1-1     By:  Driver, Counts (Senate Sponsor - Duncan)          H.B. No. 922

 1-2           (In the Senate - Received from the House April 21, 1997;

 1-3     April 22, 1997, read first time and referred to Committee on

 1-4     Economic Development; April 29, 1997, reported favorably by the

 1-5     following vote:  Yeas 9, Nays 0; April 29, 1997, sent to printer.)

 1-6                            A BILL TO BE ENTITLED

 1-7                                   AN ACT

 1-8     relating to the board of directors of the Life, Accident, Health,

 1-9     and Hospital Service Insurance Guaranty Association.

1-10           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

1-11           SECTION 1.  Sections 7(a) and (d), Article 21.28-D, Insurance

1-12     Code, are amended to read as follows:

1-13           (a)  The commissioner [State Board of Insurance] shall

1-14     appoint a board of directors of the association consisting of nine

1-15     members, three of whom shall be chosen from employees or officers

1-16     chosen from the 50 [ten] member companies having the largest total

1-17     direct premium income based on the latest financial statement on

1-18     file at date of appointment, two of whom shall be chosen from the

1-19     other companies to give fair representation to member insurers

1-20     based on due consideration of their varying categories of premium

1-21     income and geographical location, and four of whom shall be

1-22     representatives of the general public.  Members serve for six-year

1-23     staggered terms, with the terms of three members expiring each

1-24     odd-numbered year.  All directors shall serve until their

1-25     successors are appointed, except that in the case of any vacancy,

1-26     the unexpired term of office shall be filled by the appointment of

1-27     a director by the commissioner [State Board of Insurance].  If a

1-28     director ceases to be an officer or employee of a member insurer

1-29     during the director's term of office, that office becomes vacant

1-30     until the director's successor is appointed.  All directors are

1-31     eligible to succeed themselves in office.  A public representative

1-32     may not be:

1-33                 (1)  an officer, director, or employee of an insurance

1-34     company, insurance agency, agent, broker, solicitor, adjuster, or

1-35     any other business entity regulated by the department [State Board

1-36     of Insurance];

1-37                 (2)  a person required to register with the secretary

1-38     of state under Chapter 305, Government Code;  or

1-39                 (3)  related to a person described by Subparagraph (1)

1-40     or (2) of this paragraph within the second degree of affinity or

1-41     consanguinity.

1-42           (d)  A director of the association [or any member company or

1-43     other entity represented by the director] may not receive any money

1-44     or valuable thing directly, indirectly, or through any substantial

1-45     interest in any other corporation, firm, or business unit for

1-46     negotiating, procuring, participating, recommending, or aiding in a

1-47     transaction, reinsurance agreement, merger, purchase, sale,

1-48     contribution, or exchange of assets, policies of insurance, or

1-49     property made by the association or the supervisor, conservator, or

1-50     receiver on behalf of an impaired insurer.  A [The] director of the

1-51     association [, company, or entity] may not have a pecuniary

1-52     interest [be pecuniarily or contractually interested], as

1-53     principal, co-principal, agent, or beneficiary, directly,

1-54     indirectly, or through any substantial interest in any other

1-55     corporation, firm, or business unit, in the transaction,

1-56     reinsurance agreement, merger, purchase, sale, contribution, or

1-57     exchange.

1-58           SECTION 2.  This Act takes effect September 1, 1997.

1-59           SECTION 3.  The importance of this legislation and the

1-60     crowded condition of the calendars in both houses create an

1-61     emergency and an imperative public necessity that the

1-62     constitutional rule requiring bills to be read on three several

1-63     days in each house be suspended, and this rule is hereby suspended.

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