KMS S.B. 1913 75(R) BILL ANALYSIS INSURANCE S.B. 1913 By: Sibley (Smithee) 5-1-97 Committee Report (Unamended) DIGEST Currently, Texas law is silent regarding the sale of a service contract by the manufacturer or seller of the property covered. This bill clarifies that transactions involving service contracts by the manufacturer or seller of the property covered are not subject to the Insurance Code. Additionally, the bill requires third party obligors to insure their obligation with an insurer licensed to do business in Texas. PURPOSE As proposed, C.S.S.B. 1913 clarifies that transactions involving service contracts by the manufacturer or seller of the property covered are not subject to the Insurance Code. Additionally, the bill requires third party obligors to insure their obligation with an insurer licensed to do business in Texas. 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 Article 1.14-1(2), Insurance Code, by adding Subsection (b)(9) and (10), to read as follows: (9) Provides that transactions in this state involving service contracts sold by the manufacturer or seller of the property covered by the service contract where the manufacturer or seller of property or a third party is the obligor of the service contract; provided that, in the case of a third party obligor, the third party's obligation is insured by a licensed Texas insurer. Defines "service contract." (10) Defines "asset management contract" as contract or agreement for a separately stated consideration for a specific duration to manage the capital equipment assets of the owner of the equipment. Includes the maintenance costs associated with service and repair from equipment failure. A management contract is exempt from the provisions of the Insurance Code. SECTION 2. Effective date: September 1, 1997. SECTION 3. Emergency clause.