By Maxey                                        H.B. No. 1763

      75R5956 PB-D                           

                                A BILL TO BE ENTITLED

 1-1                                   AN ACT

 1-2     relating to required community investments by certain insurers and

 1-3     to reports filed by insurers regarding those and other investments.

 1-4           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

 1-5           SECTION 1.  Subchapter E, Chapter 21, Insurance Code, is

 1-6     amended by adding Article 21.39-C to read as follows:

 1-7           Art. 21.39-C.  COMMUNITY INVESTMENTS; REPORT

 1-8           Sec. 1.  LEGISLATIVE FINDINGS; PURPOSE.  (a)  The legislature

 1-9     finds that insurers are a major source of investment capital in

1-10     this state.  Many low-income communities in this state, both rural

1-11     and urban, need greater access to investment capital for purposes

1-12     such as small business and community economic development and

1-13     affordable housing rehabilitation and construction.

1-14           (b)  The legislature further finds that investments under the

1-15     Community Reinvestment Act of 1977 (12 U.S.C.  Section 2901 et

1-16     seq.) have helped to revitalize low-income communities and have

1-17     enhanced economic growth and stability in this state.  Those types

1-18     of investments are overlooked business opportunities that offer

1-19     competitive rates of return and do not compromise the financial

1-20     interests of shareholders and policyholders.

1-21           (c)  The purpose of this article is to increase safe and

1-22     sound investments by insurers in low-income communities and to

1-23     provide to the state information on investments in low-income

1-24     communities.

 2-1           Sec. 2.  DEFINITIONS.  In this article:

 2-2                 (1)  "Area median income" has the meaning assigned by

 2-3     Section 2306.123, Government Code.

 2-4                 (2)  "Insurer" means any entity authorized to do

 2-5     business in this state as an insurance company or authorized to

 2-6     provide insurance in this state, including:

 2-7                       (A)  a capital stock company;

 2-8                       (B)  a mutual company;

 2-9                       (C)  a title insurance company;

2-10                       (D)  a fraternal benefit society;

2-11                       (E)  a local mutual aid association;

2-12                       (F)  a statewide mutual assessment company;

2-13                       (G)  a county mutual insurance company;

2-14                       (H)  a Lloyd's plan company;

2-15                       (I)  a reciprocal or interinsurance exchange;

2-16                       (J)  a stipulated premium insurance company;

2-17                       (K)  a group hospital service company;

2-18                       (L)  a health maintenance organization;

2-19                       (M)  a farm mutual insurance company;

2-20                       (N)  a risk retention group; and

2-21                       (O)  a surplus lines carrier.

2-22                 (3)  "Low income" means, in the case of an individual,

2-23     an individual income, or, in the case of a geographic area, a

2-24     median family income that is at least 50 percent and less than  80

2-25     percent of the adjusted area median income, adjusted for family

2-26     size and revised annually.

2-27           Sec. 3.  COMMUNITY INVESTMENT.  Each insurer that generates

 3-1     an average annual written premium of at least $2 million in this

 3-2     state has a continuing and affirmative obligation to invest in

 3-3     low-income communities of this state in a manner that has a

 3-4     positive effect on those communities.

 3-5           Sec. 4.  REPORT.  (a)  Each insurer shall annually report to

 3-6     the department:

 3-7                 (1)  each investment made by the insurer in this state

 3-8     in an asset in this state or in a municipality, business, or

 3-9     institution of this state, including an investment in:

3-10                       (A)  an obligation of this state, an agency of

3-11     this state, or a municipality or other political subdivision of

3-12     this state;

3-13                       (B)  real property or real property financing,

3-14     including the financing of construction or rehabilitation of

3-15     housing undertaken under a federal, state, or local housing

3-16     assistance program; and

3-17                       (C)  common stock or another security of business

3-18     in this state, including a security of a small business or business

3-19     located in an area designated by a federal, state, or local law or

3-20     program as an enterprise, economic development, or similar zone;

3-21                 (2)  each charitable contribution made by the insurer

3-22     in this state;

3-23                 (3)  each investment made in a low-income community of

3-24     this state under Section 3 of this article;

3-25                 (4)  each activity conducted by the insurer in this

3-26     state to make its customers aware of the investments and charitable

3-27     contributions made by the insurer; and

 4-1                 (5)  any other similar information required by

 4-2     commissioner's rule.

 4-3           (b)  The information required by Subsection (a) of this

 4-4     section must be correct on the last day of the latest month

 4-5     preceding the 30th day before the date on which the report is filed

 4-6     with the department.

 4-7           Sec. 5.  RULES.  (a)  The commissioner shall adopt rules as

 4-8     necessary to implement Section 3 of this article.

 4-9           (b)  The commissioner shall adopt rules on the submission of

4-10     reports under this article, including rules specifying the date by

4-11     which an insurer is required to file the report.  The commissioner

4-12     may establish different filing dates for different types of

4-13     insurers to coordinate the filing date with the filing date for a

4-14     different report required under this code.

4-15           Sec. 6.  INVESTMENTS NOT AUTHORIZED.  This article does not

4-16     authorize an insurer to make an investment not otherwise authorized

4-17     by this code.

4-18           Sec. 7.  PUBLIC INFORMATION.  A report filed under this

4-19     article is public information.

4-20           SECTION 2.  (a)  Except as provided by Subsection (b) of this

4-21     section, this Act takes effect September 1, 1997.

4-22           (b)  An insurer is not required to file an annual report

4-23     under Article 21.39-C, Insurance Code, as added by this Act, before

4-24     January 31, 1998.  An insurer is not required to make a community

4-25     investment as required by Section 3, Article 21.39-C, Insurance

4-26     Code, as added by this Act, until the calendar year beginning

4-27     January 1, 1998.

 5-1           SECTION 3.  The importance of this legislation and the

 5-2     crowded condition of the calendars in both houses create an

 5-3     emergency and an imperative public necessity that the

 5-4     constitutional rule requiring bills to be read on three several

 5-5     days in each house be suspended, and this rule is hereby suspended.