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).