1-1                                   AN ACT

 1-2     relating to rates for certain lines of insurance.

 1-3           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

 1-4           SECTION 1.  Section 3, Article 5.101, Insurance Code, is

 1-5     amended by adding Subsection (r) to read as follows:

 1-6           (r)  In order to avoid the circumvention of the flexible

 1-7     rating program, and notwithstanding any other provision of this

 1-8     article, a county mutual insurance company may not use a rate for

 1-9     an insured on private passenger automobile insurance, other than

1-10     insurance on mobile homes and single interest insurance, that,

1-11     after the application of all discounts and policy fees, is lower

1-12     than the highest rate allowed under the flexibility band for that

1-13     line, if the county mutual insurance company is directly or

1-14     indirectly controlled by a holding company, as that term is defined

1-15     by Article 21.49-1 of this code, that also directly or indirectly

1-16     controls another insurance company, including a Lloyds or

1-17     reciprocal exchange, which writes private passenger automobile

1-18     insurance in Texas.

1-19           SECTION 2.  This Act applies only to a rate applicable to an

1-20     insurance policy that is delivered, issued for delivery, or renewed

1-21     on or after January 1, 1998.  A rate applicable to an insurance

1-22     policy that is delivered, issued for delivery, or renewed before

1-23     January 1, 1998, is governed by the law as it existed immediately

1-24     before the effective date of this Act, and that law is continued in

 2-1     effect for this purpose.

 2-2           SECTION 3.  This Act takes effect September 1, 1997.

 2-3           SECTION 4.  The importance of this legislation and the

 2-4     crowded condition of the calendars in both houses create an

 2-5     emergency and an imperative public necessity that the

 2-6     constitutional rule requiring bills to be read on three several

 2-7     days in each house be suspended, and this rule is hereby suspended.

         _______________________________     _______________________________

             President of the Senate              Speaker of the House

               I certify that H.B. No. 1662 was passed by the House on May

         13, 1997, by the following vote:  Yeas 88, Nays 43, 2 present, not

         voting; and that the House concurred in Senate amendments to H.B.

         No. 1662 on May 29, 1997, by the following vote:  Yeas 86, Nays 52,

         1 present, not voting.

                                             _______________________________

                                                 Chief Clerk of the House

               I certify that H.B. No. 1662 was passed by the Senate, with

         amendments, on May 22, 1997, by a viva-voce vote.

                                             _______________________________

                                                 Secretary of the Senate

         APPROVED:  _____________________

                            Date

                    _____________________

                          Governor