Enrolled Bill Summary

            Senate Bill 597 amends the Occupations Code to transfer the regulation of for-profit legal service contract companies from the Texas Department of Insurance (TDI) to the Texas Department of Licensing and Regulation (TDLR) and to exempt those companies from Texas insurance law, with certain exceptions. The bill establishes registration requirements for a legal service contract company and a tiered schedule of annual registration fees and provides that certain company information supplied to TDLR is a trade secret. The bill sets out financial security requirements to ensure the performance of a company's obligations to its legal service contract holders, and it authorizes the state to sue the company on behalf of a legal service contract holder who is injured by a violation committed by the company.

            The bill specifies the services that a legal service contract company may and may not perform, establishes qualifications and other requirements for a contracting attorney, and sets out recordkeeping criteria. It requires a company's legal service contract to contain certain information, and it requires a copy of the contract to be filed with the executive director before it is marketed, sold, or issued. The bill requires an insurer that provides prepaid legal service contracts to notify TDI of the transfer of the regulation of those contracts to TDLR, and it prohibits the insurer from issuing or renewing such a contract under the Insurance Code after March 1, 2004. It authorizes TDI and TDLR to enter into a memorandum of understanding for a transition plan to transfer regulation of legal service contracts from TDI to TDLR.