SRC-CDH H.B. 2221 75(R)   BILL ANALYSIS


Senate Research Center   H.B. 2221
By: Turner, Bob (Ratliff)
Economic Development
5-14-97
Engrossed


DIGEST 

Currently, the Insurance Code authorizes stipulated premium companies to
assume liability on a life insurance risk on any one life under certain
conditions.  Group II agents, who are not required to take an examination
or meet continuing education requirements may be licensed to sell life
insurance policies in the amount of $7,500 or less.  These policies are
not marketed in sophisticated ways like life insurance policies, and are
simply for the funding of a funeral and the payment of debts of an insured
at the time of death.  H.B. 2221 would increase the amount of life
insurance policies sold by stipulated premium companies to $10,000, and
would require companies to reinsure the insurance amount exceeding $10,000
on a life insurance risk. 

PURPOSE

As proposed, H.B. 2221 establishes limitations on the amount of life
insurance risk that may be written by certain agents of or assumed by a
stipulated premium insurance company.   

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 3, Article 21.07, Insurance Code, to require the
commissioner of insurance, rather than the State Board of Insurance, to
issue a license to a person or corporation in such form as the Texas
Department of Insurance may prepare authorizing such applicant to write
the types of insurance authorized by law to be issued by applicant's
appointing insurance carrier, except that such applicant, if not a
partnership or corporation, is prohibited from being authorized to write
life insurance in excess of $10,000, rather than $7,5000, upon any one
life, with certain exceptions. 

SECTION 2. Amends Section 4A, Article 21.07, Insurance Code, as follows:

Sec. 4A.  New heading:  EXAMINATION OF APPLICANT FOR LICENSE TO WRITE LIFE
INSURANCE UPON ANY ONE LIFE IN EXCESS OF $10,000.  Makes conforming
changes.   

SECTION 3. Amends Article 21.07, Insurance Code, by adding Section 15A, as
follows: 

Sec. 15A.  CERTAIN AGENTS FOR STIPULATED PREMIUM COMPANIES.  Provides that
a person or corporation that holds a license issued under Article 21.07-1,
Insurance Code, is entitled to write life insurance under that license for
a stipulated premium company without obtaining a license under this
article.  Authorizes a stipulated premium company to appoint as its agent
a person or corporation that holds a license under Article 21.07-1,
Insurance Code.   

SECTION 4. Amends Article 22.07, Insurance Code, by adding Section 3, as
follows: 

Sec. 3.  Provides that if the surplus of a stipulated premium company is
at least $50,000 but less than $200,000, the stipulated premium company is
required to reinsure the insurance amount that exceeds $10,000 on a life
insurance risk on any one life. 
 
SECTION 5. Amends Section 1(b), Article 22.13, Insurance Code, to provide
that if a stipulated premium company assumes a life insurance risk under
the life insurance policy, the initial death benefit may increase to a
certain amount.  Prohibits the death benefit, for a policy in which the
death benefit subsequent to issuance exceeds a certain amount, from
exceeding a certain amount at the end of each policy year.  Provides that
the maximum increase that may be specified in a life insurance policy
subject to this article is five percent, compounded annually.  Provides
that for the purposes of this subsection, the CPI-U for a given calender
year is the consumer price index for all urban consumers for all items and
for all regions of the United States, combined as determined by certain
entities on a set date.  Makes conforming changes. 

SECTION 6. Amends Article 22.23(a), Insurance Code, to authorize each
stipulated premium company possessing capital and unencumbered surplus of
a certain amount to issue policies of life insurance, provided that no
individual life shall be insured for more than $10,000, except as provided
by Section 1(b), Article 22.13 or Article 22.23A of this code.  

SECTION 7. (a)  Effective date:  September 1, 1997.
        Makes application of this Act prospective.

(b)  Provides that an insurance policy is considered renewed on the date
that the policyholder makes a payment of a premium on the policy.   

SECTION 8. Emergency clause.