ZEM C.S.H.B. 1477 75(R)BILL ANALYSIS CIVIL PRACTICES C.S.H.B. 1477 By: Bonnen 4-1-97 Committee Report (Substituted) BACKGROUND The Texas Catastrophe Property Insurance Association (TCPIA) is composed of all Texas property and casualty insurers. The Association is governed by a nine member board of directors, five members of which represent insurance companies and are elected by the members of the association, two members of the board represent insurance agents and two members of the board are consumers who represent policy holders. The Commissioner of Insurance appoints the board members representing insurance agents and consumers. All TCPIA board members serve on a volunteer basis and are not compensated for their services. The TCPIA board members are not protected from liability for most actions undertaken in the course of their official duties. PURPOSE House Bill 1477, as substituted, relieves directors of the Texas Catastrophe Property Insurance Association, but not the Association itself, from liability arising from good faith actions occurring in the performance of their duties. House Bill 1477 does not extend to acts of intentional misconduct or willful violation of the law. This bill will help the Commissioner of Insurance in his efforts to appoint qualified TCPIA board members who might be unwilling to serve in these volunteer positions in the face of personal liability exposure. RULEMAKING AUTHORITY It is the committee's opinion that this bill does not expressly grant any additional rulemaking authority to a state officer, department, agency or institution. SECTION BY SECTION ANALYSIS SECTION 1. Amends Section 9A(a), Article 21.49, Insurance Code, by adding language clarifying the applicability of Section 9. SECTION 2. Amends Section 10, Article 21.49, Insurance Code, as follows: (a) Relieves a director of the Texas Catastrophe Property Insurance Association from liability for any action or failure to act in the performance of powers and duties as members of the Association; not applicable to a bad faith act, failure to act, or to an act that involves gross negligence, intentional misconduct or a knowing violation of the law. SECTION 3. Effective Date: September 1, 1997. Applies prospectively. Savings clause. SECTION 4. Emergency clause. COMPARISON OF ORIGINAL TO SUBSTITUTE The committee substitute provides that the immunity from liability is extended only to directors of the association, not to officers, agents, or employees, and clarifies that the immunity applies only to the performance of official powers and duties and does not apply to acts of gross negligence. The substitute also reinstates current language in the statute deleted from the original bill which provides that the directors, the Board and its staff, the Association and its employees and agents are not liable for inspections.