Most people in Grand Prairie, Fort Worth, Bedford, Euless, Hurst, Grapevine, and other places in Tarrant County would not know exactly how credit policies work. Insurance companies have in the past, tried to say that these “credit policies” are not regulated by the Texas Department of Insurance.
An opinion issued in 2003, declares that these credit life and health policies are regulated by the Texas Department of Insurance. The case is, Service Lloyds Insurance Company v. Jose Montemayor, Commissioner of Insurance, and the Texas Department of Insurance. Here is some background.
The case was decided by the Austin Court of Appeals, and was an appeal from a judgment affirming an order of the Texas Department of Insurance (TDI).
Service Lloyds is a Lloyds plan insurer organized under the insurance code. As such, it was exempt from many of the regulatory requirements of other insurers. At issue here was Service Lloyds’ position that they were not subject to regulation by TDI and thus did not have to file credit policy insurance forms with TDI for approval.
TDI disagreed with the position taken by Service Lloyds and this lawsuit ensued. The State Office of Administrative Hearings heard the case originally where an Administrative Law Judge ruled against TDI and the subsequent appeals got the case to the Austin Court of Appeals.
TDI argued that because a credit accident and health insurance policy is manifestly a type of accident and health policy, Lloyds must file forms for approval with TDI. TDI looked to the Texas Insurance Code for justifying its position in the lawsuit. Conversely, Service Lloyds also looked to the Texas Insurance Code for its position that they were not subject to the regulations.
This case was decided in May of 2003. This is significant because the Texas Legislature passed new laws in June of 2003, in part, because of this lawsuit. What the legislature did was to codify and make clear what the law was suppose to be.
Part of this legislation is found in the Texas Insurance Code, Chapter 1153. Further significance is that this makes insures who deal with these “credit policies” subject to regulation and punishment for violation of the regulations.
As to this “filing of form” regulation, Section 1153.051, says, “An insurer shall file with the commissioner the form of each policy, certificate of insurance, notice of proposed insurance, application for insurance, endorsement, and rider to which this chapter applies that is delivered or issued for delivery in this state.
Beyond just the issue presented in this case, the Texas Insurance Codes dealing with this type of insurance were updated and made clear with 37 sections devoted to Credit Life Insurance and Credit Accident and Health Insurance.
These chapters along with other provisions in the Insurance Code give an experienced Insurance Law Attorney many tools to assist in holding insurance companies liable for wrongs they commit. Just as in other forms and types of insurance it is important to keep in mind – Insurance is a bet – Insurance companies do not like losing their bet. As a result they fight hard to keep from paying claims or reducing the amount of money they ultimately have to pay on a claim. It is good to know these tools are available to keep the insurance companies from taking advantage of their insureds and to punish them when their behavior gets out of line.
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