BILL ANALYSIS
C.S.H.B. 1605
By: T. Hunter
03-15-95
Committee Report (Substituted)
BACKGROUND
The 73rd Legislature passed the Texas Limited Liability
Company Act, Article 1528n, Vernon's Civil Statutes and created a
limited liability partnership under Section 13.08, Article 6132b,
the Texas Revised Partnership Act. In order to permit insurance
agents to be licensed using either of these entities it is
necessary to amend the agents' licensing provisions of the
Insurance Code.
PURPOSE
As proposed, House Bill 1605 would amend Articles 21.07,
21.07-1, 27.01-3, 21.14, and 1.14-2 of the Insurance Code to permit
an insurance agent to be licensed under any of these Articles as
the form under which an agent can do business.
RULEMAKING AUTHORITY
It is the committee's opinion that this bill does not grant
any additional rulemaking authority to a state officer,
institution, or agency.
SECTION BY SECTION ANALYSIS
SECTION 1.
Amends Section 1A, Article 21.07, Insurance Code, by defining
a "person" to include a limited liability partnership and clarifies
"partnership" or "agency partnership" to mean a general partnership
or registered limited liability partnership. Authorizes agents
licensed under Article 21.07, Insurance Code, to be licensed as a
limited liability partnership.
SECTION 2.
Amends Article 21.07, Insurance Code by adding Section 1B, by
defining a "corporation" as a corporation organized under the Texas
Business Corporation Act or Texas Limited Liability Company Act.
Requires the business to be domiciled in Texas; act as an insurance
agent; and each officer, manager and member of the company must be
licensed under this Article. A limited liability company shall be
subject to same provisions and requirements applicable to
corporations licensed under this Article. Authorizes agents
licensed under Article 21.07, Insurance Code, to be licensed as a
limited liability companies.
SECTION 3.
Amends Section 1A, Article 21.07-1, Insurance Code, by
defining a "person" to include a limited liability partnership and
clarifies "partnership" or "agency partnership" to mean a general
partnership or registered limited liability partnership.
Authorizes Legal Reserve Life Insurance agents licensed under
Article 21.07-1, Insurance Code, to be licensed as a limited
liability partnership.
SECTION 4.
Creates Section 1B, Article 21.07-1, Insurance Code, by
defining a "corporation" as a corporation organized under the Texas
Business Corporation Act or Texas Limited Liability Company Act.
Requires the business to be domiciled in Texas; act as an insurance
agent; and each officer, manager and member of the company must be
licensed under this Article. A limited liability company shall be
subject to same provisions and requirements applicable to
corporations licensed under this Article. Authorizes Legal Reserve
Life insurance agents licensed under Article 21.07-1, Insurance
Code, to be licensed as a limited liability company.
SECTION 5.
Amends Section 4, Article 21.07-3, Insurance Code, subsection
(c) and (d) and adding subsection (j) as follows:
(c) Requires the commissioner to issue a license to limited
liability partnership registered with Texas Secretary of State,
clarifies "partnership" or "agency partnership" to mean a general
partnership or registered limited liability partnership.
(d) Deletes the requirement for incorporation under the Texas
Business Corporation Act.
(j) Defines "corporation" as a corporation organized under the
Texas Business Corporation Act or Texas Limited Liability Company
Act. Requires the business to be domiciled in Texas; act as an
insurance agent; and each officer, manager and member of the
company must be licensed under this Article. A limited liability
company shall be subject to same provisions and requirements
applicable to corporations licensed under this Article. Authorizes
Managing General Agents licensed under Article 21.07-3, Insurance
Code, to be licensed as a limited liability partnership or company,
as applicable.
SECTION 6.
Amends Section 3, Article 21.14, Insurance Code, subsections
(a), (b), (c) and adding subsection (d) and (e) as follows:
(a) Authorizes Local Recording Agents licensed under Article 21.14,
Insurance Code, to be licensed as a limited liability partnership
or company, as applicable.
(b) Permits a limited liability partnership to engage in the
business of insurance.
(c) Requires notification to the Texas Department of Insurance.
(d) Clarifies "partnership" or "agency partnership" to mean a
general partnership or registered limited liability partnership
domiciled in Texas.
(e) Defines a "corporation" as a corporation organized under the
Texas Business Corporation Act, Texas Professional Corporation Act,
or Texas Limited Liability Company Act. Requires the business to
be domiciled in Texas; act as an insurance agent; and each officer,
manager and member of the company must be licensed under this
Article.
SECTION 7.
Amends Section 4(b), Article 1.14-2, Insurance Code by
deleting existing reference in insurance code from State Board of
Insurance to the Texas Department of Insurance and permits the
Department to issue a surplus lines license to an agent, require an
annual fee not to exceed $50, submit a license application on a
Department approved form, and if an agent is a general partnership
or a registered limited liability partnership the examination must
be met by each natural person acting as a partner in the
partnership.
SECTION 8. Emergency Clause and Effective Date
COMPARISON OF ORIGINAL TO SUBSTITUTE
SECTION 5 of the substitute to H.B. 1605 corrects a drafting
error by inserting the continuation of existing law, "resident of
Texas and file a written sworn application on forms furnished by
the Commissioner". SECTION 6 of the substitute amends the
reference in existing law from the State Board of Insurance to the
Texas Department of Insurance. The substitute also changes SECTION
7 by amending Section 4(b), Article 1.14-2, Insurance Code to
permit the Department to issue a surplus lines license to an agent
as defined by this Act.
SUMMARY OF COMMITTEE ACTION
In accordance with the House rules, Representative Smithee
suspended the five day posting rule from the House floor on
Wednesday, March 1, 1995 in order for the House Insurance Committee
to take up and consider H.B. 1605 in a public hearing on March 1,
1995.
The Chair laid out H.B. 1605 and a substitute to H.B. 1605.
The Chair recognized Representative T. Hunter to explain the
difference between the substitute and filed bill.
The Chair recognized Representative Duncan who offered the
substitute to H. B. 1605 and moved the Committee to adopt the
substitute to H.B. 1605. The Chair heard no objections and the
substitute was adopted.
The Chair recognized the following persons to testify in
support of H.B. 1605: Wade Spillman, Texas Association of
Insurance Agents; Kenneth Tooley, Texas Association of Life
Underwriters. The Chair recognized the following person in support
of H.B. 1605 but did not wish to testify: Bob Huxel, Texas
Association of Insurance Agents. No one testified in opposition to
or neutrally on H.B. 1605. The Chair left H.B. 1605 as pending
business before the Committee.
On March 15, 1995, the Chair laid out H.B. 1605 and the
substitute to H.B. 1605 as pending business before the Committee.
Since Representative Duncan who initially offered the substitute to
H.B. 1605 was not present, the Chair recognized Representative
Averitt to re-offered the substitute to H.B. 1605. The substitute
offered on March 15th was the same document offered on March 1st.
Representative Averitt moved the Committee re-adopt the substitute
to H.B. 1605. The Chair heard no objections and the substitute to
H.B. 1605 was re-adopted.
The Chair recognized Representative Averitt who moved the
Committee report H.B. 1605 as substituted to the full House with
the recommendation that it do pass and be printed. Representative
Shields seconded the motion and the motion prevailed by the
following vote:
AYES (5); NAYES (0); ABSENT (3); PNV (1).