RS H.B. 2193 75(R)    

BILL ANALYSIS
INSURANCE
H.B. 2193
By: Wise
3-25-97
Committee Report (Unamended)


BACKGROUND

Alien surplus lines insurers are generally free from regulation from the
Texas Department of Insurance and are located in foreign countries. Under
current Texas law, alien surplus lines insurers must establish a US trust
fund of only $1.5 million. The current requirement of $1.5 million is
inadequate when compared to the obligations these insurers have to the
public.  Most other states require $5.4 million.  These trust funds are
the primary solvency protection for such insurers because the public is
not afforded guaranty fund protection in the event of insolvency.  In
fact, a recent insolvency of one surplus lines insurer has left some Texas
consumers with unpaid insurance claims. 

PURPOSE

To increase the minimum trust fund requirement for surplus lines insurers
writing business in Texas from $1.5 million to $5.4 million. 

RULEMAKING AUTHORITY

It is the committee's opinion that this bill contains no additional rule
making authority 

SECTION BY SECTION ANALYSIS

SECTION 1. - Amends section 8(d), article 1.14-2, Insurance Code, by
increasing the   trust fund requirement from $1.5 million to $5.4 million. 

SECTION 2. - Act takes effect on September 1, 1997.

SECTION 3. - Act only applies to surplus lines insurance placed with an
insurer on or   after September 1, 1997. 

SECTION 4. - Emergency Clause