| (a) Membership. The association is created by the Act. Any insurer authorized to write and engaged in writing any insurance, the writing of which requires such insurer to become a member of the association pursuant to §3 of the Act, who becomes authorized to write and engages in writing such insurance after the effective date of the Act shall become a member of the association on the first day of January immediately following the date such insurer engaged in writing such insurance, and the determination of such insurer's participation in the association shall be made as of the date of such membership in the same manner as for all members of the association. Any member which ceases to be authorized to write or which ceases to engage in the writing of any insurance which would require such insurer to become a member of the association shall remain a member of the association until midnight of December 31 next following the date such insurer ceases to be authorized to write or ceases to write such insurance, and such insurer's participation in the association shall cease as of that time; provided, however, that each member shall participate in any financial deficit of the association for all calendar years subsequent to December 31, 1976, during which the insurer was a member of the association, whenever such deficit is determined. The member shall be charged or credited in due course with its proper share of all expenses or losses and any recoupment or reimbursement allocable to the member. In the event that a member is merged or consolidated with another insurer, the continuing insurer shall become a member of the association in place of the merged or consolidated member, provided that such member shall be deemed to have become a member of the association on the date the merged or consolidated member became a member and provided, further, that such member shall pay no initial expense fee. (b) Expense fees. (1) Initial expense fee. Each member shall pay to the association an initial expense fee of $100. All members of the association shall pay such fees on or before the date they become members of the association. (2) Annual expense fee. In addition to the initial expense fee, each member shall pay to the association an annual expense fee in an amount to be determined by the board of directors and approved by the commissioner. All members of the association shall pay such annual expense fee on or before the first of January for each year during which the association exists. (3) Remedy for failure to pay fees. If any member shall fail or refuse to pay either the initial expense fee or the annual expense fee after receipt of written notice by the association that such fee is due and payable, then such member shall be subject to the same remedies as provided in §5.2003(d)(4) of this chapter (relating to Property and Casualty Insurance) for the failure of such member to pay any assessment levied by the association. (4) Use of fees. All expense fees paid to the association shall be used in such manner as the board of directors may from time to time direct in accordance with this subchapter. (c) Meetings of members. (1) Notice of meetings. Written or printed notice stating the place, date, hour, subjects of the meeting, and the purpose or purposes for which the meeting is called, shall be delivered not less than 10 nor more than 50 days before the date of the meeting, either personally or by mail, by or at the direction of the chair of the board of directors, the secretary, or other person calling the meeting, to each member entitled to vote at such meeting. Public notice of meetings shall be given as required by the Government Code, Chapter 551. (2) Meetings. (A) Annual meeting. The annual meeting of the members shall be held not later than the 30th day of September of each year at an hour and place to be determined by the board of directors for the purpose of electing directors and for the transaction of such other business as may come before the meeting. If the election of directors is not held on the day designated for any annual meeting of the members, the board of directors shall cause the election to be held at a special meeting of the members as soon as may be convenient after the annual meeting. (B) Special meetings. The board of directors, the chair of the board of directors, or 20% of the members may call a special meeting of the members and designate any place as the place of the special meeting. (3) Quorum. Fifty members, represented by person or by proxy, shall constitute a quorum at a meeting of the members. If less than 50 members are represented at a meeting, a majority of the members represented may adjourn the meeting from time to time without further notice. At the next meeting after adjournment at which a quorum is present or represented any business may be transacted at the meeting as originally notified. The members represented at a duly organized meeting may continue to transact business until adjournment, notwithstanding the withdrawal of enough persons to leave less than a quorum. (4) Voting. (A) Each member shall be entitled to one vote at the annual meeting and each special meeting. (B) A member may vote by proxy executed in writing by the member. No proxy shall be valid after the next annual meeting after the date of its execution unless otherwise provided in the proxy. Each proxy shall be revocable. (C) Each member's vote may be voted by such officer, agent, or proxy as the bylaws of such member may authorize or, in the absence of such authorization, as such member may determine. (D) Voting on any question or in any election may be by voice vote or by show of hands unless the presiding officer shall order, or any member shall demand, that voting be by written ballot. (5) Rules. To the extent applicable, Robert's Rules of Order shall govern the conduct of and procedure at all meetings of the members. (d) Directors. (1) Selection. At each annual meeting of members or as otherwise provided in subsection (c)(2) of this section, the members shall elect five directors from among member companies for the categories set forth in paragraph (2)(B) and (C) of this subsection. Four directors shall be selected in the manner set forth in paragraph (2)(D)-(F) of this subsection. Directors take office on October 1 of each year and shall hold office until the next election of directors or until a successor has been selected and qualified. (2) Membership. (A) The number of the directors of the association shall be nine. (B) Three directors to be elected in accordance with paragraph (1) of this subsection shall be elected by the members and shall be separate members of the association representing each of the following: (i) a single representative from either the National Association of Independent Insurers or the Alliance of American Insurers, at the choice of the Property Casualty Insurers Association of America; (ii) American Insurance Association; and (iii) Insurance Council of Texas. (C) Two directors shall be elected by the members and shall be: (i) a member insurer organized under the laws of and domiciled in the State of Texas; and (ii) a member insurer that is not a member of those associations described in subparagraph (B) of this paragraph. (D) One director shall be a physician who is appointed by the Texas Medical Association or its successor. (E) One director shall be a representative of hospitals appointed by the Texas Hospital Association or its successor. (F) Two directors shall be members of the public to be appointed by the commissioner. (G) No director shall fill more than one seat on the board of directors, and no member affiliated by ownership, management, or control shall simultaneously occupy seats on the board of directors. No later than 60 days prior to the annual meeting, the board of directors shall select a nominating committee of three member companies. The three directors who shall represent the organizations set forth in subparagraph (B) of this paragraph shall be nominated by the nominating committee. The two directors described in subparagraph (C) of this paragraph shall be nominated by any member of the association by submitting the nominee's name to the nominating committee. In order to be eligible for selection to the board of directors by the members, a member must be nominated at least 30 days prior to the annual meeting at which such directors are selected. (3) Term of office. Unless removed in accordance with this subchapter, each director shall hold office until the next election of directors or until a successor has been selected and qualified. (4) Regular meetings. A regular meeting of the board of directors shall be held with notice as provided for in this subsection, immediately after and at the same place as the annual meeting of the members. The board of directors may provide, by resolution, the time and place for the holding of additional regular meetings with notice to the directors at least 10 days before each regular meeting as provided in this subsection. (5) Notice of regular or special meeting. Notice of any regular or special meeting shall be given at least 10 days prior to the meeting. The association shall provide notice by personal delivery, mail, electronic or other means to each director. If mailed, notice shall be deemed to be delivered when deposited in the United States mail, addressed with postage prepaid. If the notice is by other reasonable means, the association shall maintain a written record of the method of notification. Any director may waive notice of any meeting. The attendance of a director at a meeting shall constitute a waiver of notice of the meeting, except where a director attends a meeting for the express purpose of objection to the transaction of any business because the meeting is not lawfully called or convened. (6) Special meetings. Special meetings of the board of directors may be called by the chair of the board, or at the request of any two directors. The person or persons authorized to call special meetings of the board of directors may fix any place that is accessible to the public as the place for holding any special meeting of the board of directors called by them. (7) Statement of purpose of meeting required. The business to be transacted at, and the purpose of, any regular or special meeting of the board of directors shall be specified in the notice, or waiver of notice, of the meeting and in the notice required by the Government Code, Chapter 551. (8) Quorum. A majority of the directors shall constitute a quorum for the transaction of business at any meeting of the board of directors. Action taken by a majority of the directors present at a meeting at which a quorum is present shall be the act of the board of directors. If at any meeting of the board of directors there is less than a quorum present, a majority of those present may adjourn the meeting from time to time until a quorum is obtained, and no further notice need be given other than by announcement at the meeting which shall be adjourned. (9) Presumption of assent. A director of the association who is present at the meeting of the board of directors at which action on any matter is taken shall be presumed to have assented to the action taken unless the director's dissent is entered in the minutes of the meeting, or unless a written dissent to such action is filed with the person acting as secretary of the meeting before the adjournment. Such right to dissent shall not be available to a director who voted in favor of such action. (10) Compensation. By resolution of the board of directors, the directors and members of committees of the association may be paid their expenses, if any, of attendance at each meeting of the board of directors, or each meeting of a committee of the association. No other payment shall be made to directors other than that provided in this paragraph except that nothing in this subchapter shall be construed as preventing any director from receiving compensation for serving the association in any other capacity. (11) General powers. The board of directors shall manage the business and affairs of the association subject to the supervision and control, at all times, of the commissioner and the department as set forth in this subchapter and in the Act. Included among the powers of the board of directors, but not in limitation thereof, are the following: (A) to purchase or otherwise acquire for the association any property, rights, or privileges which the association is authorized to acquire; (B) to remove any officer summarily for cause, or without cause and, in their discretion, from time to time to dissolve the powers and duties of any officers and to confer the powers and duties upon any other person; (C) to appoint and remove or suspend such subordinate officers, agents, employees, or representatives as they may deem necessary and to determine their duties, and fix, and from time to time change, their salaries or remuneration, and to require security as and when they think fit; (D) to confer upon any officer of the association the power to appoint, remove, and suspend subordinate officers or employees; (E) to determine who shall be authorized on the association's behalf to make and sign bills, notes, acceptances, endorsements, checks, releases, receipts, contracts, and other instruments; (F) to delegate any of the powers of the board of directors in relation to the ordinary business of the association to any standing or special committee, or to any officers or agent (with power to subdelegate) upon such terms as they think fit; Cont'd... |
