wortham construction legislative update november 2011

Legislative Update New Texas Construction Statutes in Texas

Anti-Indemnification Law (HB 2093)Certificates of Insurance (SB 425)

WORTHAMInsurance & Risk Management

Presented by Wortham Insurance & Risk Management

Construction Practice Group

www.worthaminsurance.com

November 2011

11/17/2011

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2011 Legislative UpdateAnti-Indemnity Bill (HB 2093)

Lee H. ShidlofskyInsurance CoverageShidlofsky Law Firm

Robert BassConstruction Law

Winstead Attorneys

Certificates of Insurance (SB 425)Mark Gaskamp

Managing DirectorWortham Insurance & Risk Management


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The Anti-Indemnity Act• An “Anti-Indemnity Act” is a law that prevents

one party from assuming the liability or negligence of another party

• Texas already had an Oilfield Anti-Indemnity Act and an Anti-Indemnity Act for Design Work…

• Texas now also has a Construction Anti-Indemnity Act.


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Indemnity Terminology• Broad Form Indemnity – An indemnitor assumes an unqualified

obligation to hold the indemnitee harmless from all liability regardless of which party was actually at fault, even as to the sole negligence of the indemnitee.

• Intermediate Form Indemnity – Indemnitor assumes all liabilities of the indemnitee relating to the subject matter of the agreement, except for the injury or damages caused by the indemnitee’s sole negligence. Typically, any amount of fault on the part of the indemnitor obligates the indemnitor to indemnify the indemnitee for the entire amount of damages.

• Limited Form Indemnity – Indemnitor indemnifies the indemnitee only to the extent of indemnitor’s own fault in contributing to the loss. Also referred to as comparative fault clauses.

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How we got here…• Competing interests

– Owners/GC’s want to push liability and cost of defense downstream and off their policies

– Subcontractor community (and their insurers) bearing disproportionate liability/cost for % responsibility

• Lobbying power:– Railroads, Lenders, Home Builders, Sureties,

Municipalities are exempt


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History• Approximately 41 states have some form of anti-

indemnity statute.• The passage of such statutes, including

prohibitions on additional insured status, has gained momentum in recent years.

• Prior session: AGC, TCA, and Civil Justice League entered into a mediated agreement (i.e., a compromise bill).

• This session: Bill passed only after being inserted into a stripped down CIP bill.


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When does HB 2093 take effect?

• January 1, 2012• Applies to original construction contracts with

owners entered into on or after the effective date.

• Applies to subcontracts, purchase orders and insurance policies related to such original construction contracts.

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What contracts does HB 2093 apply?

• Applies to “Construction Contracts”– Prime Contracts/Subcontracts/Agreements

• Made by:– Owners, Architects, Engineers, Contractors, Construction

Managers, Subcontractors, Suppliers, Material or Equipment Lessors

• For:– Design, Construction, Alteration, Renovation, Remodel,

Repair or Maintenance of» Buildings, Structures, or other improvements


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How does it apply? • CIP projects

– Must have at least 3 years of completed operations coverage

• Bans both Broad Form and Intermediate Form indemnity and defense provisions– No more Sole or contributory negligence

• Voids additional insured requirements or provisions in policies that would cover the same obligations– Current ISO AI forms may not comply


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Real Life Example• Subcontractor signs broad form indemnity

agreement with General Contractor. A claim is made due to faulty work of both parties.

• Before January 1, 2012• After January 1, 2012

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Who/ What is excluded from HB 2093?• Exclusions

– “Employee” personal injury claims• Includes all downstream employees (“agents or

subcontractors of any tier”)• Helps avoid “Action over” claims

– “Public works project of a Municipal” – Single family, townhouse, duplex, or “land

development directly related thereto”


Big Loophole: Does not affect… “A cause of action for breach of contract or warranty that exists independently of an indemnity obligation.”

Potential Loophole: May not apply to surplus lines policies (Specific reference to Title 10).

Potential Indemnity/AI Problems


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Impact of the Court System• How will courts treat non-complying clauses?

– Strike clause in entirety?– Void “to the extent” not in compliance?

• Out of state choice of law on Texas projects is prohibited [TBCC 272.001]

• Self Insured Retentions: can you obtain AI cover within the SIR?

• New Texas-specific AI Endorsements- New ISO Endorsements proposed October 2011

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What does this mean? − More Owner Controlled programs for bigger projects

− Push for Contractor Controlled programs on smaller projects

− Limited indemnity for construction defect claims

− Limited assumed defense under AI endorsements

− More cross claims between contractor defendants

− Higher legal defense costs for General Contractors

− Higher premiums for GC’s, lower premiums for Subs?


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Potential Solutions?• Use of OCP policies

– First party coverage– Only covers ongoing operations– A way to cover negligent supervision exposure

(vicarious liability)– Similar to 2004 edition CG 20 10– Cost factor (multiple layers)– Still have completed operations (defect) exposure


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How should you respond to HB 2093?• Steps to take…

– Review/revise contracts and supply agreements• Upstream/Downstream• Scour for miscellaneous indemnity clauses

– Safety– Use of Contractor’s equipment

• Include saving clause language• Split clauses, i.e., keep broad form for employee claims• Modify AI requirements and/or include savings clause

– Consult with your counsel and insurance advisors– Statute may not be waived by contract

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What about Certificates? SB 425• What is a COI?

A document providing insurance coverage verification at a given point in time

• Cannot amend coverage (TDI 541.051)• Problem:

COIs have evolved over the years into an interpretation of coverage


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EXAMPLE OF THE

CURRENT PROBLEM


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The “Solution”: SB 425• Effective January 1, 2012• Requires all COIs to be filed with TDI

-ACORD & ISO forms are automatically approved

• The COI cannot be altered or amended subject to Civil Penalty (Sec 1811.051)– No additional info in the description box– No addendums requiring additional coverage questions

• Any person requiring the issuance of a COI not approved by TDI is subject to Civil Penalty

• Statute currently being “interpreted” by TDI

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INSURED: THE CORRECT COMPANY

INSURER: VERY IMPORTANTContractual Indicate “AM Best A- VI or better”

EFFECTIVE DATES: Is it expired?

COVERAGES: THE CORRECT BOXES CHECKED

LIMITSAs prescribed in contract?

Exceptions?

DESCRIPTION: VERY IMPORTANTAdditional Insured - **Completed Operations Primary & Non-ContributoryWaiver of Subrogation

CERT HOLDER: The Correct Name

SB 425


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How should you respond to COI requests?

• Include list of endorsements• Include the actual endorsements • Wortham’s Response

– Develop a correspondence outlining the statute– Provide policy information as requested


Discussion & Questions Lee Shidlofsky

Partner, Shidlofsky Law Firm512.685.1400

[email protected]

Robert BassWinstead Attorneys

[email protected]

Mark GaskampManaging Director, Wortham

[email protected]

H.B. No. 2093 Anti-Indemnity Statute AN ACT relating to the operation and regulation of certain consolidated insurance programs. BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: SECTION 1. Title 2, Insurance Code, is amended by adding Subtitle C to read as follows: SUBTITLE C. PROGRAMS AFFECTING MULTIPLE LINES OF INSURANCE CHAPTER 151. CONSOLIDATED INSURANCE PROGRAMS SUBCHAPTER A. GENERAL PROVISIONS Sec. 151.001. DEFINITIONS. In this chapter:

(1) "Consolidated insurance program" means a program under which a principal provides general liability insurance coverage, workers' compensation insurance coverage, or both that are incorporated into an insurance program for a single construction project or multiple construction projects.

(2) "Construction project" means construction, remodeling, maintenance, or repair of improvements to real property. The term includes the immediate construction location and areas incidental and necessary to the work as defined in the construction contract documents. A construction project under this chapter does not include a single family house, townhouse, duplex, or land development directly related thereto.

(3) "Contractor" means any person who has entered into a construction contract or a professional services contract and is enrolled in the consolidated insurance program.

(4) "Claim" includes a loss or liability for a claim, damage, expense, or governmentally imposed fine, penalty, administrative action, or other action.

(5) "Construction contract" means a contract, subcontract, or agreement, or a performance bond assuring the performance of any of the foregoing, entered into or made by an owner, architect, engineer, contractor, construction manager, subcontractor, supplier, or material or equipment lessor for the design, construction, alteration, renovation, remodeling, repair, or maintenance of, or for the furnishing of material or equipment

for, a building, structure, appurtenance, or other improvement to or on public or private real property, including moving, demolition, and excavation connected with the real property. The term includes an agreement to which an architect, engineer, or contractor and an owner's lender are parties regarding an assignment of the construction contract or other modifications thereto.

(6) "Indemnitor" means a party to a construction contract that is required to provide indemnification or additional insured status to another party to the construction contract or to a third party.

(7) "Insurer" has the meaning assigned by Section 560.001. (8) "Principal" means the person who procures the insurance policy under a consolidated insurance

program.

Sec. 151.002. RULES. The commissioner shall adopt rules as necessary to implement and enforce Subchapter B. [Sections 151.003-151.050 reserved for expansion] SUBCHAPTER B. GENERAL REQUIREMENTS Sec. 151.051. DURATION OF GENERAL LIABILITY COVERAGE. A consolidated insurance program that provides general liability insurance coverage must provide completed operations insurance coverage for a policy period of not less than three years. [Sections 151.052-151.100 reserved for expansion] SUBCHAPTER C. REQUIREMENTS RELATED TO INDEMNIFICATION Sec. 151.101. APPLICABILITY.

(a) This subchapter applies to a construction contract for a construction project for which an indemnitor is provided or procures insurance subject to:

(1) this chapter; or (2) Title 10.

(b) Subsection (a) applies regardless of whether the insurance is provided or procured before or after execution of the contract.

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Sec. 151.102. AGREEMENT VOID AND UNENFORCEABLE. Except as provided by Section 151.103, a provision in a construction contract, or in an agreement collateral to or affecting a construction contract, is void and unenforceable as against public policy to the extent that it requires an indemnitor to indemnify, hold harmless, or defend a party, including a third party, against a claim caused by the negligence or fault, the breach or violation of a statute, ordinance, governmental regulation, standard, or rule, or the breach of contract of the indemnitee, its agent or employee, or any third party under the control or supervision of the indemnitee, other than the indemnitor or its agent, employee, or subcontractor of any tier. Sec. 151.103. EXCEPTION FOR EMPLOYEE CLAIM. Section 151.102 does not apply to a provision in a construction contract that requires a person to indemnify, hold harmless, or defend another party to the construction contract or a third party against a claim for the bodily injury or death of an employee of the indemnitor, its agent, or its subcontractor of any tier. Sec. 151.104. UNENFORCEABLE ADDITIONAL INSURANCE PROVISION.

(a) Except as provided by Subsection (b), a provision in a construction contract that requires the purchase of additional insured coverage, or any coverage endorsement, or provision within an insurance policy providing additional insured coverage, is void and unenforceable to the extent that it requires or provides coverage the scope of which is prohibited under this subchapter for an agreement to indemnify, hold harmless, or defend. (b) This section does not apply to a provision in an insurance policy, or an endorsement to an insurance policy, issued under a consolidated insurance program to the extent that the provision or endorsement lists, adds, or deletes named insureds to the policy.

Sec. 151.105. EXCLUSIONS. This subchapter does not affect:

(1) an insurance policy, including a policy issued under an owner-controlled or owner-sponsored consolidated insurance program or a contractor-controlled or contractor-sponsored consolidated insurance program, except as provided by Section 151.104;

(2) a cause of action for breach of contract or warranty that exists independently of an indemnity obligation, including an indemnity obligation in a construction contract under a construction project for which insurance is provided under a consolidated insurance program;

(3) indemnity provisions contained in loan and financing documents, other than construction contracts to which the contractor and owner's lender are parties as provided under Section 151.001(5);

(4) general agreements of indemnity required by sureties as a condition of execution of bonds for construction contracts;

(5) the benefits and protections under the workers' compensation laws of this state; (6) the benefits or protections under the governmental immunity laws of this state; (7) agreements subject to Chapter 127, Civil Practice and Remedies Code; (8) a license agreement between a railroad company and a person that permits the person to enter the

railroad company's property as an accommodation to the person for work under a construction contract that does not primarily benefit the railroad company;

(9) an indemnity provision pertaining to a claim based upon copyright infringement; (10) an indemnity provision in a construction contract, or in an agreement collateral to or affecting a

construction contract, pertaining to: (A) a single family house, townhouse, duplex, or land development directly related thereto; or (B) a public works project of a municipality; or

(11) a joint defense agreement entered into after a claim is made. [Sections 151.106-151.150 reserved for expansion]

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SUBCHAPTER D. NONWAIVER

Sec. 151.151. NONWAIVER. A provision of this chapter may not be waived by contract or otherwise.

SECTION 2. Section 2252.902, Government Code, is repealed. SECTION 3. (a) Chapter 151, Insurance Code, as added by this Act, applies only to a new or renewed consolidated insurance program for a construction project that begins on or after January 1, 2012. A consolidated insurance program for a construction project that begins before January 1, 2012, is governed by the law as it existed immediately before the effective date of this Act, and that law is continued in effect for that purpose.

(b) The changes in law made by this Act apply only to an original construction contract with an owner of an improvement or contemplated improvement that is entered into on or after the effective date of this Act. If an original construction contract with an owner of an improvement or contemplated improvement is entered into on or after the effective date of this Act, the changes in law made by this Act apply to a related subcontract, purchase order contract, personal property lease agreement, and insurance policy. If an original construction contract with an owner of an improvement or contemplated improvement is entered into before the effective date of this Act, that original construction contract and a related subcontract, purchase order contract, personal property lease agreement, and insurance policy are governed by the law in effect immediately before the effective date of this Act, and that law is continued in effect for that purpose.

SECTION 4. This Act takes effect January 1, 2012.

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S.B. No. 425 Certificates of Insurance AN ACT relating to property and casualty certificates of insurance and approval of property and casualty certificate of insurance forms by the Texas Department of Insurance; providing penalties. BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: SECTION 1. Subtitle A, Title 10, Insurance Code, is amended by adding Chapter 1811 to read as follows: CHAPTER 1811. CERTIFICATES OF PROPERTY AND CASUALTY INSURANCE SUBCHAPTER A. GENERAL PROVISIONS Sec. 1811.001. DEFINITIONS. In this chapter:

(1) "Agent" means a person required to hold a license as a property and casualty agent or surplus lines agent.

(2) "Certificate holder" means a person, other than a policyholder: (A) who is designated on a certificate of insurance as a certificate holder; or (B) to whom a certificate of insurance has been issued by an insurer or agent at the

request of the policyholder. (3) "Certificate of insurance" means a document, instrument, or record, including an electronic

record, no matter how titled or described, that is executed by an insurer or agent and issued to a third person not a party to the subject insurance contract, as a statement or summary of property or casualty insurance coverage. The term does not include an insurance binder or policy form.

(4) "Electronic record" has the meaning assigned by Section 322.002, Business & Commerce Code.

(5) "Insurance" means an insurance contract for property or casualty insurance. (6) "Insurer" means a company or insurance carrier that is engaged in the business of making

property or casualty insurance contracts. The term includes: (A) a stock fire or casualty insurance company; (B) a mutual fire or casualty insurance company; (C) a Mexican casualty insurance company; (D) a Lloyd's plan; (E) a reciprocal or interinsurance exchange; (F) a county mutual insurance company; (G) a farm mutual insurance company; (H) a risk retention group; (I) the Medical Liability Insurance Joint Underwriting Association under Chapter 2203; (J) the Texas Windstorm Insurance Association under Chapter 2210; (K) the FAIR Plan Association under Chapter 2211; (L) an eligible surplus lines insurer; and (M) any other insurer authorized to write property or casualty insurance in this state. (7) "Lender" has the meaning assigned by Section 549.001. (8) "Person" means: (A) an individual; or (B) a partnership, corporation, limited liability company, association, trust, or other legal

entity, including an insurer or a political subdivision or agency of this state. (9) "Policyholder" means a person who has contracted with a property or casualty insurer for

insurance coverage. (10) "Record" has the meaning assigned by Section 322.002, Business & Commerce Code.

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Sec. 1811.002. APPLICABILITY.

(a) This chapter applies to a certificate holder, policyholder, insurer, or agent with regard to a certificate of insurance issued on property or casualty operations or a risk located in this state, regardless of where the certificate holder, policyholder, insurer, or agent is located.

(b) This chapter may not be construed to apply to: (1) a statement, summary, or evidence of property insurance required by a lender in a lending transaction involving:

(A) a mortgage; (B) a lien; (C) a deed of trust; or (D) any other security interest in real or personal property as security for a loan; (2) a certificate issued under: (A) a group or individual policy for: (i) life insurance; (ii) credit insurance; (iii) accident and health insurance; (iv) long-term care benefit insurance; or (v) Medicare supplement insurance; or (B) an annuity contract; or (3) standard proof of motor vehicle liability insurance under Section 601.081,Transportation Code. Sec. 1811.003. RULES. The commissioner may adopt rules as necessary or proper to accomplish the purposes of this chapter. Sec. 1811.004. FILING FEE.

(a) The department may collect a fee in an amount determined by the commissioner for the filing of a new or amended certificate of insurance form under this chapter.

(b) The fee may not exceed $100. (c) A fee collected under this section shall be deposited to the credit of the Texas Department of

Insurance operating account. [Sections 1811.005-1811.050 reserved for expansion] SUBCHAPTER B. PROHIBITED ACTS AND PRACTICES Sec. 1811.051. ALTERING, AMENDING, OR EXTENDING THE TERMS OF AN INSURANCE POLICY; CONTRACTUAL RIGHTS OF CERTIFICATE HOLDER.

(a) A property or casualty insurer or agent may not issue a certificate of insurance or any other type of document purporting to be a certificate of insurance if the certificate or document alters, amends, or extends the coverage or terms and conditions provided by the insurance policy referenced on the certificate or document. (b) A certificate of insurance or any other type of document may not convey a contractual right to a certificate holder.

Sec. 1811.052. USE OF APPROVED CERTIFICATE OF INSURANCE FORMS.

(a) An insurer or an agent may not issue a certificate of insurance unless the form of the certificate:

(1) has been filed with and approved by the department under Section 1811.101; or (2) is a standard form deemed approved by the department under Section 1811.103. (b) A person may not execute, issue, or require the issuance of a certificate of insurance for

risks located in this state, unless the certificate of insurance form has been filed with and approved by the department.

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Sec. 1811.053. ALTERATION OR MODIFICATION OF APPROVED CERTIFICATE OF INSURANCE FORMS. A person may not alter or modify a certificate of insurance form approved under Section 1811.101 unless the alteration or modification is approved by the department. Sec. 1811.054. ISSUANCE OF FALSE OR MISLEADING CERTIFICATE OF INSURANCE. A person may not require the issuance of a certificate of insurance from an insurer, agent, or policyholder that contains any false or misleading information concerning the policy of insurance to which the certificate refers. Sec. 1811.055. REQUEST FOR DOCUMENTS IN LIEU OF CERTIFICATE OF INSURANCE. A person may not require an agent or insurer, either in addition to or in lieu of a certificate of insurance, to issue any other document or correspondence, instrument, or record, including an electronic record, that is inconsistent with this chapter. Sec. 1811.056. USE OF DISAPPROVED CERTIFICATE OF INSURANCE FORMS. A person who receives written notice under Section 1811.102 that a certificate of insurance form filed under this chapter has been disapproved by the commissioner shall immediately stop using the form. [Sections 1811.057-1811.100 reserved for expansion] SUBCHAPTER C. CERTIFICATE OF INSURANCE FORMS Sec. 1811.101. FILING AND APPROVAL OF FORMS.

(a) Except as provided by Subsection (b), an insurer or agent may not deliver or issue for delivery in this state a certificate of insurance unless the certificate's form:

(1) has been filed with and approved by the commissioner; and (2) contains the phrase "for information purposes only" or similar language. (b) If a certificate of insurance form does not contain the language required by Subsection (a)(2),

the commissioner may approve the form if the form states: (1) that the certificate of insurance does not confer any rights or obligations other than the

rights and obligations conveyed by the policy referenced on the form; and (2) that the terms of the policy control over the terms of the certificate of insurance. (c) A filed form is approved at the expiration of 60 days after the date the form is filed unless the

commissioner by order approves or disapproves the form during the 60-day period beginning the date the form is filed. The commissioner's approval of a filed form constitutes a waiver of any unexpired portion of the 60-day period.

(d) The commissioner may extend by not more than 10 days the 60-day period described by Subsection (c) during which the commissioner may approve or disapprove a form filed by an insurer or agent. The commissioner shall notify the insurer or agent of the extension before the expiration of the 60-day period.

(e) A filed form for which an extension has been granted under Subsection (d) is considered approved at the expiration of the extension period described by that subsection absent an earlier approval or disapproval of the form.

(f) A person may not use a form unless the form has been filed with and approved by the commissioner.

Sec. 1811.102. DISAPPROVAL OF FORMS; WITHDRAWAL OF APPROVAL.

(a) The commissioner shall disapprove a form filed under Section 1811.101 or withdraw approval of a form if the form:

(1) contains a provision or has a title or heading that is misleading, is deceptive, or violates public policy;

(2) violates any state law, including a rule adopted under this code; (3) requires an agent to provide certification of insurance coverage that is not available in

the line or type of insurance coverage referenced on the form; or (4) directly or indirectly requires the commissioner to make a coverage determination under

a policy of insurance or insurance transaction.

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(b) The commissioner may not disapprove a form filed under Section 1811.101 or withdraw approval of a form based solely on the fact that the form contains language described by Section 1811.101(b).

(c) An order issued by the commissioner disapproving a form, or a notice of the commissioner's intention to withdraw approval of a form, must state the grounds for the disapproval or withdrawal of approval in sufficient detail to reasonably inform the person filing the form of those grounds and the changes to the form necessary to obtain approval.

(d) An order disapproving a form or withdrawing approval of a form takes effect on the date prescribed by the commissioner in the order. An order withdrawing approval of a form may not become effective until the 30th day after the date of the order.

Sec. 1811.103. STANDARD CERTIFICATE OF INSURANCE FORMS. A standard certificate of insurance form promulgated by the Association for Cooperative Operations Research and Development, the American Association of Insurance Services, or the Insurance Services Office (ISO) is deemed approved on the date the form is filed with the department. Notwithstanding this section, the commissioner may withdraw approval of a standard form under Section 1811.102. Sec. 1811.104. PUBLIC INSPECTION OF INFORMATION. A certificate of insurance form and any supporting information filed with the department under this subchapter is open to public inspection as of the date of the filing. [Sections 1811.105-1811.150 reserved for expansion] SUBCHAPTER D. EFFECT OF APPROVAL OF CERTIFICATE OF INSURANCE FORM Sec. 1811.151. CONFIRMATION OF POLICY ISSUANCE. A certificate of insurance form that has been approved by the commissioner and properly executed and issued by a property and casualty insurer or an agent constitutes a confirmation that the referenced insurance policy has been issued or that coverage has been bound. This section applies regardless of whether the face of the certificate includes the phrase "for information purposes only" or similar language. Sec. 1811.152. CERTIFICATE OF INSURANCE NOT POLICY OF INSURANCE. A certificate of insurance is not a policy of insurance and does not amend, extend, or alter the coverage afforded by the referenced insurance policy. Sec. 1811.153. RIGHTS CONFERRED BY CERTIFICATE OF INSURANCE. A certificate of insurance shall not confer to a certificate holder new or additional rights beyond what the referenced policy or any executed endorsement of insurance provides. Sec. 1811.154. REFERENCE TO OTHER CONTRACTS. A certificate of insurance may not contain a reference to a legal or insurance requirement contained in a contract other than the underlying contract of insurance, including a contract for construction or services. Sec. 1811.155. NOTICE.

(a) A person may have a legal right to notice of cancellation, nonrenewal, or material change or any similar notice concerning a policy of insurance only if:

(1) the person is named within the policy or an endorsement to the policy; and (2) the policy or endorsement or a law, including a rule, of this state requires notice to be

provided. (b) A certificate of insurance may not alter the terms and conditions of the notice required by a

policy of insurance or the law of this state. Sec. 1811.156. CERTIFICATE OF INSURANCE ISSUED IN VIOLATION OF CHAPTER. A certificate of insurance that is executed, issued, or required and that is in violation of this chapter is void and has no effect. [Sections 1811.157-1811.200 reserved for expansion]

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SUBCHAPTER E. ENFORCEMENT AND REMEDIES Sec. 1811.201. POWERS OF COMMISSIONER.

(a) If the commissioner has reason to believe that an insurer or agent has violated or is threatening to violate this chapter or a rule adopted under this chapter, the commissioner may:

(1) issue a cease and desist order; (2) seek an injunction under Section 1811.203; (3) request that the attorney general recover a civil penalty under Section 1811.203; (4) impose sanctions on the insurer or agent as provided by Chapter 82; or (5) take any combination of those actions. (b) This section does not prevent or limit any action by or remedy available to the commissioner

under applicable law. Sec. 1811.202. HEARING; NOTICE.

(a) The commissioner may hold a hearing on whether to issue a cease and desist order under Section 1811.201 if the commissioner has reason to believe that:

(1) an insurer or agent has violated or is threatening to violate this chapter or a rule adopted under this chapter; or

(2) an insurer or agent has engaged in or is threatening to engage in an unfair act related to a certificate of insurance.

(b) The commissioner shall serve on the insurer or agent a statement of charges and a notice of hearing in the form provided by Section 2001.052, Government Code.

(c) A hearing under this section is a contested case under Chapter 2001, Government Code. Sec. 1811.203. CIVIL PENALTY; INJUNCTION.

(a) A person, including an insurer or agent, who wilfully violates this chapter is subject to a civil penalty of not more than $1,000 for each violation.

(b) The commissioner may request that the attorney general institute a civil suit in a district court in Travis County for injunctive relief to restrain a person, including an insurer or agent, from continuing a violation or threat of violation of Subchapter B. On application for injunctive relief and a finding that a person, including an insurer or agent, is violating or threatening to violate Subchapter B, the district court shall grant the injunctive relief and issue an injunction without bond.

(c) On request by the commissioner, the attorney general may institute and conduct a civil suit in the name of the state for injunctive relief, to recover a civil penalty, or for both injunctive relief and a civil penalty, as authorized under this subchapter.

Sec. 1811.204. INVESTIGATION OF COMPLAINTS.

(a) The commissioner may: (1) investigate a complaint or allegation of specific violations by a person, including an

insurer or agent, who has allegedly engaged in an act or practice prohibited by Subchapter B; and

(2) enforce the provisions of this chapter. (b) If the commissioner has reason to believe that a person, including an insurer or agent, is

performing an act in violation of Subchapter B, the person shall immediately provide to the commissioner, on written request of the commissioner, information relating to that act.

SECTION 2. The changes in law made by this Act apply only to a certificate of insurance issued on or after January 1, 2012. A certificate of insurance issued before January 1, 2012, is governed by the law in effect immediately before the effective date of this Act, and that law is continued in effect for that purpose. SECTION 3. This Act takes effect September 1, 2011.

wortham construction legislative update november 2011

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