1-1     By:  Lewis of Tarrant (Senate Sponsor - Moncrief)     H.B. No. 1789

 1-2           (In the Senate - Received from the House May 9, 1997;

 1-3     May 12, 1997, read first time and referred to Committee on Economic

 1-4     Development; May 18, 1997, reported favorably by the following

 1-5     vote:  Yeas 10, Nays 0; May 18, 1997, sent to printer.)

 1-6                            A BILL TO BE ENTITLED

 1-7                                   AN ACT

 1-8     relating to reductions by certain insurers in writing or in the

 1-9     authority of agents to bind or solicit certain types of personal

1-10     lines insurance.

1-11           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

1-12           SECTION 1.  Article 21.49-2C, Insurance Code, is amended by

1-13     amending Subsections (a) and (g) and adding Subsection (h) to read

1-14     as follows:

1-15           (a)(1)  An [When an] authorized insurer shall file with the

1-16     commissioner a plan for orderly withdrawal if the insurer proposes

1-17     to withdraw from writing a line of insurance in this state or to

1-18     reduce its total annual premium volume by 75 percent or more or

1-19     proposes, in a personal line of motor vehicle comprehensive or

1-20     residential property insurance, to reduce its total annual premium

1-21     volume in a rating territory by 50 percent or more [it shall file

1-22     with the commissioner a plan of orderly withdrawal].  The insurer's

1-23     plan shall be constructed to protect the interests of the people of

1-24     this state and shall indicate the date it intends to begin and

1-25     complete its withdrawal plan and must contain provisions for:

1-26                       (A) [(1)]  meeting the insurer's contractual

1-27     obligations;

1-28                       (B) [(2)]  providing service to its Texas

1-29     policyholders and claimants; and

1-30                       (C) [(3)]  meeting any applicable statutory

1-31     obligations, such as the payment of assessments to the guaranty

1-32     fund and participation in any assigned risk plans or joint

1-33     underwriting arrangements.

1-34                 (2)  If within six months after a catastrophic event of

1-35     natural origin an insurer, in response to such catastrophic event,

1-36     wishes to restrict its writing of new business in a personal line

1-37     of comprehensive motor vehicle or residential property insurance in

1-38     a rating territory, it shall prepare and file a plan as to such

1-39     proposed plan of restriction with the commissioner for the

1-40     commissioner's review and comment.  Approval of such plan is not

1-41     required and the insurer may institute such plan 15 days after

1-42     filing.  However, in the event of a conflict between Subsections

1-43     (a)(1) and (a)(2), where not accepting new business may result in a

1-44     withdrawal as defined in Subsection (a)(1), Subsection (a)(1)

1-45     controls.

1-46                 (3)  "Rating territory" means a rating territory

1-47     established by the Texas Department of Insurance.

1-48           (g)  The commissioner may impose a moratorium of up to two

1-49     years on the approval of plans for withdrawal or implementation of

1-50     plans to restrict the writing of new business pursuant to

1-51     Subsection (a)(2) of this section, including those such plans

1-52     implemented subsequent to the commissioner's publishing of notice

1-53     of intention to impose a moratorium regarding the catastrophic

1-54     event related to such plans, and may renew the moratorium annually.

1-55     To impose or renew a moratorium, the commissioner must find after

1-56     notice and public hearing that a catastrophic event has occurred

1-57     and that as a result of the event, the relevant line of insurance

1-58     is not reasonably expected to be available to a substantial number

1-59     of policyholders or potential policyholders in this state, or in

1-60     the case of personal lines of motor vehicle comprehensive or

1-61     residential property insurance, in a rating territory.  Such notice

1-62     and hearing shall be governed by provisions of Chapter 2001,

1-63     Government Code, related to contested cases and of Subsection (b),

1-64     Article 1.33B, Insurance Code.  The commissioner shall, by rule,

 2-1     establish reasonable criteria for applying the above set forth

 2-2     standards for determining whether to impose a moratorium.  The

 2-3     commissioner may limit a moratorium on withdrawal from or reduction

 2-4     in personal lines insurance to certain geographical areas of this

 2-5     state.

 2-6           (h)  The board shall adopt such rules as may be necessary to

 2-7     enforce the provisions of this article.

 2-8           SECTION 2.  This Act takes effect September 1, 1997, and

 2-9     applies only to a reduction or restriction in writing new business

2-10     by an insurer on or after that date.  A reduction or restriction in

2-11     writing new business by an insurer before the effective date of

2-12     this Act in an insurer's writing of personal lines motor vehicle

2-13     comprehensive or residential property insurance is governed by the

2-14     law as it existed immediately before the effective date of this

2-15     Act, and that law is continued in effect for that purpose.

2-16           SECTION 3.  The importance of this legislation and the

2-17     crowded condition of the calendars in both houses create an

2-18     emergency and an imperative public necessity that the

2-19     constitutional rule requiring bills to be read on three several

2-20     days in each house be suspended, and this rule is hereby suspended.

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