SRC-JFA, JFA H.B. 1708 75(R)   BILL ANALYSIS


Senate Research Center   H.B. 1708
By: Lewis, Glenn (Lucio)
Economic Development
5-14-97
Engrossed


DIGEST 

Currently, property and casualty insurance companies are required to
participate in guaranty funds whereby they are assessed and have to pay
for the policyholder claims of insolvent insurance companies.  Those
companies are allowed a credit for assessments paid against current and
future premium taxes due up to a maximum credit of 10 percent per year for
10 years.  These credits are not assignable to another company in the
event of a merger, acquisition or a contract for assumption reinsurance.
Mergers, acquisitions or contracts for assumption reinsurance may result
in a stronger, more solvent insurance entity and thereby afford more
protection for the public.  The Department of Insurance cannot order the
assignment of these credits in cases involving rehabilitation or
liquidation.  Such ability may provide more funds to pay policyholders and
creditors.  This bill would permit the assignment of premium tax credits
among affected insurers in the event of a merger, acquisition, contract
for assumption reinsurance, or by order of the commissioner of insurance. 
  
PURPOSE

As proposed, H.B. 1708 permits the assignment of premium tax credits among
affected insurers in the event of a merger, acquisition, contract for
assumption reinsurance, or by order of the commissioner of insurance.  

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 Section 21, Article 21.28-C, Insurance Code, as follows:

Sec. 21.  New heading:  RECOGNITION OF ASSESSMENTS IN PREMIUM TAX OFFSET;
ASSIGNMENT OF CREDIT.  Authorizes available credit against premium tax
allowed under Subsection (a) of this section to be transferred or assigned
among or between insurers if a merger, acquisition, or total assumption of
reinsurance among or between the insurers occurs; or the commissioner of
insurance, by order, approves the transfer or assignment.  

SECTION 2. Makes application of this act retroactive. 

SECTION 3. Emergency clause.
  Effective date: upon passage.