RS H.B. 2873 75(R)    BILL ANALYSIS


INSURANCE
H.B. 2873
By: Goodman
4-20-97
Committee Report (Unamended)


BACKGROUND 

The current provisions of the Insurance Code exempt property and casualty
insurers from the use of standard policy forms for large insurance risks.
A "large risk" is currently defined as one for which the total property
value meets of exceeds $10 million, the insured's revenue meets or exceeds
$20 million, or the insurance premiums meet or exceed $50,000 for property
insurance, $50,000 for general liability insurance, or $100,000 for
multi-peril insurance. These large risks are nearly always businesses who
have the sophistication and knowledge to evaluate the policies they
purchase, and they prefer the flexibility to be able to choose the types
of coverage they purchase rather than being forced to purchase standard
coverages under the Insurance Department's promulgated policy forms.
Originally authorized in 1991, this program has worked to benefit insureds
coming under the large risk definition. 

PURPOSE

The purpose of this bill is to expand the definition of "large risk", by
reducing the levels at which an insured becomes eligible for this
category. 

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 8(f), Art. 5.13-2, Insurance Code by decreasing
the thresholds which determine the eligibility to be a "large risk" to $5
million in insured property value, $10 million in annual gross revenue, or
total premiums of $25,000 for property insurance, $25,000 for general
liability insurance, or $50,000 for multi-peril insurance. 

SECTION 2. Emergency Clause.