BILL ANALYSIS


                                                        H.B. 1987
                                               By: Duncan (Lucio)
                                             Economic Development
                                                          5-22-95
                              Senate Committee Report (Unamended)
BACKGROUND

The Surplus Lines Stamping Office of Texas (SLSOT), in an effort to
facilitate and encourage compliance with state surplus lines laws,
must receive, review, and record all surplus lines contracts which
surplus lines agents are required to report to and file in
accordance with rules promulgated by the Texas Department of
Insurance. Surplus lines agents must file with the SLSOT every
surplus lines contract procured in this state.

PURPOSE

As proposed, H.B. 1987 provides for the regulation of surplus lines
insurance; clarifies the status of the Surplus Lines Stamping
Office of Texas as exempt from the filing requirements of the state
library; and provides for the confidentiality of certain personal
information about consumers.

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 6, Article 1.14-2, Insurance Code, as
follows:

     Sec. 6. PROCEDURE FOR EFFECTING SURPLUS LINES CONTRACTS. (a)
     Deletes existing Subsection (a) relating to the requirement
     that an agent, before any new or renewal insurance is procured
     in an unlicensed insurer, to make an affidavit including
     certain information. Redesignates existing Subsection (b).
     
     (b) Deletes the requirement of the surplus lines agent,
       within a specified time after the effective date of any new
       or renewal surplus lines insurance contract, to file with
       the Surplus Lines Stamping Office of Texas evidence that a
       diligent effort has been performed.
       
       (c)-(e) Make no changes.
       
       SECTION 2.   Amends Section 6A, Article 1.14-2, Insurance Code, by
adding Subsections (g) and (h), as follows:

     (g) Provides that the stamping office and the records of the
     stamping office are not subject to Chapter 441, Government
     Code.
     
     (h) Provides that an individual surplus lines insurance
     contract filed with the stamping office is confidential and is
     not a public record under Chapter 552, Government Code.
     Provides that nothing in this subsection shall prevent access
     by a state agency to an individual surplus lines insurance
     contract filed with the stamping office.
     
     SECTION 3.     Amends Section 8(b), Article 1.14-2, Insurance Code, to
prohibit an insurer from being an eligible surplus lines insurer
unless in the case of an insurance exchange created by the laws of
another state:

     (A) the syndicates of the exchange must maintain under terms
     acceptable to the commissioner capital and surplus, or its
     equivalent under the laws of its domiciliary jurisdiction, or
     not less than $75 million in the aggregate;
     
     (B) the exchange must maintain under terms acceptable to the
     commissioner at least 50 percent of the policy holder surplus
     of each syndicate in a custodial account accessible to the
     exchange or its domiciliary commissioner in the event of
     insolvency or impairment of the individual syndicate; and
     
     (C) each individual syndicate, to be eligible to accept
     surplus lines insurance placements from this state as a member
     of the exchange must meet certain qualifications.
     
     SECTION 4.     Effective date: September 1, 1995.
           Makes application of this Act prospective.

SECTION 5. Emergency clause.