1-1     By:  Flores (Senate Sponsor - Patterson)              H.B. No. 1632

 1-2           (In the Senate - Received from the House April 27, 1997;

 1-3     April 29, 1997, read first time and referred to Committee on

 1-4     Economic Development; May 7, 1997, reported favorably by the

 1-5     following vote:  Yeas 7, Nays 0; May 7, 1997, sent to printer.)

 1-6                            A BILL TO BE ENTITLED

 1-7                                   AN ACT

 1-8     relating to the change of the name of the Texas Catastrophe

 1-9     Property Insurance Association to the Texas Windstorm Insurance

1-10     Association.

1-11           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

1-12           SECTION 1.  Section 3(2), Article 5.13-2, Insurance Code, is

1-13     amended to read as follows:

1-14                 (2)  "Insurer" means an insurer to which Article 5.13

1-15     of this code applies, but does not include the Texas Windstorm

1-16     [Catastrophe Property] Insurance Association.  However, the

1-17     provisions of Sections 4, 5, 6, and 7 of this article shall not

1-18     apply to Lloyd's or reciprocals with respect to commercial property

1-19     insurance.

1-20           SECTION 2.  Section 2, Article 21.49, Insurance Code, is

1-21     amended to read as follows:

1-22           Sec. 2.  NAME OF ACT.  This Act shall be known as the "Texas

1-23     Windstorm [Catastrophe Property] Insurance Association [Pool] Act."

1-24           SECTION 3.  Section 3(b), Article 21.49, Insurance Code, is

1-25     amended to read as follows:

1-26           (b)  "Association" means the Texas Windstorm [Catastrophe

1-27     Property] Insurance Association as established pursuant to the

1-28     provisions of this Act.

1-29           SECTION 4.  The heading to Section 4, Article 21.49,

1-30     Insurance Code, is amended to read as follows:

1-31           Sec. 4.  Creation of the Texas Windstorm [Catastrophe

1-32     Property] Insurance Association.

1-33           SECTION 5.  The heading to Section 5, Article 21.49,

1-34     Insurance Code, is amended to read as follows:

1-35           Sec. 5.  Operation of the Texas Windstorm [Catastrophe

1-36     Property] Insurance Association; Association Board of Directors.

1-37           SECTION 6.  Subsection (f), Article 24.17, Insurance Code, is

1-38     amended to read as follows:

1-39           (f)  Whenever a financed insurance contract is cancelled, and

1-40     the premium finance agreement contains an assignment or power of

1-41     attorney for the benefit of the premium finance company, the

1-42     insurer shall return whatever unearned premiums are due under the

1-43     insurance contract directly to the premium finance company within

1-44     60 days after the policy cancellation date.  The insurer, however,

1-45     may deduct from the unearned premium returned to the premium

1-46     finance company the amount of unearned commission due from the

1-47     agent or agency writing the insurance if the insurer notifies such

1-48     agent or agency that such unearned commission should be returned to

1-49     the premium finance company.  The insurer shall remit the unearned

1-50     commission to the premium finance company within 120 days of the

1-51     policy cancellation date if the agent has not returned the same to

1-52     the premium finance company within 90 days after the policy

1-53     cancellation date.

1-54           Provided, however, agents or agencies shall be liable for the

1-55     return of unearned commissions on policies written through the

1-56     Texas Windstorm [Catastrophe Property] Insurance Association, the

1-57     Texas Automobile Insurance Plan, and the Texas Medical Liability

1-58     Insurance Underwriting Association.  Agents or agencies placing

1-59     business through these plans shall return the unearned commissions

1-60     to the premium finance company within 60 days after the agent or

1-61     agency has been notified of the cancellation.

1-62           The insurer, except the Texas Windstorm [Catastrophe

1-63     Property] Insurance Association, the Texas Automobile Insurance

1-64     Plan, and the Texas Medical Liability Insurance Underwriting

 2-1     Association, may return the unearned premiums to the producing

 2-2     agent or agency; however, the insurer shall remain liable and remit

 2-3     to the premium finance company within 120 days of the policy

 2-4     cancellation date if the producing agent or agency does not return

 2-5     the unearned premiums to the premium finance company within 90 days

 2-6     after the policy cancellation date, provided the premium finance

 2-7     company complied with the provisions of Article 24.22 herein.  In

 2-8     the event the premium finance company fails to comply with the

 2-9     provisions in Article 24.22 herein, the insurer, including the

2-10     Texas Windstorm [Catastrophe Property] Insurance Association, the

2-11     Texas Automobile Insurance Plan, and the Texas Medical Liability

2-12     Insurance Underwriting Association, may satisfy any legal

2-13     obligations it has to return the unearned premiums due under the

2-14     insurance contract to the insurance premium finance company or

2-15     returning said unearned premiums to the producing agent or agency.

2-16           SECTION 7.  Article 24.22, Insurance Code, is amended to read

2-17     as follows:

2-18           Art. 24.22.  EXISTENCE OF AGREEMENT; NOTIFICATION OF

2-19     INSURERS.  Any premium finance company which enters into a premium

2-20     finance agreement which includes an assignment or power of attorney

2-21     shall notify either the insurer or the Texas Windstorm [Catastrophe

2-22     Property] Insurance Association, the Texas Automobile Insurance

2-23     Plan, or the Texas Medical Liability Insurance Underwriting

2-24     Association whose premiums are being financed of the existence of

2-25     such agreement and to whom the premium payment has been made.

2-26     Provided, however, the premium finance company shall notify and

2-27     fund all premiums to county mutual insurance companies unless the

2-28     premium finance company is authorized in writing by the county

2-29     mutual to notify or fund an agent or managing general agent.

2-30     Notification shall be made within 30 days of the date the agreement

2-31     is accepted by the premium finance company.

2-32           SECTION 8.  The importance of this legislation and the

2-33     crowded condition of the calendars in both houses create an

2-34     emergency and an imperative public necessity that the

2-35     constitutional rule requiring bills to be read on three several

2-36     days in each house be suspended, and this rule is hereby suspended,

2-37     and that this Act take effect and be in force from and after its

2-38     passage, and it is so enacted.

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