COUNTY MUTUAL INSURANCE COMPANIES

Tex. INS Code ch. 912

in effect

Tex. INS Code § 912.001. DEFINITIONS.

In this chapter: (1) "Member" includes a policyholder or another person who is insured by a county mutual insurance company. (2) "Policy" includes a certificate or contract of insurance, certificate of membership, or other document through which insurance is effected or evidenced. Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003.

Tex. INS Code § 912.002. LIMITED EXEMPTION FROM INSURANCE LAWS; APPLICABILITY OF CERTAIN LAWS.

(a) A county mutual insurance company is exempt from the operation of all insurance laws of this state except laws that are made applicable by their specific terms or except as specifically provided by this chapter. (b) A county mutual insurance company is subject to: (1) Sections 38.001 , 401.051 , 401.052 , 401.054-401.062, 401.151 , 401.152 , 401.155 , 401.156 , 501.159 , 501.202 , 501.203 , 822.204 , 1806.001 , 1806.101 , 1806.103 (b), 1806.104-1806.107, 1953.051 (b), 2002.002 , and 2002.005 ; (2) Subchapter A , Chapter 86 ; (3) Subchapter A , Chapter 401 ; (4) the provisions of Subchapter B , Chapter 424 , other than Sections 424.052 , 424.072 , and 424.073 ; (5) Chapters 221 , 251 , 252 , 254 , 541 , and 2210 ; and (6) Articles 5.39 and 5.40. (c) Rate regulation for a residential fire and allied lines insurance policy written by a county mutual insurance company is subject to Chapter 2253 . On and after December 1, 2004, rate regulation for a personal automobile insurance policy and a residential fire and allied lines insurance policy written by a county mutual insurance company is subject to Article 5.13-2 and Chapter 2251 . A county mutual insurance company is subject to Chapter 2253 . The commissioner may adopt rules as necessary to implement this subsection. Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003. Amended by Acts 2003, 78th Leg., ch. 206, Sec. 21.40(a), (b), eff. June 11, 2003; Acts 2003, 78th Leg., ch. 209, Sec. 10, eff. Oct. 1, 2003.

Tex. INS Code § 912.003. FEES.

The department shall charge and collect a fee in the amount of $1 for the issuance of a county mutual insurer's certificate of authority. Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003.

Tex. INS Code § 912.004. FORMATION OF NEW COUNTY MUTUAL COMPANY PROHIBITED.

A new county mutual insurance company may not be formed under this chapter. Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003.

Tex. INS Code § 912.005. LIMITATION ON TRANSFER OF BUSINESS TO COUNTY MUTUAL INSURANCE COMPANY.

An insurer may not transfer more than 10 percent of the insurer's insurance policies to a county mutual insurance company without the prior approval of the commissioner. Added by Acts 2003, 78th Leg., ch. 206, Sec. 21.405, eff. June 11, 2003. SUBCHAPTER B. ORGANIZATION OF COUNTY MUTUAL INSURANCE COMPANY; DIRECTORS

Tex. INS Code § 912.051. APPLICABILITY OF TEXAS NON-PROFIT CORPORATION ACT.

(a) Except to the extent of any conflict with this code, the Texas Non-Profit Corporation Act (Article 1396-1.01 et seq., Vernon's Texas Civil Statutes) applies to a county 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 county mutual insurance companies. (b) On advance approval of the commissioner, a county mutual insurance company may pay dividends to its members. Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003.

Tex. INS Code § 912.052. ELIGIBILITY OF BOARD OF DIRECTORS; TERM.

(a) An individual is eligible to serve as a director of a county mutual insurance company if the individual is a policyholder who maintains insurance coverage in the amount of at least $1,000 written by the company on the individual's property. (b) Except as otherwise provided by the company's bylaws, 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.

Tex. INS Code § 912.053. GENERAL POWERS OF BOARD OF DIRECTORS.

The board of directors of a county mutual insurance company has the powers provided by the company's charter. Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003.

Tex. INS Code § 912.054. AUTHORITY TO BORROW MONEY.

(a) The board of directors of a county mutual insurance company 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.

Tex. INS Code § 912.055. CHARTER AND ARTICLES OF INCORPORATION.

The charter and articles of incorporation of a county mutual insurance company must state: (1) the name of the company, which must include the words "County Mutual Insurance Company"; (2) the location of the principal office of the company; and (3) the number of the directors, which must be at least five. Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003.

Tex. INS Code § 912.056. CREATION OF LOCAL CHAPTERS AND DISTRICTS.

(a) A county 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. (d) A company organized and operating under this chapter that, as of September 1, 2001, and continuously thereafter, appointed managing general agents, created districts, or organized local chapters to manage a portion of the company's business independent of all other business of the company may continue to operate in that manner and may appoint and contract with one or more managing general agents in accordance with this code only if the company: (1) cedes 85 percent or more of the company's direct and assumed risks to one or more reinsurers; and (2) has a private passenger automobile insurance business: (A) with a market share of not greater than five percent; or (B) that is predominantly nonstandard. (e) A company described by Subsection (d) shall file, for each managing general agent, district, or local chapter program, the rating information required by the commissioner by rule. Each managing general agent, district, or local chapter program shall be treated as a separate insurer for the purposes of Chapters 544 , 2251 , 2253 , and 2254 . (f) Notwithstanding any other provision of this code, a company operating under Subsection (d) that cedes 85 percent or more of the company's direct and assumed risks to one or more nonaffiliated reinsurers shall maintain unencumbered surplus, or guaranty fund and unencumbered surplus, equal to the greater of $2 million or five percent of the company's recoverable for reinsurance after taking full credit against the recoverable as otherwise permitted for: (1) premium payable to ceding insurers, net of any ceding commission due the company; (2) collateral held as required by Section 493.104 , letters of credit, and security trusts that secure the collection of the reinsurance; and (3) reinsurance through reinsurers whose financial strength is rated "A" or better by the A. M. Best Company, Incorporated, or another nationally recognized statistical rating organization acceptable to the commissioner. (g) The commissioner by rule shall adopt a transition period for insurance companies subject to Subsection (f) to meet the requirements of that subsection and for the pro rata elimination of any deficiencies in the amounts required under that subsection. The transition period adopted under this subsection must be for a period of not less than five years. Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003. Acts 2009, 81st Leg., R.S., Ch. 677 (H.B. 2449 ), Sec. 3, eff. September 1, 2009.

Tex. INS Code § 912.057. POLICYHOLDER MEETINGS.

(a) A county 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.

Tex. INS Code § 912.058. VOTING BY POLICYHOLDERS.

(a) Each policyholder of a county mutual insurance company is entitled to only one vote at a policyholders' meeting. (b) A policyholder may not vote by proxy unless the company's bylaws specifically authorize voting in that manner. Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003.

Tex. INS Code § 912.059. AMENDMENT TO BYLAWS.

(a) A majority of the members of a county mutual insurance company, either in person or by proxy when ratified by the board of directors, may amend the company's bylaws at a regular meeting or at a special meeting called for that purpose. (b) Notice of a regular or special meeting at which an amendment to the bylaws will be considered must be mailed or delivered personally to each member. (c) An amendment to the bylaws is not effective until approved by the commissioner as meeting the requirements of this chapter. Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003.

Tex. INS Code § 912.060. AUTHORITY TO PROHIBIT WAIVER OF BYLAWS.

A county mutual insurance company may provide in its bylaws that a local chapter or an officer or agent elected by the local chapter may not waive a provision of the bylaws. Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003.

Tex. INS Code § 912.061. APPLICATION FOR EXTENSION OF CHARTER; TERM.

(a) Before a county mutual insurance company's charter or extension of the charter expires, the company may apply to the department for an extension of the charter for a term of 50 years from the date the charter would otherwise expire. (b) The application for an extension must: (1) demonstrate that the application was authorized either by a two-thirds vote of the company's directors or by a majority vote at a policyholders' meeting; (2) state in full the charter to be extended; (3) state the period for which the charter is to be extended; (4) be signed and acknowledged by the president and secretary of the company; and (5) be accompanied by a fee of $50. (c) A company whose charter is extended retains the rights, privileges, and immunities granted a county mutual insurance company by this chapter. Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003. SUBCHAPTER C. AUTHORITY TO ENGAGE IN BUSINESS IN THIS STATE

Tex. INS Code § 912.101. OPERATION UNDER CERTIFICATE OF AUTHORITY.

A county mutual insurance company engages in the business of insurance under a certificate of authority issued by the department. Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003.

Tex. INS Code § 912.102. AUTHORITY TO ENGAGE IN BUSINESS.

A county mutual insurance company may engage in the business of insurance in accordance with this chapter and other applicable laws only if: (1) the company was formed before September 6, 1955, and was actively engaged in the business of insurance on that date; or (2) the company was formed under a permit to solicit insurance issued before September 6, 1955. Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003. SUBCHAPTER D. POLICIES AND COVERAGE

Tex. INS Code § 912.151. KINDS OF INSURANCE AUTHORIZED.

(a) A county mutual insurance company that qualifies to write casualty lines for statewide operation may write all lines of automobile insurance. The company may not assume a risk on any one hazard that is greater than five percent of its assets, unless the company promptly reinsures the excess amount of risk. (b) A county mutual insurance company may insure property against loss or damage by: (1) fire, lightning, gas explosion, theft, windstorm, and hail or for any combination of these hazards; or (2) any other hazard against which any other fire or windstorm insurance company operating in this state may write insurance on property described by Subsection (c). (c) Unless restricted by its charter, the company may write insurance against the hazards described by Subsection (b) on: (1) a rural or urban dwelling and attendant outhouses and yard buildings; (2) the contents, for home and personal use, of a rural or urban dwelling, an attendant outhouse, or a yard building, including a family vehicle, musical instrument, and library; (3) a barn or other farm, dairy, truck garden, hennery, or ranch building and any other improvement; (4) a vehicle, harness, implement, tool, or machinery of any description used on and about a farm, truck garden, dairy, hennery, or ranch; (5) fruit and products, other than growing crops, and any fowl, livestock, or domestic animals that are produced, raised, grown, kept, or used on a farm, truck garden, dairy, hennery, or ranch; (6) a church house, country school house, country lodge room, or country recreation hall, other than a road house or public dance hall; and (7) the contents of a church house, country school house, country lodge room, or country recreation hall. (d) An insurance policy written by a county mutual insurance company against loss or damage by windstorm 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). (e) The county mutual insurance company may impose appropriate limits of coverage and deductibles for coverage described by Subsection (d). Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003.

Tex. INS Code § 912.152. POLICY FORMS.

(a) A county mutual insurance company is subject to: (1) Sections 1952.051-1952.055; (2) Subchapter H , Chapter 1952 ; (3) Subchapter B , Chapter 2002 ; (4) Chapter 2301 ; and (5) Articles 5.06 and 5.35. (b) County mutual insurance companies shall file policy forms under Subchapter B , Chapter 2301 , or continue to use the standard policy forms and endorsements promulgated under former Articles 5.06 and 5.35 on notification to the commissioner in writing in the manner prescribed by those articles that those forms will continue to be used. Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003. Amended by Acts 2003, 78th Leg., ch. 206, Sec. 21.41, eff. June 11, 2003.

Tex. INS Code § 912.153. CONTRACT TERMS: INCORPORATION OF BYLAWS.

(a) A county 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.

Tex. INS Code § 912.154. AMOUNT OF INSURANCE UNDER MULTIPLE HAZARDS POLICY.

The amount of risk or insurance coverage in a policy that insures a risk against more than one hazard is the maximum loss the county mutual insurance company may sustain under the policy at any one time, regardless of the number of hazards against which the company insures. Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003.

Tex. INS Code § 912.155. REPAIR OR REPLACEMENT OF INSURED PROPERTY.

(a) The county mutual insurance 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. (b) This section does not apply to a company that meets the requirements of Section 912.308 (a)(3), but such a company is subject to Sections 883.154 , 883.155 , and 883.156 . Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003.

Tex. INS Code § 912.156. CONTESTING CLAIM FOR CERTAIN PURPOSES PROHIBITED.

(a) In this section, "full payment" means payment of the full amount of a loss actually sustained on the occurrence of the contingency against which the insurance coverage is obtained, not to exceed the maximum amount stated in the policy. (b) A county mutual insurance company may not contest a claim: (1) only for delay or a captious or inconsequential reason; or (2) to force a settlement for less than full payment. Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003.

Tex. INS Code § 912.157. DENIAL OF CLAIM: NOTICE REQUIRED.

(a) A county mutual insurance company shall notify a claimant of the company's intent to deny liability on a claim not later than the 60th day after the date the company receives due proofs that the claim will not be paid. (b) A company that does not notify a claimant as required by Subsection (a) is presumed as a matter of law to have accepted liability on the claim. Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003. SUBCHAPTER E. CHARGES, PREMIUMS, AND ASSESSMENTS

Tex. INS Code § 912.201. SCHEDULE OF CHARGES.

A county mutual insurance company shall file with the department a schedule of the amounts the company charges a policyholder or an applicant for a policy, regardless of the term the company uses to refer to those charges, including "rate," "policy fee," "inspection fee," "membership fee," or "initial charge." A county mutual insurance company shall file premium, expense, and loss experience data with the department in the manner prescribed by the commissioner. An insurer shall file the schedules and data required under this section according to rules promulgated by the commissioner. Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003. Amended by Acts 2003, 78th Leg., ch. 206, Sec. 21.42, eff. June 11, 2003.

Tex. INS Code § 912.202. PAYMENT OF PREMIUM OR ASSESSMENT.

(a) A county 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 $2 for each $100 of insurance coverage; and (3) state the time and manner of payment of a policyholder's contingent liability established under Subdivision (2). (b) As required by its bylaws, a county mutual insurance company shall establish and levy premiums and assessments, including the contingent liability of a policyholder, for all insurance written by the company. (c) A policyholder shall pay premiums and assessments as required by the company's bylaws. (d) 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. (e) Subsection (a) does not apply to a company that meets the requirements of Section 912.308 (a)(3), but such a company is subject to Sections 883.154 , 883.155 , and 883.156 . Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003.

Tex. INS Code § 912.203. NONPAYMENT OF PREMIUM OR ASSESSMENT: FILING OF ACTION.

(a) A county mutual insurance company may bring an action in the home county of the company against a policyholder who defaults on the payment of an assessment or premium. (b) The company is entitled to judgment against the policyholder for: (1) delinquent premiums or assessments; (2) foreclosure of the lien described by Section 912.202 ; and (3) the costs of an action, including a reasonable attorney's fee in the amount of at least $5. Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003.

Tex. INS Code § 912.204. POLICYHOLDER LIABILITY.

A policyholder is liable for the losses of a county mutual insurance company only as provided by Section 912.202 and the company's 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

Tex. INS Code § 912.251. LICENSING AND APPOINTMENT OF AGENTS.

An agent for a county mutual insurance company must be licensed and appointed as provided by Title 13. Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003. Amended by Acts 2003, 78th Leg., ch. 1276, Sec. 10A.224(a), eff. Sept. 1, 2003. SUBCHAPTER G. REGULATION OF COUNTY MUTUAL INSURANCE COMPANY; FINANCIAL REQUIREMENTS

Tex. INS Code § 912.301. REPORT REGARDING CONDITION OF COMPANY.

(a) The commissioner may, at any time the commissioner determines advisable, compel written reports from a county mutual insurance company regarding the company's condition. (b) The commissioner may require that the report be verified under oath by a responsible officer of the company. Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003.

Tex. INS Code § 912.302. ANNUAL STATEMENT FEE.

The department shall charge and the comptroller shall collect a fee of $20 for the filing of an annual statement by a county mutual insurance company. Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003.

Tex. INS Code § 912.303. BOOKS AND RECORDS.

(a) A county mutual insurance company shall maintain the company's books and records in a form and manner that accurately reflects the condition of the company or the facts essential to the company's faithful and effective operation. (b) The company shall use forms or systems that most effectively serve the purposes of this section. Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003.

Tex. INS Code § 912.304. REINSURANCE.

(a) A county mutual insurance company may reinsure any or all of the company's risks with another company against any hazard against which the county mutual insurance company is permitted to insure. (b) The county 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 county mutual insurance company may assume the reinsurance on the risks of the other company only if the other company reinsures the risks of the county mutual insurance company; and (2) the county mutual insurance 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 county 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 county mutual insurance company does not become a member or partner of the other company as a result of the reinsurance. (d) A county 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.

Tex. INS Code § 912.305. SECURITY DEPOSIT.

(a) A county mutual insurance company shall maintain with the comptroller through the department a deposit in cash or, subject to the commissioner's approval, convertible securities. The deposit must be equal to: (1) the largest amount assumed by the company on any one risk; or (2) on a demonstration of reinsurance acceptable to the commissioner, the largest amount retained by the company on any one risk after reinsurance. (b) The deposit is liable for the payment of all judgments against the company and is subject to garnishment after final judgment against the company. The company, on the commissioner's demand, must immediately replenish the deposit when the deposit is impounded or depleted. If the company does not immediately replenish the deposit, the company may be regarded as insolvent. (c) If a county mutual insurance company makes a statement, including a statement contained in an advertisement, letter, or literature, that the company deposited cash or securities as required by this section, the company must also state in full: (1) the purpose, exact amount, and character of the deposit; and (2) the conditions under which the deposit was made. Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003.

Tex. INS Code § 912.306. REQUIRED BONDS.

(a) A county mutual insurance company shall obtain a bond for: (1) the officer responsible for handling the funds of the company's members; and (2) all other office employees who may have access to the company's funds. (b) The bonds required under this section must: (1) be with a surety authorized by the department to engage in business in this state; (2) be made payable to the department for the use and benefit of the company's members; and (3) obligate the principal and surety to pay pecuniary losses that the company sustains through an act of fraud, dishonesty, forgery, theft, embezzlement, wrongful abstraction, or wilful misapplication, regardless of whether the act is committed by the officer or employee directly and alone, or in cooperation with another person. (c) A bond under this section must: (1) be in an amount that is at least the greater of $1,000 or the amount of cash assets on hand, but not more than $20,000, if the bond covers the officer; or (2) be in an amount established by the department that is at least $1,000 but not more than $5,000, if the bond covers office employees. (d) One or more persons may recover on a bond under this section until the bond is exhausted. Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003.

Tex. INS Code § 912.307. RESERVE REQUIREMENTS.

(a) A county mutual insurance company shall maintain unearned premium reserves as provided by Section 862.102 . (b) The company shall invest the unearned premium reserves and any other type of reserves authorized by the company's board of directors in the same type of securities in which the reserve funds of insurance companies engaged in the same kind of business are required to be invested by law. Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003.

Tex. INS Code § 912.308. AMOUNT AND INVESTMENT OF SURPLUS.

(a) A county mutual insurance company shall maintain an unencumbered surplus which may be invested only in items listed in Section 822.204 . The unencumbered surplus must be at least: (1) $25,000, if the company is organized to write insurance coverage locally in only the county of its domicile; (2) $50,000, if the company is organized to write insurance coverage in only the county of its domicile and any adjacent county; or (3) an amount equal to the aggregate of the minimum capital and minimum surplus required under Sections 822.054 , 822.202 , 822.210 , and 822.211 , for a fire insurance company if the county mutual insurance company is organized to write insurance coverage statewide. (b) Except as provided by Section 912.056 , a county mutual insurance company is subject to Subchapter B , Chapter 404 , and Sections 822.203 , 822.210 , and 822.212 . Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003. Acts 2009, 81st Leg., R.S., Ch. 677 (H.B. 2449 ), Sec. 2, eff. September 1, 2009.

Tex. INS Code § 912.309. POLICYHOLDER LOANS TO COMPANY.

(a) A policyholder may loan to a county mutual insurance company money as necessary: (1) for the company to engage in the company's business; or (2) to enable the company to comply with a requirement of this chapter, including the unencumbered surplus requirement under Section 912.308 . (b) Subject to the approval of the commissioner, the county mutual insurance company may repay a loan and agreed interest, at an annual rate not to exceed 10 percent, only from the surplus remaining after the company provides for the company's reserves, other liabilities, and required surplus. (c) A loan under this section or interest on a loan is not otherwise a liability or claim against the company or any of its assets. (d) A county mutual insurance company may not pay a commission, promotion expense, or other bonus in connection with a loan made to the company. (e) A county mutual insurance company shall report in its annual statement the amount of each loan made to the company. Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003.

Tex. INS Code § 912.310. CERTAIN COMPANIES EXEMPT.

(a) Chapter 196, Acts of the 53rd Legislature, Regular Session, 1953, and Chapter 117, Acts of the 54th Legislature, Regular Session, 1955, do not apply to a county mutual insurance company: (1) that was organized and operating as a county mutual fire insurance company on May 22, 1953; and (2) the business of which is devoted exclusively to the writing of industrial fire insurance policies covering dwellings, household goods and wearing apparel on a weekly, monthly, or quarterly basis on a continuous premium payment plan. (b) The exemption established by this section applies only so long as the company is engaged exclusively in the writing of industrial fire insurance policies described by Subsection (a). Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003. SUBCHAPTER O. GENERAL FINANCIAL REGULATION

Tex. INS Code § 912.701. HAZARDOUS FINANCIAL CONDITION, SUPERVISION, CONSERVATORSHIP, AND LIQUIDATION.

Subchapter A , Chapter 404 , and Chapters 441 and 443 apply to a county mutual insurance company engaged in the business of insurance in this state. Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003. SUBCHAPTER P. DISCIPLINARY ACTION AND PROCEDURES IN GENERAL

Tex. INS Code § 912.751. OFFICER OR DIRECTOR UNWORTHY OF TRUST: REMOVAL AND REVOCATION OF CERTIFICATE OF AUTHORITY.

(a) After notice and hearing, the commissioner shall order the removal of an officer or director of a county mutual insurance company holding a certificate of authority if the officer or director is found unworthy of the trust or confidence of the public. (b) If a county mutual insurance company does not remove an officer or director as required by an order issued under Subsection (a), the commissioner shall: (1) revoke the company's certificate of authority; and (2) treat the company as insolvent. Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003.

Tex. INS Code § 912.752. FRAUDULENT OPERATION OR IMPROPER CONTESTS: REVOCATION OF CERTIFICATE OF AUTHORITY.

After notice and hearing, the commissioner shall revoke the certificate of authority of a county mutual insurance company that is: (1) operating fraudulently; or (2) improperly contesting the company's claims. Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003.

Tex. INS Code § 912.753. TIME LIMIT TO APPEAL.

An individual or a county mutual insurance company may appeal an order or a ruling of the commissioner under this chapter not later than the 60th day after the date of the order or ruling, in accordance with Subchapter D , Chapter 36 . Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003. SUBCHAPTER Q. GENERAL CRIMINAL PENALTIES

Tex. INS Code § 912.801. VIOLATION OF CHAPTER; CRIMINAL PENALTY.

(a) Except as otherwise provided by this subchapter, a person, including a director, officer, agent, employee, attorney at law, or attorney in fact of a county mutual insurance company, commits an offense if the person violates this chapter. (b) An offense under this section is punishable by: (1) a fine of not more than $500; (2) confinement in jail for a term of not more than 180 days; or (3) both a fine and confinement as provided by Subdivisions (1) and (2). Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003.

Tex. INS Code § 912.802. CONVERSION; CRIMINAL PENALTY.

(a) A director, officer, agent, employee, attorney at law, or attorney in fact of a county mutual insurance company commits an offense if the person fraudulently takes or converts to the person's own use or secretes with the intent to take or convert to the person's own use, and with knowledge that the person is not entitled to receive it, any property or other thing of value of the company that is in the person's custody, control, or possession as a result of the person's office, directorship, agency, or employment or in any other manner. (b) A director, officer, agent, employee, attorney at law, or attorney in fact of a county mutual insurance company commits an offense if the person pays or delivers property or another thing of value described by Subsection (a) to another person knowing that the person is not entitled to receive it. (c) An offense under this section is punishable by imprisonment in the Texas Department of Criminal Justice for a term of not more than 10 years or less than 2 years. Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003. Acts 2009, 81st Leg., R.S., Ch. 87 (S.B. 1969 ), Sec. 25.126, eff. September 1, 2009.

Tex. INS Code § 912.803. UNLAWFUL DIVERSION OF FUNDS; CRIMINAL PENALTY.

(a) A director, officer, agent, employee, attorney at law, or attorney in fact of a county mutual insurance company commits an offense if the person wilfully borrows, withholds, or diverts from its purpose in any manner all or part of a special fund that: (1) belongs to or is under the control and management of the company; and (2) is designated by law for that purpose. (b) An offense under this section is punishable by imprisonment in the Texas Department of Criminal Justice for a term of not more than 10 years or less than 2 years. Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003. Acts 2009, 81st Leg., R.S., Ch. 87 (S.B. 1969 ), Sec. 25.127, eff. September 1, 2009.

Tex. INS Code § 912.804. FALSE AFFIDAVIT; CRIMINAL PENALTY.

(a) An officer, director, agent, employee, attorney at law, or attorney in fact of a county mutual insurance company commits an offense if the person wilfully makes a false affidavit in connection with the requirements of this chapter. (b) An offense under this section is punishable by: (1) a fine of not more than $500; or (2) confinement in jail or imprisonment in the Texas Department of Criminal Justice for a term of not more than two years. Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003. Acts 2009, 81st Leg., R.S., Ch. 87 (S.B. 1969 ), Sec. 25.128, eff. September 1, 2009.

Source: TX Statutes (Official Site)URL: https://statutes.capitol.texas.gov/Fetched: 6/29/2026