1-1  By:  Smithee (Senate Sponsor - Sibley)                H.B. No. 1243
    1-2        (In the Senate - Received from the House May 11, 1995;
    1-3  May 16, 1995, read first time and referred to Committee on Economic
    1-4  Development; May 22, 1995, reported favorably, as amended, by the
    1-5  following vote:  Yeas 9, Nays 0; May 22, 1995, sent to printer.)
    1-6  COMMITTEE AMENDMENT NO. 1                               By:  Sibley
    1-7  Amend H.B. 1243, as engrossed, by inserting a new SECTION 18(c) of
    1-8  the bill (house engrossment printing, page 17, between lines 20 and
    1-9  21) to read as follows:
   1-10        (c)  Article 21.49-8, Insurance Code, as added by this Act,
   1-11  takes effect only on certification by the commissioner of insurance
   1-12  that the National Association of Insurance Commissioners has
   1-13  provided to the commissioner in writing a total budgetary
   1-14  disclosure as to the use by that association of funds received by
   1-15  that association from states that are members of the association.
   1-16  The commissioner shall issue a finding regarding the certification,
   1-17  and shall publish the finding in the Texas Register.
   1-18                         A BILL TO BE ENTITLED
   1-19                                AN ACT
   1-20  relating to requirements for certain insurers and health
   1-21  maintenance organizations concerning financial solvency.
   1-22        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
   1-23        SECTION 1.  Article 1.39, Insurance Code, is amended by
   1-24  amending Subsection (b) and adding Subsections (e) and (f) to read
   1-25  as follows:
   1-26        (b)  An insurer may obtain a loan or an advance of cash, cash
   1-27  equivalents, or other assets that have a readily determinable value
   1-28  and are satisfactory to the commissioner <or property>, repayable
   1-29  with interest, and may assume a subordinated liability for
   1-30  repayment of the advance and payment of interest on the advance if
   1-31  the insurer and creditor execute a written agreement stating that
   1-32  the creditor may be paid only out of that portion of the insurer's
   1-33  surplus that exceeds the greater of a minimum surplus stated and
   1-34  fixed in the agreement or a minimum surplus of $500,000 for that
   1-35  insurer.  The department or the commissioner may not require the
   1-36  agreement to provide another minimum surplus amount.
   1-37        (e)  An agreement entered into under Subsection (b) of this
   1-38  article must be submitted to the commissioner for approval as to
   1-39  form and content; provided, however, that the commissioner must
   1-40  give his decision of either approval or disapproval within 30 days
   1-41  after the written filing by the insurer, and his failure to so act
   1-42  within such 30 days shall constitute approval of the transaction.
   1-43  An insurer may not assume a subordinated liability until the
   1-44  commissioner has approved the agreement under either Section 4,
   1-45  Article 21.49-1, or this article.  An insurer may not repay
   1-46  principal or pay interest on a subordinated liability assumed under
   1-47  either Section 4, Article 21.49-1, or this article on or after
   1-48  September 1, 1995, unless either (i) such payment or repayment
   1-49  complies with a specific schedule of payments contained within the
   1-50  terms of the previously approved agreement, or (ii) written notice
   1-51  is provided to the commissioner at least 15 days before the date
   1-52  scheduled for any payment or repayment if either a schedule of
   1-53  payments is not contained within the terms of the previously
   1-54  approved agreement, or such payment or repayment does not comply
   1-55  with the specific schedule of payments contained within the terms
   1-56  of the previously approved agreement.  A loan, debenture, revenue
   1-57  bond, or advance agreement issued before September 1, 1995, and any
   1-58  subsequent payment of interest or repayment of principal are
   1-59  governed by the law in effect on the date of issuance.
   1-60        (f)  The commissioner shall adopt rules as necessary to
   1-61  implement this article.
   1-62        SECTION 2.  Article 3.10(l), Insurance Code, is amended to
   1-63  read as follows:
   1-64        (l)  An insurer shall account for reinsurance agreements and
   1-65  shall record those reinsurance agreements in the insurer's
   1-66  financial statement in a manner that accurately reflects the effect
   1-67  of the reinsurance agreements on the financial condition of the
   1-68  company.  The State Board of Insurance may adopt reasonable rules
    2-1  relating to the accounting and financial statement requirements of
    2-2  this section and the treatment of reinsurance agreements between
    2-3  insurance companies, including minimum risk transfer standards,
    2-4  asset debits or credits, reinsurance debits or credits, and reserve
    2-5  debits or credits relating to the transfer of all or any part of an
    2-6  insurer's risks or liabilities by reinsurance agreements and any
    2-7  contingencies arising from reinsurance agreements.  Rules adopted
    2-8  subsequent to September 1, 1995, shall apply to reinsurance
    2-9  agreements entered into on or after the effective date of such
   2-10  rules, and to reinsurance agreements that are amended on or after
   2-11  the effective date of such rules.  A reinsurance agreement may
   2-12  contain a provision that allows the offset of mutual debts and
   2-13  credits between a ceding insurer and the assuming insurer, whether
   2-14  arising out of one or more reinsurance agreements.
   2-15        SECTION 3.  Subchapter B, Chapter 3, Insurance Code, is
   2-16  amended by adding Article 3.27-4 to read as follows:
   2-17        Art. 3.27-4.  APPLICATION OF CERTAIN SOLVENCY REQUIREMENTS.
   2-18  Articles 3.02 and 21.49-8 of this code apply to an insurance
   2-19  company subject to this subchapter.
   2-20        SECTION 4.  Article 5.75-1(n), Insurance Code, is amended to
   2-21  read as follows:
   2-22        (n)  An insurer shall account for reinsurance agreements and
   2-23  shall record those agreements in the insurer's financial statements
   2-24  in a manner that accurately reflects the effect of the reinsurance
   2-25  agreements on the financial condition of the insurer.  The State
   2-26  Board of Insurance may adopt reasonable rules relating to the
   2-27  accounting and financial statement requirements of this subsection
   2-28  and the treatment of reinsurance agreements between insurers,
   2-29  including minimum risk transfer standards, asset debits or credits,
   2-30  reinsurance debits or credits, and reserve debits or credits
   2-31  relating to the transfer of all or any part of an insurer's risks
   2-32  or liabilities by reinsurance agreements and to any contingencies
   2-33  arising from reinsurance agreements.  Reinsurance agreements may
   2-34  contain a provision allowing the offset of mutual debts and credits
   2-35  between the ceding insurer and the assuming insurer whether arising
   2-36  out of one or more reinsurance agreements.
   2-37        SECTION 5.  Section 2, Article 9.47, Insurance Code, is
   2-38  amended to read as follows:
   2-39        Sec. 2.  Regardless of Section 1 of this Article, where
   2-40  applicable to title insurance companies, Article 1.01 through 1.25;
   2-41  Article 2.01; Article 2.02, Sections 1, 2 and 3; Article 2.03,
   2-42  except Section 5; Article 2.04; Article 2.05; Article 2.06; Article
   2-43  3.01, Section 10(a), (b) and (c); Article 3.12, except Section (c);
   2-44  Article 3.13;  <Article 3.14;> Article 21.21; Article 21.21-1;
   2-45  Article 21.25; Article 21.26; Article 21.31; Article 21.36; Article
   2-46  21.37; Article 21.43; Article 21.46; <and> Article 21.47; Article
   2-47  21.49-8; and Subchapter F of Chapter 5 of this code shall apply to
   2-48  and govern title insurance companies where applicable thereto.  In
   2-49  case of conflict between provisions of any of the foregoing
   2-50  articles and the provisions of this Chapter Nine, the latter shall
   2-51  govern.
   2-52        SECTION 6.  Section 16.24(b), Insurance Code, is amended to
   2-53  read as follows:
   2-54        (b)  Regardless of the preceding portion of this Article,
   2-55  Articles 1.01, 1.02, 1.04, <1.08,> 1.09, 1.09-1, 1.11, 1.12, 1.13,
   2-56  1.14, 1.15, 1.15A, 1.16, 1.17, 1.18, 1.19, 1.20, 1.21, 1.22, 1.23,
   2-57  1.24, 1.29, 2.08, 2.10, 3.12, 3.13, 6.16, 21.21, 21.25, 21.28,
   2-58  21.28-A, <21.28-B,> 21.28-C, 21.39, 21.39-A, and Sections 10(a),
   2-59  (b) and (c) of Article 3.01 and Sections 1, 2, 5, 6, 7, 8, 9, 10,
   2-60  11, 13, 14 and 17 of Article 1.10 of this code <the Insurance Code
   2-61  as they now exist or shall hereafter be amended> shall apply to and
   2-62  govern farm mutual insurance companies except where such Articles
   2-63  or portions thereof are in conflict with the provisions of Chapter
   2-64  16 of the Insurance Code.
   2-65        SECTION 7.  Section 17.22(a), Insurance Code, is amended to
   2-66  read as follows:
   2-67        (a)  County mutual insurance companies shall be exempt from
   2-68  the operation of all insurance laws of this state, except such laws
   2-69  as are made applicable by their specific terms or as in this
   2-70  Chapter specifically provided.  In addition to such other Articles
    3-1  as may be made to apply by other Articles of this Code, county
    3-2  mutual insurance companies shall be subject to:
    3-3              (1)  <all the provisions of Article 1.04(e), and of>
    3-4  Subdivision 7 of Article 1.10 of this Code;
    3-5              (2)  Articles <and of Article> 1.15A, <and of Article>
    3-6  1.24, <and of Article> 2.04, <and of Article> 2.05, <and of
    3-7  Article> 2.08, <and of Article> 2.10, <and of Article> 5.12, <a
    3-8  of Article> 5.37, <and of Article> 5.38,  <and of Article> 5.39,
    3-9  <and of Article> 5.40, <and of Article> 5.49, <and of Article>
   3-10  21.21,  and <of Article 21.28B and of Article> 21.49 of this
   3-11  Code;<,> and
   3-12              (3)  <the provisions of> Article 7064, <of the> Revised
   3-13  <Civil> Statutes <of Texas, 1925>.
   3-14        SECTION 8.  Section 18.23(b), Insurance Code, is amended to
   3-15  read as follows:
   3-16        (b)  In addition to such Articles as may be made to apply by
   3-17  other Articles of this Chapter, underwriters at a Lloyds' shall not
   3-18  be exempt from and shall be subject to Articles <all of the
   3-19  provisions of Article> 1.15A, <and of Article> 2.20, <and of
   3-20  Article> 5.35, <and of Article> 5.38,  <and of Article> 5.39, <
   3-21  of Article> 5.40, <and of Article> 5.49, <and of Article> 21.21,
   3-22  and 21.49-8 of this Code.
   3-23        SECTION 9.  Section 19.12(b), Insurance Code, is amended to
   3-24  read as follows:
   3-25        (b)  In addition to such Articles as may be made to apply by
   3-26  other Articles of this Code, reciprocal or inter-insurance
   3-27  exchanges shall not be exempt from and shall be subject to:
   3-28              (1)  <all of the provisions of> Section 5, <of> Article
   3-29  1.10 of this Code; and
   3-30              (2)  Articles <of Article> 1.15, <and of Article>
   3-31  1.15A, <and of Article> 1.16, 2.20, <and of Article> 5.35, <and ofª
   3-32  Article 5.36 and of Article> 5.37,  <and of Article> 5.38, <and of
   3-33  Article> 5.39, <and of Article> 5.40, <and of Article> 6.12, <a
   3-34  of Article> 8.07, <and of Article> 21.21, and 21.49-8 of this Code.
   3-35        SECTION 10.  Section 26(i), Texas Health Maintenance
   3-36  Organization Act (Article 20A.26, Vernon's Texas Insurance Code),
   3-37  is amended to read as follows:
   3-38        (i)  Any health maintenance organization authorized under
   3-39  this Act shall be subject to:
   3-40              (1)  Article 21.49-8, Insurance Code; and
   3-41              (2)  Article 3.51-6, Section 3B, Insurance Code.
   3-42        SECTION 11.  Article 21.44, Insurance Code, is amended to
   3-43  read as follows:
   3-44        Art. 21.44.  CAPITAL AND SURPLUS REQUIREMENTS FOR FOREIGN OR
   3-45  ALIEN INSURANCE COMPANIES OTHER THAN LIFE.  (a)  No foreign or
   3-46  alien insurance company subject to the provisions of Article 21.43
   3-47  of this code shall be permitted to do business within this State
   3-48  unless it shall have and maintain the minimum requirements of this
   3-49  Code as to capital or surplus or both, applicable to companies
   3-50  organized under this Code doing the same kind or kinds of business.
   3-51        (b)  Articles 2.20 and 21.49-8 of this code apply to an
   3-52  insurance company subject to this article.
   3-53        SECTION 12.  Section 4(c), Article 21.49-1, Insurance Code,
   3-54  is amended to read as follows:
   3-55        (c)  Dividends and Other Distributions.  (1)  No insurer
   3-56  subject to registration under Section 3 shall pay any extraordinary
   3-57  dividend or make any other extraordinary distribution to its
   3-58  shareholders until (i) 30 days after the commissioner has received
   3-59  notice of the declaration thereof and has not within such period
   3-60  disapproved such payment, or (ii) the commissioner shall have
   3-61  approved such payment within such 30-day period.
   3-62              (2)  For purposes of this section an extraordinary
   3-63  dividend or distribution includes any dividend or distribution of
   3-64  cash or other property, whose fair market value together with that
   3-65  of other dividends or distributions made within the preceding 12
   3-66  months exceeds the greater of (i) 10 percent (20 percent if such
   3-67  insurer is a title insurer) of such insurer's surplus as regards
   3-68  policyholders as of the 31st day of December next preceding, or
   3-69  (ii) the net gain from operations of such insurer, if such insurer
   3-70  is a life or title insurer, or the net <investment> income, if such
    4-1  insurer is not a life or title insurer, for the 12-month period
    4-2  ending the 31st day of December next preceding, but shall not
    4-3  include pro rata distributions of any class of the insurer's own
    4-4  securities.
    4-5              (3)  Notwithstanding any other provision of law, an
    4-6  insurer may declare an extraordinary dividend or distribution which
    4-7  is conditional upon the commissioner's approval thereof, and such a
    4-8  declaration shall confer no rights upon shareholders until (i) the
    4-9  commissioner has approved the payment of such dividend or
   4-10  distribution or (ii) the commissioner has not disapproved such
   4-11  payment within the 30-day period referred to above.
   4-12        SECTION 13.  Subchapter E, Chapter 21, Insurance Code, is
   4-13  amended by adding Article 21.49-8 to read as follows:
   4-14        Art. 21.49-8.  DISCLOSURE OF MATERIAL TRANSACTIONS REPORT
   4-15        Sec. 1.  APPLICATION; EXEMPTION.  (a)  Except as provided by
   4-16  Subsection (b) of this section, this article applies to the
   4-17  following domestic insurers and commercially domiciled insurers:
   4-18              (1)  a capital stock company;
   4-19              (2)  a mutual company;
   4-20              (3)  a title insurance company;
   4-21              (4)  a fraternal benefit society;
   4-22              (5)  a Lloyd's plan company;
   4-23              (6)  a reciprocal or interinsurance exchange;
   4-24              (7)  a group hospital service corporation;
   4-25              (8)  a health maintenance organization;
   4-26              (9)  a risk retention group;
   4-27              (10)  a nonprofit legal service corporation; and
   4-28              (11)  a nonprofit hospital, medical, or dental service
   4-29  corporation.
   4-30        (b)  A domestic insurer listed under Subsection (a) of this
   4-31  section that does business only in this state is exempt from the
   4-32  application of this article until the insurer obtains authority to
   4-33  conduct the business of insurance in another state.
   4-34        Sec. 2.  REPORT.  (a)  Unless the material acquisition and
   4-35  disposition of assets and the nonrenewal, cancellation, or
   4-36  revisions of material ceded reinsurance agreements have been
   4-37  submitted to the commissioner for review, approval, or information
   4-38  under other provisions of this code or other laws, regulations, or
   4-39  requirements, each insurer shall file a report with the
   4-40  commissioner that discloses:
   4-41              (1)  material acquisitions and dispositions of assets;
   4-42  or
   4-43              (2)  material nonrenewals, cancellations, or revisions
   4-44  of ceded reinsurance agreements.
   4-45        (b)  The report required under Subsection (a) of this section
   4-46  must be filed not later than the 15th day after the last day of the
   4-47  calendar month in which any of the affected transactions occur.
   4-48        (c)  The insurer also shall file one complete copy of the
   4-49  report, including any necessary exhibits or other attachments, with
   4-50  the department.
   4-51        (d)  A report obtained by or disclosed to the commissioner
   4-52  under this article is confidential and is not subject to a
   4-53  subpoena, other than a grand jury subpoena.  The report may not be
   4-54  disclosed by the commissioner, the National Association of
   4-55  Insurance Commissioners, or any other person, except to the
   4-56  insurance department of another state or another authorized
   4-57  governmental agency, without the prior written consent of the
   4-58  affected insurer, unless the commissioner, after notice to the
   4-59  affected insurer and an opportunity for a hearing, determines that
   4-60  the interest of policyholders, shareholders, or the public will be
   4-61  served by the publication of the report.  If the commissioner does
   4-62  so determine, the department may disclose a report to the public
   4-63  and may publish all or any part of the report in any manner
   4-64  considered appropriate by the commissioner.
   4-65        Sec. 3.  ACQUISITIONS AND DISPOSITIONS OF ASSETS.  (a)  An
   4-66  insurer is not required to report an acquisition or disposition of
   4-67  assets under Section 2 of this article if the acquisition or
   4-68  disposition is not material.  For purposes of this article, an
   4-69  acquisition, or the aggregate of a series of related acquisitions
   4-70  during a 30-day period, or a disposition, or the aggregate of a
    5-1  series of related dispositions during a 30-day period, is material
    5-2  if it:
    5-3              (1)  is not recurring;
    5-4              (2)  is not in the ordinary course of business; and
    5-5              (3)  involves more than five percent of the reporting
    5-6  insurer's total admitted assets as reported in its most recent
    5-7  statutory statement filed with the department.
    5-8        (b)  An asset acquisition subject to this article includes
    5-9  each purchase, lease, exchange, merger, consolidation, succession,
   5-10  or other acquisition, other than the construction or development of
   5-11  real property by or for the reporting insurer or the acquisition of
   5-12  materials for that purpose.
   5-13        (c)  An asset disposition subject to this article includes
   5-14  each sale, lease, exchange, merger, consolidation, mortgage,
   5-15  hypothecation, assignment, whether for the benefit of creditors or
   5-16  otherwise, abandonment, destruction, or other disposition.
   5-17        (d)  The following information must be disclosed in a report
   5-18  of a material acquisition or disposition of assets:
   5-19              (1)  the date of the transaction;
   5-20              (2)  the manner of acquisition or disposition;
   5-21              (3)  a description of the assets involved;
   5-22              (4)  the nature and amount of the consideration given
   5-23  or received;
   5-24              (5)  the purpose of or reason for the transaction;
   5-25              (6)  the manner by which the amount of consideration
   5-26  was determined;
   5-27              (7)  the gain or loss recognized or realized as a
   5-28  result of the transaction; and
   5-29              (8)  the name of each person from whom the assets were
   5-30  acquired or to whom they were disposed.
   5-31        (e)  An insurer shall report material acquisitions and
   5-32  dispositions on a nonconsolidated basis unless the insurer:
   5-33              (1)  is part of a consolidated group of insurers that
   5-34  uses a pooling arrangement or a 100 percent reinsurance agreement
   5-35  that affects the solvency and integrity of the insurer's reserves;
   5-36  and
   5-37              (2)  ceded substantially all of its direct and assumed
   5-38  business to the pooling arrangement.
   5-39        (f)  For purposes of Subsection (e), an insurer is considered
   5-40  to have ceded substantially all of its direct and assumed business
   5-41  to a pooling arrangement if:
   5-42              (1)  the insurer has, during a calendar year, less than
   5-43  $1 million total direct and assumed written premiums that are not
   5-44  subject to a pooling arrangement; and
   5-45              (2)  the net income of the business not subject to the
   5-46  pooling arrangement represents less than five percent of the
   5-47  insurer's capital and surplus.
   5-48        Sec. 4.  NONRENEWALS, CANCELLATIONS, OR REVISIONS OF CEDED
   5-49  INSURANCE.  (a)  An insurer is not required to report a nonrenewal,
   5-50  cancellation, or revision of a ceded reinsurance agreement under
   5-51  Section 2 of this article if the nonrenewal, cancellation, or
   5-52  revision is not material.  For purposes of this article, a
   5-53  nonrenewal, cancellation, or revision is material if it affects, on
   5-54  an annual basis, as indicated in the insurer's most recently filed
   5-55  statutory statement:
   5-56              (1)  for property and casualty business, including
   5-57  accident and health business when written as property and casualty
   5-58  business, more than 50 percent of an insurer's ceded written
   5-59  premium; or
   5-60              (2)  for life, annuity, and accident and health
   5-61  business, more than 50 percent of the total reserve credit taken
   5-62  for business ceded.
   5-63        (b)  An insurer is not required to report if the insurer's
   5-64  ceded written premium of the total reserve credit taken for
   5-65  business ceded represents, on an annual basis, less than:
   5-66              (1)  10 percent of direct and assumed written premiums;
   5-67  or
   5-68              (2)  10 percent of the statutory reserve requirement
   5-69  before a cession.
   5-70        (c)  Subject to the requirements imposed under Subsections
    6-1  (a) and (b) of this section, an insurer shall file a report without
    6-2  regard to which party initiated the nonrenewal, cancellation, or
    6-3  revision of ceded reinsurance when one or more of the following
    6-4  conditions exist:
    6-5              (1)  the entire cession has been canceled, nonrenewed,
    6-6  or revised, and ceded indemnity and loss adjustment expense
    6-7  reserves after the nonrenewal, cancellation, or revision represent
    6-8  less than 50 percent of the comparable reserves that would have
    6-9  been ceded had the nonrenewal, cancellation, or revision not
   6-10  occurred;
   6-11              (2)  an authorized or accredited reinsurer has been
   6-12  replaced on an existing cession by an unauthorized reinsurer; or
   6-13              (3)  collateral requirements previously established for
   6-14  unauthorized reinsurers have been reduced in that the requirement
   6-15  to collateralize incurred but not reported claim reserves has been
   6-16  waived for one or more unauthorized reinsurers newly participating
   6-17  in an existing cession.
   6-18        (d)  Subject to the requirement of materiality, for purposes
   6-19  of Subsections (c)(2) and (3) of this section, an insurer shall
   6-20  file a report if the result of the revision affects more than 10
   6-21  percent of the cession.
   6-22        (e)  An insurer shall disclose the following information in a
   6-23  report of a material nonrenewal, cancellation, or revision of a
   6-24  ceded reinsurance agreement:
   6-25              (1)  the effective date of the nonrenewal,
   6-26  cancellation, or revision;
   6-27              (2)  a description of the transaction that identifies
   6-28  the initiator of the transaction;
   6-29              (3)  the purpose of or reason for the transaction; and
   6-30              (4)  if applicable, the identity of the replacement
   6-31  reinsurers.
   6-32        (f)  An insurer shall report all material nonrenewals,
   6-33  cancellations, or revisions of ceded reinsurance agreements on a
   6-34  nonconsolidated basis unless the insurer:
   6-35              (1)  is part of a consolidated group of insurers that
   6-36  uses a pooling arrangement or 100 percent reinsurance agreement
   6-37  that affects the solvency and integrity of the insurer's reserves;
   6-38  and
   6-39              (2)  ceded substantially all of its direct and assumed
   6-40  business to the pooling arrangement.
   6-41        (g)  For purposes of Subsection (f) of this section, an
   6-42  insurer is considered to have ceded substantially all of its direct
   6-43  and assumed business to a pooling arrangement if:
   6-44              (1)  the insurer has, during a calendar year, less than
   6-45  $1 million total direct and assumed written premiums that are not
   6-46  subject to the pooling arrangement; and
   6-47              (2)  the net income of the business not subject to the
   6-48  pooling arrangement represents less than five percent of the
   6-49  insurer's capital and surplus.
   6-50        SECTION 14.  Subchapter E, Chapter 21, Insurance Code, is
   6-51  amended by adding Article 21.72 to read as follows:
   6-52        Art. 21.72.  GENERAL REINSURANCE REQUIREMENTS
   6-53        Sec. 1. (a)  An insurance company incorporated under the laws
   6-54  of another state or the United States and authorized to do business
   6-55  in this state may not expose itself to any loss or hazard on any
   6-56  one risk in an amount that exceeds 10 percent of the company's
   6-57  surplus as regards policyholders unless the excess is reinsured by
   6-58  the company in another solvent insurer.
   6-59        (b)  An insurance company incorporated under a jurisdiction
   6-60  other than that of this state, another state, or the United States
   6-61  and authorized to do business in this state may not expose itself
   6-62  to any loss or hazard on any one risk in an amount that exceeds 10
   6-63  percent of the company's deposit with the statutory officer in the
   6-64  state through which the company gains admission to the United
   6-65  States, together with 10 percent of the other surplus to
   6-66  policyholders of the company's United States branch, unless the
   6-67  excess is reinsured by the company in another solvent insurer.
   6-68        Sec. 2.  An insurance or reinsurance company authorized to
   6-69  transact insurance or reinsurance in this state may reinsure the
   6-70  whole or any part of an individual risk in another solvent insurer.
    7-1        Sec. 3.  This article does not apply to:
    7-2              (1)  life insurance;
    7-3              (2)  health insurance;
    7-4              (3)  annuity contracts;
    7-5              (4)  title insurance;
    7-6              (5)  workers' compensation insurance;
    7-7              (6)  employers' liability insurance coverage; or
    7-8              (7)  any policy or type of coverage as to which the
    7-9  maximum possible loss to the insurer is not readily ascertainable
   7-10  on issuance of the policy.
   7-11        Sec. 4.  Any reinsurance required or permitted by this
   7-12  article must comply with Article 5.75-1 of this code.
   7-13        SECTION 15.  Section 1, Article 22.18, Insurance Code, is
   7-14  amended to read as follows:
   7-15        Sec. 1.  The following Articles of this Code<, to
   7-16  wit>:  Article 1.14, Article 1.15, Article 1.15A, Article 1.16,
   7-17  Article 1.19, Article 1.24, Article 1.32, Article 3.10, Article
   7-18  3.13, Article 3.39, Article 3.40, Article 3.61, <Article 3.62,>
   7-19  Article 3.63, Article 3.67, Article 21.07-7, Article 21.21, Article
   7-20  21.25, Article 21.26, Article 21.28, Article 21.32, Article 21.39,
   7-21  Article 21.45, and Article 21.47, shall apply to and govern
   7-22  stipulated premium companies and each company shall comply with the
   7-23  provisions thereof.
   7-24        SECTION 16.  Section 23.26(b), Insurance Code, is amended to
   7-25  read as follows:
   7-26        (b)  The following provisions of the Insurance Code as they
   7-27  now exist or shall hereafter be amended shall, where not in
   7-28  conflict with this chapter, apply to corporations complying with
   7-29  the provisions of this chapter to the same extent as they apply to
   7-30  insurers and to those doing the business of insurance: Articles
   7-31  1.01, 1.02, 1.04, <1.08,> 1.09, 1.09-1, 1.11, 1.12, 1.13, 1.14,
   7-32  1.15, 1.15A, 1.16, 1.17, 1.18, 1.19, 1.20, 1.21, 1.22, 1.23, 1.24,
   7-33  1.25, 1.29, 3.12, 3.13, <3.14,> 21.21, 21.21-2, 21.25, 21.28,
   7-34  21.28-A, <21.28A, and> 21.47, 21.49-8 and Sections 1, 2, 6, 8, 9,
   7-35  10, 11, 12, 13, 14, and 17 of Article 1.10 of this code <the
   7-36  Insurance Code, as amended>.
   7-37        SECTION 17.  Article 25.05, Insurance Code, is amended to
   7-38  read as follows:
   7-39        Art. 25.05.  Other Laws to Govern.  Chapter <Chapters> 2,
   7-40  including Article 2.20, Chapter <and> 8, and Article 4.10 of this
   7-41  code, and all other provisions of the Insurance Code, if not in
   7-42  conflict with this chapter, shall apply to and govern any insurance
   7-43  carrier operating under this chapter.  In addition, Article 21.49-8
   7-44  of this code applies to each insurance carrier operating under this
   7-45  chapter.
   7-46        SECTION 18.  (a)  This Act takes effect September 1, 1995.
   7-47        (b)  The commissioner of insurance shall adopt rules as
   7-48  required by the Insurance Code, as amended by this Act, not later
   7-49  than December 31, 1995.
   7-50        SECTION 19.  The importance of this legislation and the
   7-51  crowded condition of the calendars in both houses create an
   7-52  emergency and an imperative public necessity that the
   7-53  constitutional rule requiring bills to be read on three several
   7-54  days in each house be suspended, and this rule is hereby suspended.
   7-55                               * * * * *