Enrolled Bill Summary

            House Bill 976 provides for the conversion of the Texas workers' compensation insurance facility into a stock property and casualty insurance company subject to the approval of the commissioner of insurance. The act specifies that the converted facility is considered a continuation of the facility with the same rights, debts, and standing in legal proceedings and that the rights and claims of the facility's policyholders and creditors must be preserved and unimpaired. It allows the converted facility to conduct audits of certain service companies, specifies that claims are covered by the Texas Property and Casualty Insurance Guaranty Act, and prohibits the converted facility from amending its bylaws in a way that adversely affects policyholders, insureds, beneficiaries, and employees, without the commissioner's prior consent. The act provides certain exemptions and options to the converted facility if it does not issue policies and authorizes the facility to make a final assessment on insurance carriers in the amount necessary to consummate the transactions contemplated by the conversion agreement.

            The act provides for the transfer of the facility to the Texas Property and Casualty Insurance Guaranty Association in the event the facility conversion does not take place by August 31, 1997. It establishes a system for allocating facility deficits or surpluses, authorizes the guaranty association to privatize the facility, and requires the association to submit a facility operation plan to the insurance commissioner. The act specifies that the facility rejected risk fund is not liable for a deficit incurred on a policy before January 1992. It addresses the immunity and liability in legal proceedings of entities involved in the facility transfer, provides that certain sections of the bill control over conflicting law, and includes a severability clause. In addition, the act requires the facility to deliver any evidence of possible criminal wrongdoing or fraud to the Travis County district attorney within 30 days after the facility's conversion or transfer. The provisions governing facility conversion take effect on the closing date of conversion. Provisions governing transfer of the facility to the guaranty association take effect September 1, 1997, and only if the facility conversion does not take effect.