By Smithee                                      H.B. No. 1976

      75R5707 SAW-F                           

                                A BILL TO BE ENTITLED

 1-1                                   AN ACT

 1-2     relating to financial solvency requirements for certain property

 1-3     and casualty insurers.

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

 1-5           SECTION 1.  Subsection (f), Article 2.20, Insurance Code, is

 1-6     amended to read as follows:

 1-7           (f)  Notwithstanding any other provision of this code other

 1-8     than Subsection (b) of this article, for insurers that write

 1-9     business only in this state and that [which] are not required by

1-10     law to have capital stock, the minimum free surplus or guaranty

1-11     fund and free surplus required shall be the greater of that

1-12     required of the insurer immediately prior to the effective date of

1-13     this article or one-third of the net written premium of the insurer

1-14     for the preceding 12 months after deducting:

1-15                 (1)  lawfully ceded reinsurance; and

1-16                 (2)  policy fees, if any, not ceded to reinsurers.

1-17           SECTION 2.  This Act takes effect September 1, 1997.

1-18           SECTION 3.  The change in law made by this Act applies only

1-19     to the minimum free surplus or guaranty fund and free surplus of an

1-20     insurer on or after January 1, 1998.  The minimum free surplus or

1-21     guaranty fund and free surplus of an insurer before January 1,

1-22     1998, is governed by the law as it existed immediately before the

1-23     effective date of this Act, and that law is continued in effect for

1-24     that purpose.

 2-1           SECTION 4.  The importance of this legislation and the

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

 2-3     emergency and an imperative public necessity that the

 2-4     constitutional rule requiring bills to be read on three several

 2-5     days in each house be suspended, and this rule is hereby suspended.