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FIRE INSURANCE COMPANIES-PRESCRIBING CONDITIONS
FOR TRANSACTING BUSINESS. S. B. No. 25.]
CHAPTER 18. An Act providing conditions upon which fire insurance companies shall transact
business in this State, and providing for the regulation and control of rates of premium on fire insurances, and to prevent discrimination therein and to create a Fire Insurance Rating Board, and to provide penalties for violations
of this Act, and declaring an emergency. Be it enacted by the Legislature of the State of Texas:
SECTION 1. Every fire insurance company not organized under the laws of this State, hereafter granted a certificate of authority to transact business in this State, shall be deemed to have accepted such certificate and to transact business thereunder upon the condition that it consents to the terms and provisions of this Act, and that it agrees to transact its business in this State subject thereto.
SEC. 2. Every fire insurance company organized under the laws of this State, hereafter granted a certificate of authority to transact business in this State, shall be deemed to have accepted. such certificate and to transact business thereunder upon the condition that it consents to the terms and provisions of this Act, and that it agrees to transact its business in this State subject thereto.
SEC. 3. There is hereby created a board to be known as the State Fire Rating Board, which shall be composed of the Commissioner of Insurance and Banking, who shall be chairman thereof, and one member to be appointed by the Governor, who shall be secretary thereof, and one additional member who shall be appointed by the Governor upon the joint nomination and recommendation in writing of a majority of all the companies transacting the business of fire insurance in this State, provided that if the State representative or representatives or executive officer of a majority of such companies shall fail to join in the nomination or recommendation of some citizen of this State for such appointment not later than ten days prior to the date when the same is required to be made, the Governor shall have the power to make such appointment regardless of such nomination or recommendation. The members of said board, cther than the Commissioner of Insurance and Banking, shall each have had at least five years practical experience in the making of fire insurance rates and inspection of risks, shall be appointed as herein provided within sixty days after this Act takes effect for the term of two years and biennially, and they shall have the power to decide all guestions required, authorized or permitted to be passed upon by said board upon which they shall agree, and in case of disagreement as to any such question, the decision of the Commissioner of Insurance and Banking thereon shall determine the action of the board. Said members of said board, other than the Commissioner of Insurance and Banking, shall each receive as compensation for their. services the sum of twenty-five hundred dollars per annum, and the Commissioner of Insurance and Banking shall receive as compensation or salary for his services under this Act the sum of five hundred dollars per annum in addition to his compensation as now fixed by law.
SEC. 4. Every fire insurance company transacting business in this State shall, not later than January 1st, 1910, after this Act takes effect, file with the secretary of said board general basis schedules showing the rates on all classes of risks insurable by such company in this state, and all charges, credits, terms, privileges and conditions which in anywise affect such rates or the value of the insurance issued to the assured, and any one or more of such companies may employ for the making of such schedules and rates, the services of such experts as they may deem advisable for such purpose.
Sec. 5. No change shall be made in the schedules which have been filed in compliance with the requirements of this Act except after thirty days notice to the secretary of said board, which notice shall plainly state the changes proposed to be made in the schedules thereunder in force and the time when such changes will go into effect; and such changes shall be shown by filing new schedules or shall be plainly indicated on the schedules in force at the time; provided that said board may in its discretion and for good cause shown allow changes to be made upon notice for a shorter period than that specified herein either in particular instances or by general order applicable to special or peculiar circumstances or conditions.
SEC. 6. When said board shall determine that any rate made by any company in this State is excessive or unreasonably higli, or that said rate is not adequate to the safety or soundness of the company granting the same, it is authorized to direct said company to publish and file a higher or a lower rate as shall be commensurate with the character of the risk, but in every case the rate shall be reasonable. The State Fire Rating Board shall have the power at its discretion to have prepared and to pubJish for the information of the public, specific schedules of fire insurance rates which shall by said board be deemed reasonable, covering all fire insurance risks in the State, or in any locality thereof, and to fix the fee to be paid for copies of the same furnished to any person desiring such copies. Said board shall also have the power to alter, amend or revise such published specific schedules of reasonable rates, and to publish notice of such alteration, amendment or revision; provided that nothing herein shall be construed to deny the right of any company to reduce its rates to conform with any lower rate established by said Board, apply. ing to the same character of risks; provided, that said board shall never make a higher rate than the schedule published by said companies.
SEC. 7. No fire insurance company shall engage or participate in the insurance of any property located in this State unless the schedule of rates under which such property is insured has been filed in accordance with the provisions of this Act; nor shall any fire insurance company knowingly write any insurance at a rate different than the rate named in its schedules, subject to the provisions of Section 6 hereof, or refund or remit in any manner or by any device any portion of the rates so established, or extend to any insured or other person any privileges, advantage, favor, inducement or concession except as is specified in such schedule.
SEC. 8. No fire insurance company or officer, agent or representative thereof, shall enter into any contract of insurance on any property located in this State, on which there has been no rate filed as provided for in this Act, unless such company shall within thirty days after entering into said contract file with said board in such form or forms as shall be by it prescribed, a statement truly setting forth the description of such property, the rate thereon, and such other information as said board shall require. Such statement shall conform to the schedule provided for in this Act, and when so filed shall constitute the local tariff rates of premium for said company.
Sec. 9. That all schedules and local tariffs filed in accordance with the provisions of this Act, shall be open to the inspection of the public, and each local agent shall have and exhibit to the public copies thereof relative to all risks upon which he is authorized to write insurance.
SEC. 10. No fire insurance company shall directly or indirectly by any special rate, tariff, rebate, drawback or other device, charge, demand, collect or receive from any person or persons a greater or less or different compensation for the insurance of any property located in this state than it charges, demands, collects or receives from any other person or persons for like insurance on risks of a like kind and hazard under similar circumstances and conditions in this State; and any fire insurance company violating any of the provisions of this Section shall be deemel guilty of unjust discrimination, which shall be unlawful.
Sec. 11. The Commissioner of Insurance and Banking, if he shall find that any insurance company or any officer, agent or representative thereof has violated any of the provisions of this Act, may at his discretion revoke the certificate of authority of such company, officer, agent or representative, but such revocation of any certificate shall in no manner affect the liability of such company, officer, agent or representative to the infliction of any other penalty provided by this Act, and provided that any action, decision or determination of the ('ommissioner of Insurance and Banking or of the State Fire Rating Board, shall be subject to review of the courts of this State, as herein provided.
Sec. 12. The State Fire Rating Board shall not make any regulations or order without giving all insurance companies concerned reasonable notice thereof and an opportunity to appear to be heard in respect to same, and if any insurance company or any other person or city or municipality which shall be interested in any such order shall be dissatisfied with any regulation, order or rate adopted by said board), such person or municipality or their representatives shall have the right within thirty days after the making of such regulation, order or rate to bring an action against said board in any district court of the State of Texas to have such regulation, order or rate vacated or modified, and shall set forth in the petition therein the particular ground or grounds of objection to any or all of them. In any such suit the issue shall be formed and the controversy tried and determined as in other civil cases; and the court may set aside, vacate or annul one or more or any part of any of the regulations, orders or rates adopted or fixed by said board which shall be found by the court to be unreasonable, unjust, excessive or inadequate to compensate the company writing insurance thereon for the risk assumed by it, without disturbing others. No injunction, interlocutory order or decree suspending or restraining directly or indirectly the enforcement of any order of said board shall be granted, provided, that the court may permit any company complaining of any order, regulation or rate made by said board to write insurance at any rates which
obtained prior to the making of such order, regulation or rate complained of, upon condition that the difference between the rate complained of and the rate at which it is permitted to write insurance shall be deposited with the Commissioner of Insurance and Banking, and upon the final determination of the suit shall be paid by him to the insurance company if the court shall find it entitled to the same, or to the holders of policies written by said company after the rate complained of is ordered, as the court may deem just and equitable. Whenever any action shall be brought on any insurance company under the provisions of this Section within said period of thirty days, no penalties or forfeitures shall attach or accrue on account of the failure of the plaintiff to comply with the order sought to be vacated or modified in such action until the final determination of the same.
Either party to any such action if dissatisfied with the judgment or decree of said court may appeal therefrom as in other civil cases. No action shall be brought in any court of the United States to set aside any order made by said board under the provisions of this Act until all of the remedies provided for herein shall have been exhausted by the party complaining. If any fire insurance company organized under the laws of this State or authorized to transact business in this State shall violate any of the provisions of this Section, the Commissioner of Insurance and Banking shall cancel its certificate of authority to transact business in this State.
SEC. 13. Any fire insurance company, director or officer thereof, or any agent or person acting for or employed by any such company, who alone, or in conjunction with any corporation, company or person, shall wilfully do or cause to be done, or shall wilfully suffer or permit to be done, any act, matter or thing prohibited or declared to be unlawful by this Act, or who shall wilfully omit or fail to do any act, matter or thing required to be done by this Act, or shall cause or wilfully suffer or permit any act, matter or thing described by this Act, not to be done, or shall be guilty of any wilful infraction of this Act, shall be deemed guilty of a misdemeanor and shall upon conviction thereof be punished by a fine not to exceed $100.00 for each offense, provided that if the offense for which any person shall be convicted, as aforesaid, shall be an unlawful discrimination, such person shall be punished by a fine not exceeding $100.00 or by imprisonment in the county jail for a term not exceeding ninety days, or by both such fine and imprisonment.
SEC. 14. No person shall be excused from giving testimony or producing evidence when legally called upon so to do at the trial of any other person charged with violating any of the provisions of this Act on the ground that it may incriminate him under the laws of this State, but no person shall be prosecuted or subjected to any penalty or forfeiture for or on account of any transaction, matter or thing concerning which he may so testify or produce evidence under the authority of this Act. except for perjury in so testifying.
SEC. 15. No regulation, order or rate made by the State Fire Rating Board, under the provisions of this Act, shall be binding upon any fire insurance company not organized under the laws of this State until such company shall have obtained a certificate of authority to transact business in this State after this Act takes effect, unless such company
shall file with said board a certified copy of a resolution, duly adopted by its board of directors, accepting and agreeing to be bound by the terms of this Act until the expiration of its certificate of authority in force at the time this Act shall take effect.
SEC. 16. The salaries of the members of said State Fire Rating Board and the compensation of the necessary clerical and other assistants employed by said board, and any necessary traveling or other expenses incurred by said board in carrying out the provisions of this Act, shall be paid by warrants drawn by the Comptroller upon the State Treasurer, upon the order of said board, approved by the Commissioner of Insurance and Banking, provided, that the total amount of all such salaries and expenses shall not exceed the sum of $15,000.00 during any one year after this Act takes effect.
Not later than March 15th after this Act shall take effect, and annually thereafter, it shall be the duty of the Commissioner of Insurance and Banking, for the purpose of reimbursing the State for the amount to be so expended, during the current year, in carrying out the provisions of this Act, to collect from each fire insurance company which transacted business in this State during the preceding calendar year or any portion thereof, the proportion of said sum of $15,000.00 which the gross premiums collected by such company during such year from persons or upon property located in this State bears to the aggregate amount of such gross premiums so collected during such year by all fire insurance companies transacting business in this State. Provided, that in computing such gross premium receipts there shall be deducted therefrom the amount paid out for re-insurance and for returned premiums on cancelled risks. If at the end of any year after this Act shall take effect it shall be found that the aggregate amount expended in carrying out the provisions of this Act during such year has been less than $15,000.00, the amount remaining unexpended shall be applied in reduction of the amount to be collected from said companies for the succeeding year.
The amount due under the provisions of this Section by each company shall be certified by the Commissioner of Insurance and Banking and he shall revoke the certificate of authority of any company which shall fail to pay the same within thirty days after the receipt of such certificate. Provideu, that the collections from fire insurance companies provided for in this Section shall not be made for any year during which any such company shall be liable under the laws of this State, to the payment of an occupation tax at a rate of not less than two and one-half per cent of the gross premiums received, less deductions for re-insurance and return premiums on cancelled risks.
Sec. 17. This Act shall not apply to mutual or profit-sharing fire insurance companies incorporated under the laws of this State, nor to purely co-operative inter-insurance and reciprocal exchanges carried on by the members thereof solely for the protection of their own property and not for profit.
Sec. 18. The fact that there is now no law in this State prohibiting unjust discriminations in the collection of fire insurance rates as between citizens of this State constitutes an emergency and an imperative public necessity requiring that the Constitutional rule requiring bills to be read