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.