BILL ANALYSIS


                                                        S.B. 1365
                                                    By: Wentworth
                                                    State Affairs
                                                          4-23-95
                                       Committee Report (Amended)
BACKGROUND

Insurance companies which operate under Articles 5.13 and 5.16,
Insurance Code, historically do not offer an indemnity product.  As
a result, it is impossible to produce actuarial data for the
purpose of making rates.

PURPOSE

As proposed, S.B. 1365 removes the requirement that certain prepaid
legal service providers be required to produce non-existing
actuarial data for the purpose of establishing rates.

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 Article 5.13-1, Insurance Code, by amending
Subsections (a), (b), and (f) and adding Subsection (g), as
follows:

     (a)  Deletes requirement that all rates, rate plans, and
     charges, are to be established in accordance with actuarial
     principles for various categories of insureds; the prohibition
     that the rates and charges not be excessive, inadequate, or
     discriminatory; and that the benefits be reasonable.
     
     (f)  Authorizes the State Board of Insurance (board) to
     require that prepaid legal services contracts have rates that
     are adequate to reasonably provide the benefits under the
     prepaid legal services contracts.  Provides that this
     subsection does not apply to a prepaid legal services contract
     that provides only consultation and advice on simple legal
     matters, either alone or in combination with the referral
     service, and that provides fee discounts for other matters.
     
     (g)  Prohibits the board from determining, fixing,
     prescribing, setting, or promulgating maximum rates or maximum
     amounts of premium to be charge for a prepaid legal service
     contract issued under this chapter.  Requires the board to
     approve such rates as filed by any insurer unless it finds
     that such filing does not meet the requirements of this
     article.  Deletes the provision that this article shall not be
     construed as to require the board to establish a single or
     uniform rate for each risk or risks or to compel all insurers
     to adhere to such rates previously filed by other insurers,
     and the board's empowerment to approve such different rates
     for different insurers.
     
SECTION 2. Articles 23.10, 23.14, and 23.15, Insurance Code, as
follows:

     Art. 23.10.  CORPORATIONS NON PROFIT; FUNDS; INVESTMENTS. 
     Requires the claim fund to be composed of at least 70 percent,
     rather than 80 percent, of the regular payments by
     participants, and the application fees.  Makes a conforming
     change.
     
     Art. 23.14.  SUPERVISION.  (a)  Makes conforming changes.
     
     (b)  Prohibits the board from determining, fixing,
       prescribing, setting, or promulgating maximum rates or
       maximum amounts of premium to be charged for a non profit
       legal services plan under this chapter.
       
     Art. 23.15.  New heading: DUTIES OF CONTRACTING ATTORNEYS;
     ADEQUATE FINANCIAL STANDING.  Deletes a requirement that the
     board approve the ratio of benefits to be paid to anticipated
     revenues from the rate schedule proposed to be used if found
     to be actuarially sound.   Deletes a provision prohibiting
     prepaid legal services contract or benefit certificate
     thereunder from being used by corporations complying with this
     chapter without such finding.
     
SECTION 3. Effective date: September 1, 1995.
           Makes application of this Act prospective beginning
January 1, 1996.

SECTION 4. Emergency clause.