This section limits when certain association insurance plans may keep operating, requires disclosures on assessment notices and certificates, and directs the commissioner to treat underfunded associations as insolvent.
Sec. 887.207. EXCEPTION TO FULL PAYMENT REQUIREMENT: ASSESSMENT-AS-NEEDED ASSOCIATIONS. (a) Section 887.206 does not apply to a class organized before May 12, 1939, and operating on the postmortem or assessment-as-needed plan on that date. (b) An association with a postmortem or assessment-as-needed class to which Subsection (a) applies may continue to operate on the plan only if: (1) the class has a sufficient membership at the assessment rate charged to produce for the mortuary fund at least 50 percent of the maximum value of the largest certificate in the class; and (2) the association receives the amount required by Subdivision (1). (c) If the membership of a class is sufficient in number to pay more than 50 percent but less than 100 percent of the maximum value of the largest certificate in the class, an officer of the association shall print on each assessment notice the percentage of the maximum value of the certificate actually paid on the last claim for death benefits in the class. (d) If the amount realized on an assessment is not sufficient to pay 50 percent of the maximum amount of promised benefits as shown on the certificate, the commissioner shall treat the association as insolvent. (e) Any benefits paid by an association operating on a postmortem or assessment-as-needed basis are dependent on the amount realized from assessments on the membership. Each of the association's insurance certificates must state: (1) that any benefits paid are dependent on the amount realized from assessments on the membership; and (2) the certificate's maximum payment. (f) An association or a class in an association organized after May 12, 1939, may not operate on the postmortem or assessment-as-needed plan. Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003.