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.

         _______________________________     _______________________________

             President of the Senate              Speaker of the House

               I certify that H.B. No. 1789 was passed by the House on May

         8, 1997, by a non-record vote.

                                             _______________________________

                                                 Chief Clerk of the House

               I certify that H.B. No. 1789 was passed by the Senate on May

         24, 1997, by a viva-voce vote.

                                             _______________________________

                                                 Secretary of the Senate

         APPROVED:  _____________________

                            Date

                    _____________________

                          Governor