SRC-HRD C.S.H.B. 1356 75(R)BILL ANALYSIS


Senate Research CenterC.S.H.B. 1356
By: Counts (Haywood)
Economic Development
5-18-97
Committee Report (Substituted)


DIGEST 

The issuance of permits to sell prearranged funeral contracts and related
matters are strictly regulated by the Department of Banking.  Current law
lists two alternatives for investment of purchaser-paid funds and earnings
thereon:  (1) a life insurance policy or annuity contract approved by the
Texas Department of  Insurance and issued by an insurance company licensed
in Texas, or (2) a "trust" account consisting of deposits with a bank,
savings and loan, or trust company.   

This bill would allow insurers that issue life or annuity coverage under
regulated prepaid funeral contracts to simplify the licensing of agents
who write insurance only in the funeral prearrangement market.  The bill
would also allow an insurer to administer its own instruction and
licensing examination under a program approved by the commissioner of
insurance but subject to the commissioner's discretionary withdrawal.  
                
PURPOSE

As proposed, C.S.H.B. 1356 sets forth provisions regarding the licensing
of funeral prearrangement life insurance agents. 

RULEMAKING AUTHORITY

This bill does not grant any additional rulemaking authority to a state
officer, institution, or agency. 

SECTION BY SECTION ANALYSIS

SECTION 1. Amends Article 21.07-1, V.T.C.S., by adding Section 5A, as
follows: 

Sec. 5A.  FUNERAL PREARRANGEMENT LIFE INSURANCE AGENT.  (a) Defines
"funeral prearrangement life insurance agent."   

(b) Requires the commissioner of insurance (commissioner) to issue a
limited purpose license to act as a funeral prearrangement life insurance
agent for an authorized legal reserve life insurance company to an
applicant other than a partnership or corporation after receiving
certification from the insurance company that the applicant has completed
a course of study and instruction offered by the insurance company and
passed without aid a written examination administered by the insurance
company.   

(c) Requires the commissioner to authorize a legal reserve life insurance
company to administer a funeral prearrangement life insurance examination
after the commissioner approves for the insurance company a complete
outline and explanation of the course of study and instruction on life
insurance and fixed annuities for applicants and the nature and manner of
conducting the examination for applicants.  Requires the commissioner, on
or before September 1, 1997, to promulgate a uniform examination for
applicants fairly addressing the information contained in the approved
course of study and instruction.   

(d) Requires the course of study and instruction to be for five hours and
to include instruction on both the policies to be sold and the law
relating to funeral prearrangement.  
 
(e) Authorizes the commissioner to investigate as necessary the manner and
method of instruction and examination of each authorized legal reserve
life insurance company. Authorizes the commissioner at the commissioner's
discretion to withdraw from an insurance company the authority to offer
instruction and administer an examination. 

(f) Sets forth prohibitions for a funeral prearrangement life insurance
agent licensed under this section. 

(g) Requires the commissioner to stamp "FUNERAL PREARRANGEMENT LIFE
INSURANCE AGENT LICENSE"  on a license issued under this section. 

(h)  Sets forth provisions regarding expiration of a license issued under
this section. 

(i) Provides that an applicant for or holder of a license issued under
this section is not subject to the requirements of this article, other
than the requirements of Sections 5A and 12. 

SECTION 2. Emergency clause.
  Effective date: upon passage. 

SUMMARY OF COMMITTEE CHANGES

SECTION 2.

Redesignated from proposed SECTION 4.

Removes proposed changes to Article 3.50-6, Insurance Code.

Removes proposed SECTION 3, to conform to the removal of the proposed
changes to Article 3.506, Insurance Code.