1-1 By: Dear (Senate Sponsor - Harris of Dallas) H.B. No. 1568
1-2 (In the Senate - Received from the House May 3, 1993;
1-3 May 4, 1993, read first time and referred to Committee on Economic
1-4 Development; May 24, 1993, reported favorably, as amended, by the
1-5 following vote: Yeas 9, Nays 0; May 24, 1993, sent to printer.)
1-6 COMMITTEE VOTE
1-7 Yea Nay PNV Absent
1-8 Parker x
1-9 Lucio x
1-10 Ellis x
1-11 Haley x
1-12 Harris of Dallas x
1-13 Harris of Tarrant x
1-14 Leedom x
1-15 Madla x
1-16 Rosson x
1-17 Shapiro x
1-18 Wentworth x
1-19 COMMITTEE AMENDMENT NO. 1 By: Harris of Dallas
1-20 Amend House Bill 1568 by striking all below the Enacting Clause,
1-21 and inserting in lieu thereof the following:
1-22 Section 1. Amend Article 5.13-1(a), Texas Insurance Code, to
1-23 read as follows:
1-24 (a) "Every insurer governed by Subchapter B of Chapter 5 of
1-25 the Insurance Code, as amended, and every life, health, and
1-26 accident insurer governed by Chapter 3 of the Insurance Code, as
1-27 amended, is authorized to issue prepaid legal services contracts.
1-28 Every such insurer or rating organization authorized under Article
1-29 5.16 of the Insurance Code shall file with the State Board of
1-30 Insurance all rules and forms applicable to prepaid legal service
1-31 contracts in a manner to be established by the State Board of
1-32 Insurance. <All rates, rating plans, and charges shall be
1-33 established in accordance with actuarial principles for various
1-34 categories of insureds. Rates, rating plans, and charges shall not
1-35 be excessive, inadequate, unfairly discriminatory, and the benefits
1-36 shall be reasonable with respect to the rates charged.>
1-37 Certification, by a qualified actuary, to the appropriateness of
1-38 the charges, rates, or rating plans, based upon reasonable
1-39 assumptions, shall accompany the filing along with adequate
1-40 supporting information. To provide for the actuarial soundness of
1-41 the prepaid legal service contracts issued under this Code, the
1-42 State Board of Insurance may require that prepaid legal service
1-43 contracts, other than prepaid legal service contracts that provide
1-44 only consultation and advice on simple legal matters, either alone
1-45 or in combination with a referral service and have the promise of
1-46 fee discounts for other matters, have rates that are not inadequate
1-47 to reasonably provide the benefits under the prepaid legal service
1-48 contracts. The State Board of Insurance shall have no authority or
1-49 power to determine, fix, prescribe, set or promulgate maximum rates
1-50 or maximum amounts of premium to be charged for any prepaid legal
1-51 service contracts, agreements, plans or policies issued under this
1-52 Chapter or Chapter 23 of this Code."
1-53 Section 2. Amend Article 5.13-1(b) Texas Insurance Code, to
1-54 read as follows:
1-55 (b) "The State Board of Insurance shall, within a reasonable
1-56 period, approve any form if the requirements of this section are
1-57 met. It shall be unlawful to issue such forms until approved or to
1-58 use such schedules of charges, rates, or rating plans until filed.
1-59 <and approved.> If the State Board of Insurance has good cause to
1-60 believe such rates and rating plans do not comply with the
1-61 standards of this article, it shall give notice in writing to every
1-62 insurer or rating organization which filed such rates or rating
1-63 plans, stating therein in what manner and to what extent such
1-64 noncompliance is alleged to exist and specifying therein a
1-65 reasonable time, not less than 30 days thereafter, in which such
1-66 noncompliance may be corrected. If the board has not acted on any
1-67 form, rate, rating plan, or charges within 30 days after the filing
1-68 of same, they shall be deemed approved. The board may require the
2-1 submission of whatever relevant information is deemed necessary in
2-2 determining whether to approve or disapprove a filing made pursuant
2-3 to this section."
2-4 Section 3. Amend Article 5.13-1(f), Texas Insurance Code, to
2-5 read as follows:
2-6 "Except for the limitations expressed herein in paragraph (a)
2-7 above, nothing in this Act shall be construed as compelling the
2-8 State Board of Insurance to establish standard or absolute rates
2-9 and the board is specifically authorized, in its discretion, to
2-10 approve different rates for different insurers for the same risk or
2-11 risks on the types of insurance covered by this article; nor shall
2-12 this article be construed as to require the State Board of
2-13 Insurance to establish a single or uniform rate for each risk or
2-14 risks or to compel all insurers to adhere to such rates previously
2-15 filed by other insurers; and the board is empowered to approve such
2-16 different rates for different insurers, and is required to approve
2-17 such rates as filed by any insurer unless it finds that such filing
2-18 does not meet the requirements of this article."
2-19 Section 4. Amend Article 23.10, Texas Insurance Code, to
2-20 read as follows:
2-21 "The corporations complying with the requirements of this
2-22 chapter shall be governed and conducted as non-profit nonmembership
2-23 organizations for the purpose of contracting for and obtaining
2-24 legal services for their participants through contracting
2-25 attorneys, in consideration of the payment by the participants of a
2-26 definite sum to fund the payment of attorneys fees for the legal
2-27 services to be furnished by the contracting attorneys. Provided
2-28 further, that each such corporation shall have two funds, namely:
2-29 the claim fund and the expense fund. The claim fund shall be
2-30 composed of at least <80> 70 percent of the regular payments by
2-31 participants, and the application fees. The percentage amounts
2-32 above stated may be modified by the State Board of Insurance upon
2-33 showing that such is in the best interest of the then existing
2-34 persons receiving legal services under contract or that such is
2-35 necessary for the development of the corporation during its first
2-36 year of existence. The application fees shall be paid by
2-37 applicants prior to issuance of a benefit certificate, and shall
2-38 not apply as a part of the cost of receiving benefits under the
2-39 benefit certificate issued. Claim fund investments may include,
2-40 besides lawful money and demand deposits, only certificates of
2-41 deposits, share accounts, and time deposits in public banks and
2-42 savings and loan institutions whose deposits are insured by a
2-43 federal governmental agency, and obligations of a state or the
2-44 federal government; and the expense fund investments may include
2-45 only such as are legal investments for the capital, surplus, and
2-46 contingency funds of capital stock life insurance companies. The
2-47 net income from the investments shall accrue to the funds,
2-48 respectively, from which the investments were made. The claim fund
2-49 shall be disbursed only for the payment of valid claims, taxes on
2-50 income of such fund, security transfer costs, and refunds of fees
2-51 paid into such fund; <and to the extent approved by the State Board
2-52 of Insurance,> cost of settling contested claims, expenses directly
2-53 incurred on or for preservation of investments of the claim fund
2-54 and contracts authorized under Article 23.19 of this code."
2-55 Section 5. Amend Article 23.14, Texas Insurance Code, to
2-56 read as follows:
2-57 "Every corporation complying with the requirements of this
2-58 chapter shall, before accepting applications for participation in
2-59 said non-profit legal service plan, have sufficient money in its
2-60 expense fund to cover initial operations and shall submit to the
2-61 State Board of Insurance a plan of operation together with a rate
2-62 schedule of its charges to participants and a schedule and
2-63 projections of costs of legal services to be contracted for on
2-64 behalf of the participants; which plan, <rate schedule,> and the
2-65 sufficiency of expense fund shall first be approved by the State
2-66 Board of Insurance as adequate, fair, and reasonable <and not
2-67 excessive> before such corporation shall engage in business. The
2-68 State Board of Insurance shall have continuing control over the
2-69 plan of operation of such corporation. <and its rate schedule of
2-70 charges to participants.> No change in such plan <or rate
3-1 schedule> shall be effectuated without its first being filed and
3-2 approved by the State Board of Insurance."
3-3 Section 6. This Act takes effect September 1, 1993, and
3-4 applies only to a prepaid legal services contract issued or renewed
3-5 entered into on or after that date.
3-6 Section 7. The importance of this legislation and the
3-7 crowded condition of the calendars in both houses create an
3-8 emergency and an imperative public necessity that the
3-9 constitutional rule requiring bills to be read on three several
3-10 days in each house be suspended, and this rule is hereby suspended.
3-11 A BILL TO BE ENTITLED
3-12 AN ACT
3-13 relating to an exception from certain requirements regarding
3-14 prepaid legal services contracts.
3-15 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
3-16 SECTION 1. Article 5.13-1, Insurance Code, is amended by
3-17 adding Subsection (g) to read as follows:
3-18 (g) For the purpose of establishing and maintaining rates, a
3-19 plan that does not provide a benefit other than consultation and
3-20 advice on a simple legal matter, either alone or in combination
3-21 with a referral service and the promise of fee discounts for other
3-22 matters, does not constitute a prepaid legal services contract
3-23 subject to this article.
3-24 SECTION 2. This Act takes effect September 1, 1993, and
3-25 applies only to a prepaid legal services contract issued or renewed
3-26 on or after that date.
3-27 SECTION 3. The importance of this legislation and the
3-28 crowded condition of the calendars in both houses create an
3-29 emergency and an imperative public necessity that the
3-30 constitutional rule requiring bills to be read on three several
3-31 days in each house be suspended, and this rule is hereby suspended.
3-32 * * * * *
3-33 Austin,
3-34 Texas
3-35 May 24, 1993
3-36 Hon. Bob Bullock
3-37 President of the Senate
3-38 Sir:
3-39 We, your Committee on Economic Development to which was referred
3-40 H.B. No. 1568, have had the same under consideration, and I am
3-41 instructed to report it back to the Senate with the recommendation
3-42 that it do pass, as amended, and be printed.
3-43 Parker,
3-44 Chairman
3-45 * * * * *
3-46 WITNESSES
3-47 FOR AGAINST ON
3-48 ___________________________________________________________________
3-49 Name: Cordell Hull x
3-50 Representing: The Signature Group
3-51 City: Austin
3-52 -------------------------------------------------------------------
3-53 Name: Dean Cobb x
3-54 Representing: The Signature Group
3-55 City: Austin
3-56 -------------------------------------------------------------------
3-57 Name: Joe Nelson x
3-58 Representing: Tx Public Employees Assn.
3-59 City: Austin
3-60 -------------------------------------------------------------------