BILL ANALYSIS


                                                     C.S.S.B. 391
                                                       By: Harris
                                             Economic Development
                                                         03-22-95
                                   Committee Report (Substituted)
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.  Corporations that paid
millions in premiums were suddenly divested of the Act's
protection.

PURPOSE

As proposed, C.S.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.