BILL ANALYSIS

Insurance Committee

By: Harris (Duncan)
04-26-95
Committee Report (Unamended)

BACKGROUND

     The Texas Guaranty Act (TGA) established the Texas Property
and Casualty Insurance Guaranty Association (TPCIGA) in 1971. 
TPCIGA provides partial safety for policyholders in the event of
insurer insolvency, thereby helping to maintain public confidence
in the insurance industry.

     TGA was amended by the Texas Legislature during the
restructuring of the Texas Department of Insurance and other
revisions to the Insurance Code, dealing with the insolvency of
insurance companies.  One provision allows TPCIGA to recover
payments of liability obligations made on behalf of purchasers of
insurance if the purchaser had a net worth exceeding $50 million. 
The provision was made effective based on when the insurance
companies failed, thereby making its application retroactive. 

PURPOSE

     As proposed, S.B. 391 entitles the Texas Property and Casualty
Insurance Guaranty Association to recover the amount of a covered
claim for a third party if the person from whom the claim is sought
meets specific requirements.

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 11(b), Article 21.28-C, Insurance Code, 
as follows:

(b) Entitles the Texas Property and Casualty Insurance Guaranty
Association to recover the amount of any covered claim on behalf of
a person from, among others, any insured, other than an insured
exempt from federal income tax under 26 U.S.C. Section 501(a), by
being described by 26 U.S.C. Sec. 501(c)(3), whose net worth on
December 31 of the year next preceding the date the insurer becomes
an impaired insurer exceeds $50 million, and whose liability
obligations to other persons under a policy or contract of
insurance written, issued, and placed in force after January 1,
1992, are satisfied in whole or in part by payments made.

SECTION 2. Makes application of this Act prospective.

SECTION 3. Emergency clause;  Effective date: upon passage.

SUMMARY OF COMMITTEE ACTION

     In accordance with House rules, S.B. 391 was heard in a public
hearing on April 26, 1995.  The Chair laid out S.B. 391 and
recognized Representative Duncan to explain the bill.
The Chair recognized the following person to testify neutrally on
S.B. 391:  Jan Ferguson, Texas Property & Casualty Insurance
Guaranty Association.

     The Chair recognized Representative Counts who moved the
Committee report S.B. 391 as engrossed to the full House with the
recommendation that it do pass and be printed.  Representative G.
Lewis seconded the motion and the motion prevailed by the following
vote:
AYES (6); NAYES (0); ABSENT (3); PNV (0).