Texas Insurance Code 1806.105 – Profit Sharing Authorized; Certain Prohibitions
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(a) This subchapter does not prohibit an insurer from sharing earned profits with the insurer’s policyholders in accordance with a profit sharing agreement contained in the policy, provided that any profit sharing under the policy with those insureds must be uniform among the insureds and may consist only of the equitable distribution of earnings among the insureds in accordance with the terms of the policy.
(b) An insurer may not:
(1) discriminate in the distribution of profits among insureds of the same class;
(2) distribute the profit to an insured before the expiration of the policy; or
(3) establish a class of insureds for the distribution of profits, except on the commissioner’s approval.
Terms Used In Texas Insurance Code 1806.105
- Equitable: Pertaining to civil suits in "equity" rather than in "law." In English legal history, the courts of "law" could order the payment of damages and could afford no other remedy. See damages. A separate court of "equity" could order someone to do something or to cease to do something. See, e.g., injunction. In American jurisprudence, the federal courts have both legal and equitable power, but the distinction is still an important one. For example, a trial by jury is normally available in "law" cases but not in "equity" cases. Source: U.S. Courts
- in writing: includes any representation of words, letters, or figures, whether by writing, printing, or other means. See Texas Government Code 312.011
(c) A distribution of profits or dividends to an insured may not take effect or be distributed until:
(1) the insurer has adequate reserves, as computed on the same basis for all classes of insurers to which this subchapter applies; and
(2) if the policyholder dividend amount exceeds 10 percent of surplus, the commissioner approves the distribution.
(d) The insurer must notify the commissioner in writing of each distribution if the insurer’s policyholder dividend amount is not greater than 10 percent of surplus.