BILL ANALYSIS


                                                        H.B. 1605
                                          By: Hunter, T. (Sibley)
                                             Economic Development
                                                         05-18-95
                              Senate Committee Report (Unamended)
BACKGROUND

The 73rd Legislature passed Article 1528n, V.T.C.S. (Texas Limited
Liability Company Act) and created joint liability in a limited
liability partnership under Section 3.08 of Article 6132b, V.T.C.S.
(Texas Revised Partnership Act).  However, current law does not
establish licensing provisions for insurance agents in a limited
liability partnership registered with the secretary of state and
engaging in business in Texas.

PURPOSE

As proposed, H.B. 1605 establishes provisions for the licensing of
insurance agents in a limited liability partnership.

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, as
follows:

     Sec.  1A.  New heading: DEFINITIONS.  Redefines "person." 
     Defines "partnership" and "agency partnership."
     
     SECTION 2.     Amends Article 21.07, Insurance Code, by adding Section
1B, as follows:

     Sec.  1B.  LICENSING OF LIMITED LIABILITY COMPANIES.  Defines
     "corporation."  Requires each officer, manager, and member of
     a limited liability company to be licensed under this article. 
     Requires the licensing and regulation of a limited liability
     company to be subject to the same provisions and requirements
     of this article that are applicable to corporations licensed
     under this article.
     
     SECTION 3.     Amends Section 1A, Article 21.07-1, V.T.I.C., to
redefine "person."  Defines "partnership" and "agency partnership."

SECTION 4. Amends Article 21.07-1, V.T.I.C., by adding Section 1B,
as follows:

     Sec.  1B.  Defines "corporation."  Requires each officer,
     manager, and member of a limited liability company to be
     licensed under this Act.  Requires the licensing and
     regulation of a limited liability company to be subject to the
     same provisions and requirements of this Act that are
     applicable to corporations licensed under this Act.
     
     SECTION 5.     Amends Section 4, Article 21.07-3, V.T.I.C., by amending
Subsections (c) and (d) and by adding Subsection (j), as follows:

     (c) Requires the commissioner of insurance (commissioner) to
     issue a license to a general partnership, or to a limited
     liability partnership registered with the secretary of state
     under Section 3.08, Article 6132b-3.08, V.T.C.S. (Texas
     Revised Partnership Act), engaging in the insurance business
     if each of the partners is licensed as an agent under this
     Act.  Defines "partnership" and "agency partnership."
     
     (d) Deletes language providing that a corporation organized or
     existing under the Texas Business Corporation Act be required
     to be licensed by the commissioner.
     
     (j) Defines "corporation."  Requires each officer, manager,
     and member of a limited liability company to be licensed under
     this Act.  Requires the licensing and regulation of a limited
     liability company to be subject to the same provisions and
     requirements of this Act that are applicable to corporations
     licensed under this Act.
     
     SECTION 6.     Amends Section 3, Article 21.14, Insurance Code, as
follows:

     Sec.  3.  APPLICATION FOR LICENSE; TO WHOM LICENSE MAY BE
     ISSUED.  (a) Requires any person, partnership, registered
     limited liability partnership, limited liability company, or
     corporation (entity) to make application for a license to the
     Texas Department of Insurance (department), rather than the
     State Board of Insurance, in such form as the department may
     require, when any entity desires to engage in business as a
     local recording agent for an insurance company or carrier. 
     Requires the application to bear a signed endorsement by a
     general, state, or special agent of a qualified insurance
     company or carrier that each applicant or each member of the
     limited liability company, among others, is a resident of the
     state.  Makes a conforming change.
     
     (b) Requires the department to issue a license to an
       individual or a general partnership or a limited liability
       partnership registered with the secretary of state under
       Section 3.08, Article 6132b-3.08, V.T.C.S., engaging in the
       insurance business.  Makes a conforming and a nonsubstantive
       change.
       
       (c) Makes conforming changes.
       
       (d) Defines "partnership" and "agency partnership."
       
       (e) Defines "corporation" and "corporations."  Requires each
       officer, manager, and member of a limited liability company
       to be licensed under this article.  Requires the licensing
       and regulation of a limited liability company to be subject
       to the same provisions and requirements of this article that
       are applicable to corporations licensed under this article.
       
       SECTION 7.   Amends Section 4(b), Article 1.14-2, Insurance Code, to
authorize the department to issue a surplus lines license to an
agent after the agent has met certain requirements, including
remitting the application fee set by the department in an amount
not to exceed $50; and requiring each agent, including an agent
acting as a partner in a general partnership or a registered
limited liability partnership, to pass a qualifying examination. 
Requires the examination requirement to be met by each natural
person acting as an officer, manager, and member of that limited
liability company if the agent is a limited liability company.

SECTION 8. Emergency clause.
           Effective date: upon passage.