide for the issuance of policies
without contingent liability as required by Subsection (a)(2) if
the company has policyholder surplus in the amount of at least
$1,000,000.
(c) As required by its bylaws, a farm mutual insurance company
shall establish and levy premiums and assessments, including the
contingent liability of a policyholder, for all insurance written
by the company.
(d) A policyholder shall pay premiums and assessments as
required by the company's bylaws.
(e) The premium or assessment for a policy shall be secured by a
lien on each item of real or personal property, other than a
homestead, covered by the policy, including the land on which an
insured building is located. The lien remains on the property
while the insured owns the property.
(f) A conservator, receiver, or liquidator of a farm mutual
insurance company may not make an assessment against a
policyholder for the contingent liability established under
Subsection (a)(2).
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 911.202. NONPAYMENT OF PREMIUMS OR ASSESSMENTS: FILING OF
ACTION. (a) A farm mutual insurance company may bring an action
in the county in which the company's home office is located
against a policyholder who defaults on the payment of a premium
or an assessment.
(b) The company is entitled to judgment against the policyholder
for:
(1) delinquent premiums or assessments;
(2) foreclosure of the lien described by Section 911.201; and
(3) the costs of an action, including a reasonable attorney's
fee.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 911.203. POLICYHOLDER LIABILITY. A policyholder is liable
for the losses of a farm mutual insurance company only as
provided by the company's constitution and bylaws, and only in
proportion to the amount that the premium or assessment for the
policyholder's policy bears to the total amount of premiums or
assessments for all policies written by the company in the class
to which the policyholder's policy belongs.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
SUBCHAPTER F. AGENTS
Sec. 911.251. LICENSING AND APPOINTMENT OF CERTAIN AGENTS. (a)
An individual or firm may not solicit, write, sign, execute, or
deliver insurance policies, bind insurance risks, collect
premiums, or otherwise act on behalf of a farm mutual insurance
company in the capacity of an insurance agent in the solicitation
or sale of crop insurance unless the individual or firm holds a
license issued under Title 13.
(b) A farm mutual insurance company may not appoint and act
through an agent under Subchapter F, Chapter 4051.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003. Amended by Acts 2003, 78th Leg., ch. 1276, Sec. 10A.223(a),
eff. Sept. 1, 2003.
Amended by:
Acts 2007, 80th Leg., R.S., Ch.
730, Sec. 2E.107, eff. April 1, 2009.
SUBCHAPTER G. REGULATION OF FARM MUTUAL INSURANCE COMPANY;
FINANCIAL REQUIREMENTS
Sec. 911.301. GENERAL OPERATING REQUIREMENTS. (a) In this
section, "rural property" means property located outside an area
of land subject to the taxing authority of a municipality with a
population of more than 2,500.
(b) A farm mutual insurance company shall:
(1) maintain a majority of the company's total insurance in
force on rural property at all times the insurance is written;
and
(2) operate on a regular and special assessment basis.
(c) Except as otherwise approved by the commissioner, a farm
mutual insurance company may not use more than 33 percent of the
company's gross income for expenses.
(d) Property that is rural property at the time the property is
originally insured continues to be classified as rural property
if:
(1) the policy or policies that insure the property are written
by the same farm mutual insurance company; and
(2) the coverage continues in effect without lapse of coverage
for more than 60 days.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 911.302. LOCATION OF BUSINESS. (a) Except as provided by
Subsection (b), a farm mutual insurance company may write
insurance in:
(1) the county in which the company's home office is located at
the time of incorporation and in any county adjoining the county
in and for which the company is organized;
(2) any county in which another farm mutual insurance company is
not organized; and
(3) any county in this state if the company's reserve fund
exceeds $200,000 in cash or securities in which the reserve fund
of a stock fire insurance company may be invested.
(b) This section does not apply to a farm mutual insurance
company organized and operating in this state under a certificate
of authority issued before May 21, 1973, under former Chapter 16
of this code.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 911.303. REINSURANCE. (a) A farm mutual insurance company
may reinsure the company's risks with another company against any
hazard against which the farm mutual insurance company is
permitted to insure.
(b) The farm mutual insurance company may contract for mutual or
reciprocal reinsurance with another company on the mutual or
cooperative plan subject to the following conditions:
(1) the farm mutual company may assume the reinsurance on the
risks of the other company only if the other company reinsures
the risks of the farm mutual insurance company; and
(2) the farm mutual company may write or assume the reinsurance
only on property that the company is authorized to insure and
that is located in this state.
(c) A farm mutual insurance company that reinsures another
company's property is liable for the losses of the other company
only as specified in the reinsurance contract. The farm mutual
insurance company does not become a member or partner of the
other company as a result of the reinsurance.
(d) A farm mutual insurance company may pay or collect
additional assessments or premiums for the purpose of a contract
described by Subsection (b).
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 911.304. ANNUAL REPORTS REQUIRED. (a) A farm mutual
insurance company shall annually prepare a written report as
required by this section and submit the report to the company's
policyholders.
(b) The annual report must show:
(1) the total amount of premiums paid during the year for the
policyholders' insurance;
(2) the company's operating expenses; and
(3) the total amount of claims paid and the amount paid for each
covered peril.
(c) Repealed by Acts 2007, 80th Leg., R.S., Ch. 47, Sec. 2, eff.
May 8, 2007.
(d) The company shall make available to each policyholder a copy
of the annual report at the time and in the manner prescribed by
the company's bylaws.
(e) A farm mutual insurance company shall make annual reports to
the department as required by the commissioner or by law.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Amended by:
Acts 2007, 80th Leg., R.S., Ch.
47, Sec. 1, eff. May 8, 2007.
Acts 2007, 80th Leg., R.S., Ch.
47, Sec. 2, eff. May 8, 2007.
Sec. 911.305. EXAMINATION OF COMPANY. The department shall
examine each farm mutual insurance company as often as the
department determines necessary.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 911.306. SOLVENCY REQUIREMENTS. (a) A farm mutual
insurance company is solvent if:
(1) the company's assets, including the policyholders'
contingent liability for the company's losses, are reasonably
sufficient to pay the company's losses according to the terms of
the policies; and
(2) the company's required unencumbered surplus, if any, has not
been impaired in excess of 16-2/3 percent of the required
unencumbered surplus.
(b) A company that is solvent as provided by this section may
continue to engage in the business of insurance.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 911.307. RESERVE REQUIREMENTS. (a) A farm mutual
insurance company's board of directors may provide for the
accumulation of reserve funds.
(b) The company shall invest the reserve funds in the same type
of securities in which the reserve funds of other fire insurance
companies are required to be invested by law.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 911.308. SURPLUS REQUIREMENTS. (a) A farm mutual
insurance company organized between January 1, 1955, and May 21,
1973, shall maintain an unencumbered surplus of $2 for each $100
of insurance in force or an unencumbered surplus of $200,000,
whichever amount is less.
(b) A farm mutual insurance company organized under this chapter
on or after May 21, 1973, shall maintain an unencumbered surplus
in cash of $2 for each $100 of insurance in force or an
unencumbered surplus of $200,000, whichever amount is greater.
(c) A company described by Subsection (b) shall invest the
minimum unencumbered surplus as provided by Section 822.204. The
company may invest funds in excess of the minimum unencumbered
surplus as provided by the provisions of Subchapter B, Chapter
424, other than Sections 424.052, 424.072, and 424.073.
(d) A company described by Subsection (b) shall, without delay,
restore the minimum unencumbered surplus if the surplus is
impaired. The department shall proceed as provided by Subchapter
B, Chapter 404.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Amended by:
Acts 2007, 80th Leg., R.S., Ch.
730, Sec. 2E.108, eff. April 1, 2009.