By Lewis of Tarrant H.B. No. 1789
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to reductions by certain insurers in writing or in the
1-3 authority of agents to bind or solicit certain types of personal
1-4 lines insurance.
1-5 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-6 SECTION 1. Article 21.49-2C, Insurance Code, is amended by
1-7 amending Subsections (a) and (g) and adding Subsection (h) to read
1-8 as follows:
1-9 (a)(1) An [When an] authorized insurer shall file with the
1-10 commissioner a plan for orderly withdrawal if the insurer proposes
1-11 to withdraw from writing a line of insurance in this state or to
1-12 reduce its total annual premium volume by 75 percent or more or
1-13 proposes, in a personal line of motor vehicle comprehensive or
1-14 residential property insurance, to reduce its total annual premium
1-15 volume in a rating territory by 50 percent or more [it shall file
1-16 with the commissioner a plan of orderly withdrawal]. The insurer's
1-17 plan shall be constructed to protect the interests of the people of
1-18 this state and shall indicate the date it intends to begin and
1-19 complete its withdrawal plan and must contain provisions for:
1-20 (A) [(1)] meeting the insurer's contractual
1-21 obligations;
1-22 (B) [(2)] providing service to its Texas
1-23 policyholders and claimants; and
1-24 (C) [(3)] meeting any applicable statutory
2-1 obligations, such as the payment of assessments to the guaranty
2-2 fund and participation in any assigned risk plans or joint
2-3 underwriting arrangements.
2-4 (2) If within six months after a catastrophic event of
2-5 natural origin an insurer, in response to such catastrophic event,
2-6 wishes to restrict its writing of new business in a personal line
2-7 of comprehensive motor vehicle or residential property insurance in
2-8 a rating territory, it shall prepare and file a plan as to such
2-9 proposed plan of restriction with the commissioner for the
2-10 commissioner's review and comment. Approval of such plan is not
2-11 required and the insurer may institute such plan 15 days after
2-12 filing. However, in the event of a conflict between Subsections
2-13 (a)(1) and (a)(2), where not accepting new business may result in a
2-14 withdrawal as defined in Subsection (a)(1), Subsection (a)(1)
2-15 controls.
2-16 (3) "Rating territory" means a rating territory
2-17 established by the Texas Department of Insurance.
2-18 (g) The commissioner may impose a moratorium of up to two
2-19 years on the approval of plans for withdrawal or implementation of
2-20 plans to restrict the writing of new business pursuant to
2-21 Subsection (a)(2) of this section, including those such plans
2-22 implemented subsequent to the commissioner's publishing of notice
2-23 of intention to impose a moratorium regarding the catastrophic
2-24 event related to such plans, and may renew the moratorium annually.
2-25 To impose or renew a moratorium, the commissioner must find after
2-26 notice and public hearing that a catastrophic event has occurred
2-27 and that as a result of the event, the relevant line of insurance
3-1 is not reasonably expected to be available to a substantial number
3-2 of policyholders or potential policyholders in this state, or in
3-3 the case of personal lines of motor vehicle comprehensive or
3-4 residential property insurance, in a rating territory. Such notice
3-5 and hearing shall be governed by provisions of Chapter 2001,
3-6 Government Code, related to contested cases and of Subsection (b),
3-7 Article 1.33B, Insurance Code. The commissioner shall, by rule,
3-8 establish reasonable criteria for applying the above set forth
3-9 standards for determining whether to impose a moratorium. The
3-10 commissioner may limit a moratorium on withdrawal from or reduction
3-11 in personal lines insurance to certain geographical areas of this
3-12 state.
3-13 (h) The board shall adopt such rules as may be necessary to
3-14 enforce the provisions of this article.
3-15 SECTION 2. This Act takes effect September 1, 1997, and
3-16 applies only to a reduction or restriction in writing new business
3-17 by an insurer on or after that date. A reduction or restriction in
3-18 writing new business by an insurer before the effective date of
3-19 this Act in an insurer's writing of personal lines motor vehicle
3-20 comprehensive or residential property insurance is governed by the
3-21 law as it existed immediately before the effective date of this
3-22 Act, and that law is continued in effect for that purpose.
3-23 SECTION 3. The importance of this legislation and the
3-24 crowded condition of the calendars in both houses create an
3-25 emergency and an imperative public necessity that the
3-26 constitutional rule requiring bills to be read on three several
3-27 days in each house be suspended, and this rule is hereby suspended.