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