BILL ANALYSIS
C.S.H.B. 2960
By: Counts
03-29-95
Committee Report (Substituted)
BACKGROUND
The Texas Title Insurance Guaranty Act (Article 9.48,
Insurance Code) and the Texas Property and Casualty Insurance
Guaranty Act (Article 21.28-C, Insurance Code) establishes
mechanisms for the payment of covered claims under insurance
policies of impaired title and
property and casualty insurers, respectively, in the State of
Texas. Article 21.28 of the Insurance Code is the statute
governing the liquidation of insolvent insurers in the State of
Texas. Pursuant to Article 21.28, Insurance code, the Insurance
Commissioner shall act as the receiver of insolvent insurers.
PURPOSE
As substituted, H.B. 2960 would amend Article 9.48 of the
Texas Insurance Code to clarify the activities of examiners of the
title agencies. Additionally, the bill would amend Article 21.28
to facilitate the administration of receivership estates, codify
the judicial immunity of the Commissioner as receiver, and clarify
the priority of the guaranty association's expenses in the
distribution of assets. It further proposes to amend Article
21.28-C, Insurance Code to clarify the guaranty association's
obligations, facilitate the guaranty association's ability to pay
covered claims, and facilitate the administration of the guaranty
association.
RULEMAKING AUTHORITY
It is the committee's opinion that this bill does not
expressly grant any additional rulemaking authority to a state
officer, department, agency or institution.
SECTION BY SECTION ANALYSIS
SECTION 1.
Amends Article 9.48, §14(c)(3) to reflect the correct date cited in
Subchapter B, Chapter 572, Government Code. This section further
amends Article 9.48, §14(c)(13) to clarify the authorized
activities of the examiners for title agencies employed by the
Texas Department of Insurance and paid for by the Title Guaranty
Association.
SECTION 2.
Amends Article 21.28, §2(g) by raising the threshold amount of any
claim or debt that the receiver may compromise or compound without
receivership court approval from $1000 to $10,000. Re-references
the "State Board of Insurance" to "Commissioner". This section
further amends Article 21.28, §2 by adding section (j) which
codifies the Commissioner's, receiver's, and special deputy
receiver's judicial immunity for good faith acts, and amends
Article 21.28, §2 by adding section (k) which provides that the
Attorney General shall defend any action to which the immunity
provision applies.
SECTION 3.
Amends Article 21.28-C, §8(a) to provide that a guaranty
association is entitled to recover those administrative expenses
allocated to a receivership estate as a Class 1 claim from the
assets of a receivership estate. This section further clarifies
that a guaranty association's expenses incurred in the defense of
insured under policies issued by impaired insurer on covered claims
are "claims handling " expenses.
SECTION 4.
Amends Article 21.28-C, §5(8) to clarify the definition of "covered
claim" in the following respects:
1) A covered claim includes those first party claims for damage
to property located in Texas.
2) A covered claim does not include any amount sought by a
reinsurer, insurer, insurance pool, or underwriting
association as reinsurance recoveries or contribution or indemnity.
3) A claim that is not covered because it is a claim for an
amount sought by a reinsurer, insurer, insurance pool, or
underwriting association as a subrogation recover, reinsurance recovery, contribution or indemnity may not be asserted
against an insured of the
impaired insurer to the extent of the applicable liability
limits of the policy written and issued to the insured by the
impaired insurer.
SECTION 5.
Amends Article 21.28-C, §7(a) to clarify that in order to serve as
an industry board
member, a person must be a full time employee of a member insurer.
SECTION 6.
Amends Article 21.28-C §8(b) by deleting the language meant to be
deleted during the last legislative session. Art. 21.28-C 8 (b)
was amended in 1993 to clarify the duties of the guaranty
association in discharging the policy obligations of the impaired
insurer.
SECTION 7.
Amends Article 21.28-C, §12(a) to require a claimant to exhaust
their right to a defense under any other policy covering their
claim before seeking a defense from the guaranty association under
the policy of an impaired insurer.
SECTION 8.
Amends Article 21.28-C §14 to provide that the date for submission
of the association's audited financial statement will be April 30
instead of March 30.
SECTION 9.
Amends Article 21.28-C §17 to provide that all deadlines under the
Texas and Federal rules of civil and appellate procedure are tolled
during the stay. The section further clarifies that the
receivership court has exclusive jurisdiction regarding the
application, enforcement, and extension of the stay.
SECTION 10.
Amends Article 21.28-C §18(b) to provide that in the event of a
natural disaster or other catastrophic event, the association may
seek authority from the Governor to assess member insurers who
write insurance coverage other than motor vehicle or workers'
compensation coverage up to an additional 2% of their net direct
written premium. Amends Article 21.28-C §18(c) to provide that an
insurer must pay its assessment within 30 days from the date after
the association gives notice of the assessment. Additionally, this
section amends Article 21.28-C, §18 (h) to extend the duration of
the 3% cap on the workers' compensation line of business until
January 1, 1998.
SECTION 11. Effective Date
SECTION 12. Emergency Clause
COMPARISON OF ORIGINAL TO SUBSTITUTE
The substitute adds a new Section 1 amending Article 9.48,
§14(c)(3), Insurance Code to reflect the correct date cited in
Subchapter B, Chapter 572, Government Code. This section further
amends Article 9.48, §14(c)(13) to clarify the authorized
activities of the examiners for title agencies employed by the
Texas Department of Insurance and paid for by the Title Guaranty
Association.
The substitute also adds a new Section 2 by amending Article
21.28, §2(g), Insurance Code by raising the threshold amount of any
claim or debt that the receiver may compromise or compound without
receivership court approval from $1000 to $10,000. Re-references
the "State Board of Insurance" to "Commissioner". This section
further amends Article 21.28, §2 by adding section (j) which
codifies the Commissioner's, receiver's, and special deputy
receiver's judicial immunity for good faith acts, and amends
Article 21.28, §2 by adding section (k) which provides that the
Attorney General shall defend any action to which the immunity
provision applies.
SUMMARY OF COMMITTEE ACTION
In accordance with House rules, H.B. 2960 was heard in a
public hearing on March 22, 1995. There being a quorum present the
Chair announced at the request of the author, H.B. 2960 by Rep.
Counts be left as pending business before the Committee.
There being a quorum present on March 29, 1995, the Chair laid
out H.B. 2960 as pending business. The Chair recognized
Representative Counts who offered a substitute to H.B. 2960 and
moved the Committee adopt the substitute. The Chair heard no
objections and the substitute to H.B. 2960 was adopted. The Chair
recognized the following persons to testify in support of H.B.
2960: Will D. Davis, USAA; Karen Benson, Baylor University;
Charles Wirth, State Farm Insurance Company. The Chair recognized
the following persons to testify neutrally on H.B. 2960: Jan
Ferguson, Texas Property & Casualty Insurance Guaranty Association;
Mary Kelly Pauwels, Texas Department of Insurance.
The Chair recognized Representative Counts who moved the
Committee report H.B. 2960 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 (8); NAYES (0); ABSENT (1); PNV (0).