75(R) HB 3575 Senate committee report

 1-1     By:  Brimer, Junell, Counts                           H.B. No. 3575

 1-2          (Senate Sponsor - Armbrister)

 1-3           (In the Senate - Received from the House May 15, 1997;

 1-4     May 16, 1997, read first time and referred to Committee on Economic

 1-5     Development; May 18, 1997, reported favorably by the following

 1-6     vote:  Yeas 10, Nays 0; May 18, 1997, sent to printer.)

 1-7                            A BILL TO BE ENTITLED

 1-8                                   AN ACT

 1-9     relating to the conversion or transfer of the Texas workers'

1-10     compensation insurance facility.

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

1-12                     PART 1.  PRIVATIZATION OF FACILITY

1-13           SECTION 1.01.  PURPOSE.  The purpose of this part is to

1-14     provide a means to:

1-15                 (1)  convert the Texas workers' compensation insurance

1-16     facility into a stock insurance company and facilitate the transfer

1-17     of control to a third party as provided by this part; and

1-18                 (2)  ensure that the converted facility has full

1-19     authority to enforce the rights of the facility existing

1-20     immediately before the effective date of the conversion without

1-21     impairment or limitation, except as expressly provided by this

1-22     part.

1-23           SECTION 1.02.  DEFINITIONS.  In this part:

1-24                 (1)  "Closing date" means the effective date of the

1-25     closing of the transactions contemplated by a conversion agreement,

1-26     as provided by that agreement, and is the effective date of the

1-27     conversion.

1-28                 (2) "Commission" means the Texas Workers' Compensation

1-29     Commission.

1-30                 (3)  "Commissioner" means the commissioner of

1-31     insurance.

1-32                 (4)  "Converted facility" means the entity that exists

1-33     after the facility is converted under this part.

1-34                 (5)  "Facility" means the Texas workers' compensation

1-35     insurance facility that was established under Article 5.76-2,

1-36     Insurance Code.

1-37                 (6)  "Fund" means the employers' rejected risk fund for

1-38     providing workers' compensation coverages for rejected risks, as

1-39     provided by Article 5.76-2, Insurance Code, as that article existed

1-40     before its repeal.

1-41                 (7)  "Insurer" means a stock company, mutual company,

1-42     reciprocal, or interinsurance exchange, the Texas Workers'

1-43     Compensation Insurance Fund, or a Lloyd's association authorized to

1-44     write workers' compensation insurance in this state.

1-45                 (8)  "Servicing company" means a member of the facility

1-46     or other eligible entity that is designated by the commissioner to

1-47     issue a policy that evidences the insurance coverages provided by

1-48     the fund to a rejected risk and to service the risk as provided by

1-49     Article 5.76-2, Insurance Code, as that article existed before its

1-50     repeal.

1-51           SECTION 1.03.  CONVERSION; CONVERSION EFFECTIVE DATE;

1-52     CONTINGENT TRANSFER.  (a)  If a conversion agreement receives the

1-53     approvals described by Sections 1.04 and 1.05 of this part, the

1-54     facility shall convert from a nonprofit unincorporated association

1-55     to a Texas stock property and casualty insurance company

1-56     incorporated under Chapter 2, Insurance Code, effective on the

1-57     consummation of the transactions contemplated by the agreement.

1-58           (b)  If the required approvals are not obtained or the

1-59     transactions are not consummated on or before August 31, 1997, the

1-60     facility may not be converted, and instead, the operation of the

1-61     facility shall be transferred to the Texas Property and Casualty

1-62     Insurance Guaranty Association in accordance with Part 2 of this

1-63     Act.

1-64           SECTION 1.04.  CONVERSION AGREEMENT.  The facility may enter

 2-1     into an agreement to issue and sell shares of the capital stock

 2-2     created as a result of the conversion described by Section 1.03 of

 2-3     this part.  To take effect, the agreement must be approved by a

 2-4     majority of the voting members of the governing committee of the

 2-5     facility at a meeting at which a quorum is present.

 2-6           SECTION 1.05.  COMMISSIONER APPROVAL.  (a)  On approval under

 2-7     Section 1.04 of this part, an agreement shall be submitted to the

 2-8     commissioner for approval.  The agreement must be submitted to the

 2-9     commissioner not later than June 30, 1997.  The commissioner shall

2-10     review the agreement in the manner provided for review of a filing

2-11     under Article 21.49-1, Insurance Code.

2-12           (b)  If the commissioner approves the agreement, the

2-13     commissioner shall order that the facility be converted.

2-14           SECTION 1.06. EFFECT OF CONVERSION.  (a)  The converted

2-15     facility may exercise all the rights, privileges, powers, and

2-16     authority of any other stock corporation organized to transact

2-17     property and casualty insurance business in this state, subject to

2-18     the requirements of this part.  On the closing date:

2-19                 (1)  the converted facility is considered to be a

2-20     continuation of the facility; and

2-21                 (2)  subject to Section 1.07 of this part, the

2-22     converted facility is vested with all property of the facility.

2-23           (b)  The converted facility may enforce all contract and

2-24     statutory rights of the facility under any servicing company

2-25     arrangements, and this part may not be construed as an assignment

2-26     of the facility's rights or obligations under those agreements.

2-27           (c)  Each debt, claim, and cause of action of the facility,

2-28     and all property rights, privileges, franchises, and other

2-29     interests of the facility, remain the property of the converted

2-30     facility.

2-31           (d)  The rights of all policyholders and creditors and the

2-32     standing of all claims under the facility shall be preserved

2-33     unimpaired under the converted facility.

2-34           (e)  Subject to Section 1.07 of this part, each debt,

2-35     liability, and duty of the facility becomes a debt, liability, or

2-36     duty of the converted facility and may be enforced against the

2-37     converted facility as if it were incurred or contracted by the

2-38     converted facility.

2-39           (f)  A cause of action or similar proceeding in which the

2-40     facility was a party that is pending on the effective date of the

2-41     conversion:

2-42                 (1)  is not affected by the conversion;

2-43                 (2)  may be continued to be prosecuted by or against

2-44     the converted facility; and

2-45                 (3)  continues to be governed by and conducted under

2-46     Article 5.76-2, Insurance Code, as that article existed before its

2-47     repeal, and the applicable bylaws, rules, and regulations of the

2-48     facility, as amended by the converted facility.

2-49           (g)  The converted facility may not, without the prior

2-50     consent of the commissioner, amend its bylaws, rules, or

2-51     regulations in a manner that would reasonably be likely to have a

2-52     material adverse effect on employees, beneficiaries, or the holders

2-53     of or insureds under policies issued under Article 5.76, Insurance

2-54     Code, or under Article 5.76-2, Insurance Code, as that article

2-55     existed before its repeal.

2-56           (h)  The converted facility may audit, at the converted

2-57     facility's expense, the books and records of each company that

2-58     services policies of insurance issued under Article 5.76, Insurance

2-59     Code, or under Article 5.76-2, Insurance Code, as that article

2-60     existed before its repeal.  The audit must be limited to:

2-61                 (1)  the books and records that relate to the policies

2-62     described by this subsection; and

2-63                 (2)  claims paid on behalf of or charged to the

2-64     converted facility.

2-65           SECTION 1.07.  APPLICABLE LAW.  Except as otherwise provided

2-66     by this part, Article 5.76-2, Insurance Code, ceases to apply to

2-67     the facility on the closing date and does not apply to the

2-68     converted facility.  Specifically, neither the converted facility

2-69     nor any other insurer succeeds to the facility's right to assess

 3-1     the facility's member insurers under Section 4.04, Article 5.76-2,

 3-2     Insurance Code.

 3-3           SECTION 1.08.  COMPLIANCE; CAPITALIZATION REQUIREMENTS.  (a)

 3-4     The converted facility shall comply with the Insurance Code and

 3-5     rules adopted by the commissioner except as otherwise provided by

 3-6     this part.  If the converted facility does not issue any policies

 3-7     of insurance after the closing date, the converted facility:

 3-8                 (1)  is exempt from:

 3-9                       (A)  the risk-based capital and surplus

3-10     regulations adopted under Article 2.02, Insurance Code; and

3-11                       (B)  the requirements adopted under Article

3-12     21.45, Insurance Code;

3-13                 (2)  may discount the reserves for losses and loss

3-14     adjustment expenses in a manner and to the extent authorized by the

3-15     commissioner in the order approving the conversion agreement;

3-16                 (3)  may reflect accounts receivable as an admitted

3-17     asset, notwithstanding the regulations adopted under Articles 2.08

3-18     and 2.10, Insurance Code, if those accounts receivable are

3-19     guaranteed by an insurance company authorized to do business in

3-20     this state:

3-21                       (A)  in an amount not to exceed $15 million; and

3-22                       (B)  in a manner and to the extent authorized by

3-23     the commissioner in the order approving the conversion agreement;

3-24     and

3-25                 (4)  may receive full credit for the reinsurance

3-26     contemplated by the conversion agreement to the extent ordered by

3-27     the commissioner, notwithstanding Article 5.75-1, Insurance Code,

3-28     and the rules adopted under that article.

3-29           (b)  The commissioner shall set the capitalization

3-30     requirements of the converted facility in the order approving the

3-31     conversion agreement.

3-32           SECTION 1.09.  FINAL ASSESSMENT.  (a)  The facility, through

3-33     action by its governing committee, may make a final assessment of

3-34     the insurance carriers licensed in this state in accordance with

3-35     Section 4.04, Article 5.76-2, Insurance Code, as that section

3-36     existed before its repeal, and the facility's bylaws, rules, and

3-37     regulations in the amount that  the governing committee determines

3-38     is necessary to consummate the transactions contemplated by the

3-39     conversion agreement.  The final assessment must be made at a time

3-40     to allow the assessment to be paid in full on or before the closing

3-41     date.

3-42           (b)  On or before the closing date, and under terms and

3-43     conditions the governing committee considers necessary or advisable

3-44     to consummate the transactions contemplated by the conversion

3-45     agreement, the governing committee may:

3-46                 (1)  bind the carriers described by Subsection (a) to

3-47     reinsure a portion of the facility's liabilities instead of payment

3-48     of any or all of the final assessment under Subsection (a)  of this

3-49     section; or

3-50                 (2)  defer payment on any or all of the final

3-51     assessment.

3-52           (c)  A reinsurance arrangement approved by the governing

3-53     committee must compute a member insurer's participation in

3-54     reinsurance in the same manner that is used for the computation of

3-55     assessments under Section 4.04, Article 5.76-2, Insurance Code, as

3-56     that section existed before its repeal.

3-57           SECTION 1.10.  IMMUNITY.  The immunity provisions of Sections

3-58     2.05(h) and 2.12, Article 5.76-2, Insurance Code, as those

3-59     provisions existed before their repeal, continue to apply to each

3-60     act or omission that occurs before, on, or after the closing date

3-61     and that is performed by the persons or entities covered by those

3-62     provisions, including an act or omission related to the powers and

3-63     duties contained in this part.

3-64           SECTION 1.11.  DEFENSE; INDEMNIFICATION.  If any party

3-65     institutes or continues an action against the facility, or the

3-66     governing committee, executive director, staff, agents, servants,

3-67     or employees of the facility, whether or not serving in that

3-68     capacity on the closing date, in connection with or arising from

3-69     either the facility's operations or the transactions contemplated

 4-1     by the conversion agreement, the converted facility shall defend,

 4-2     indemnify, and hold harmless that person or entity from liability

 4-3     for any act or omission of that person or entity in connection

 4-4     with, or arising from the performance of, the powers and duties

 4-5     exercised under Article 5.76-2, Insurance Code, as that article

 4-6     existed before its repeal, but only on, and subject to, the terms

 4-7     and conditions set forth in the conversion agreement, which must be

 4-8     substantially as beneficial to the indemnified person or entity as

 4-9     the indemnification set forth in the facility's bylaws in effect on

4-10     the closing date.

4-11           SECTION 1.12.  CONTROLLING LAW.  If a conflict exists between

4-12     this part and any other statute relating to the facility, this part

4-13     controls.

4-14           SECTION 1.13. CONFORMING AMENDMENT.  Article 21.28-C,

4-15     Insurance Code, is amended by adding Sections 26 and 27 to read as

4-16     follows:

4-17           Sec. 26.  COVERAGE FOR WORKERS' COMPENSATION INSURANCE

4-18     POLICIES ISSUED BY TEXAS WORKERS' COMPENSATION INSURANCE FACILITY.

4-19     (a)  Notwithstanding any other provision of this article, this

4-20     article applies to each policy of insurance issued under Article

4-21     5.76 of this code or Article 5.76-2 of this code, as that article

4-22     existed before its repeal.

4-23           (b)  Notwithstanding any other provision of this article,

4-24     after the conversion of the Texas workers' compensation insurance

4-25     facility to a stock insurance company, that converted facility

4-26     shall be considered an impaired insurer for purposes of this

4-27     article if any of the actions described by Section 5(9)(A) or (B)

4-28     of this article occurs to the converted facility.

4-29           (c)  A claim under such an insurance policy is a covered

4-30     claim for purposes of this article if the claim satisfies the

4-31     definition under Section 5(8) of this article, whether or not the

4-32     converted facility:

4-33                 (1)  issued or assumed the policy; or

4-34                 (2)  was licensed to do business in this state at the

4-35     time:

4-36                       (A)  the policy was written; or

4-37                       (B)  the converted facility became an impaired

4-38     insurer.

4-39           (d)  If a conflict exists between this section and any other

4-40     statute relating to the Texas workers' compensation insurance

4-41     facility or the Texas Property and Casualty Insurance Guaranty

4-42     Association, this section controls.

4-43           Sec. 27.  IMMUNITY.  There is no liability on the part of,

4-44     and a cause of action does not arise against, any member insurer of

4-45     the association, the association, an agent or employee of the

4-46     association, a member of the board of directors of the association,

4-47     or the commissioner or the commissioner's representative for any

4-48     act or omission in the performance of any activity related to the

4-49     negotiations relating to the privatization of the Texas workers'

4-50     compensation insurance facility.  This section applies to each

4-51     activity undertaken by such a  person or entity, regardless of the

4-52     date of the act or omission.

4-53           SECTION 1.14.  EFFECTIVE DATE FOR PART 1.  This part takes

4-54     effect immediately.

4-55                        PART 2.  CONTINGENT TRANSFER

4-56           SECTION 2.01.  TRANSFER TO TEXAS PROPERTY AND CASUALTY

4-57     INSURANCE GUARANTY ASSOCIATION; EFFECTIVE DATE.  (a)  If the

4-58     conversion required under Part 1 of this Act does not occur on or

4-59     before August 31, 1997, the Texas Property and Casualty Insurance

4-60     Guaranty Association, on September 1, 1997, shall take control of

4-61     the operations and all of the assets, liabilities, and obligations

4-62     of the Texas workers' compensation insurance facility as provided

4-63     by this part.

4-64           (b)  This part takes effect September 1, 1997, but only if

4-65     the conversion described by Subsection (a) of this section does not

4-66     occur before that date.  If that conversion does occur before that

4-67     date, this part has no effect.

4-68           SECTION 2.02.  CONFORMING AMENDMENT.  Article 21.28-C,

4-69     Insurance Code,  is amended by adding Section 26 to read as

 5-1     follows:

 5-2           Sec. 26.  TRANSFER OF FACILITY TO ASSOCIATION.  (a)  The

 5-3     purpose of this section is to:

 5-4                 (1)  provide a means for the transfer of control of the

 5-5     assets, liabilities, and obligations of the Texas workers'

 5-6     compensation insurance facility to the Texas Property and Casualty

 5-7     Insurance Guaranty Association; and

 5-8                 (2)  ensure that the association has full authority to

 5-9     enforce the rights of the facility without limitation, except as

5-10     expressly provided by this section.

5-11           (b)  In addition to the definitions under Section 5 of this

5-12     Act, in this section:

5-13                 (1)  "Comptroller" means the Texas comptroller of

5-14     public accounts.

5-15                 (2)  "Facility" means the Texas workers' compensation

5-16     insurance facility.

5-17                 (3)  "Fund" means the Texas Workers' Compensation

5-18     Insurance Fund.

5-19                 (4)  "Insurer" means an insurance company licensed to

5-20     do business in this state.

5-21                 (5)  "Texas workers' compensation insurance facility

5-22     account" means the account maintained by the association for the

5-23     assets of the facility.

5-24           (c)  The association shall take control of the facility's

5-25     assets, liabilities, and obligations and may administer all of the

5-26     remaining aspects of the facility's operation.  The association has

5-27     full authority to enforce the contract or statutory rights of the

5-28     facility under any servicing company agreements. This section may

5-29     not be construed to be an assignment of the facility's rights or

5-30     obligations under those agreements.

5-31           (d)  The association shall maintain the Texas workers'

5-32     compensation insurance facility account separately from the

5-33     association's accounts described by Section 6 of this Act.  Each

5-34     claim, expense, or other liability related to the assets,

5-35     liabilities, and obligations of the facility shall be paid from,

5-36     and all collections and receipts shall be deposited into, the Texas

5-37     workers' compensation insurance facility account. Funds in the

5-38     Texas workers' compensation insurance facility account shall be

5-39     maintained outside the state treasury.

5-40            (e)  Not later than June 1 of each year, the association

5-41     shall report its operating results for the Texas workers'

5-42     compensation insurance facility account to the commissioner on a

5-43     calendar year premium and an accident year loss basis.

5-44           (f)  For a claim in which the compensable injury occurred

5-45     before January 1, 1992, the association shall compute at least

5-46     annually its results for incurred losses in the Texas workers'

5-47     compensation insurance facility account, including incurred but not

5-48     reported losses, by accident year.  If there is a deficit or

5-49     surplus from the operation of the Texas workers' compensation

5-50     insurance facility account for those claims, the amount of the

5-51     deficit or surplus shall be assessed or rebated to the member

5-52     insurers licensed in this state who were members of the facility

5-53     during the calendar year.  Each member insurer shall pay a

5-54     proportionate share of the total assessment or receive a

5-55     proportionate share of the total rebate based on that insurer's

5-56     portion of the total voluntary workers' compensation insurance

5-57     writings during the calendar year. The fund is not liable for any

5-58     deficit incurred on a policy with an effective date before January

5-59     1, 1992.

5-60           (g)  For claims with an accident date on or after January 1,

5-61     1992, the association shall compute at least annually its results

5-62     for incurred losses in the Texas workers' compensation insurance

5-63     facility account, including incurred but not reported losses, by

5-64     accident year.  If there is a deficit or surplus from operation of

5-65     the Texas workers' compensation insurance facility account for

5-66     those claims, the amount of the deficit or surplus shall be

5-67     assessed or rebated to the member insurers licensed in this state

5-68     who were members of the facility during the calendar year and to

5-69     the fund.  Each member insurer and the fund shall pay a

 6-1     proportionate share of the total assessment or receive a

 6-2     proportionate share of the total rebate based on its portion of the

 6-3     total voluntary workers' compensation insurance writings during the

 6-4     calendar year.

 6-5           (h)  The association may provide for the redistribution of

 6-6     all or part of an assessment that would otherwise be levied on a

 6-7     member insurer under Subsection (f) or (g) of this section if the

 6-8     member insurer is unable to pay the full assessment because the

 6-9     member insurer is in liquidation at the time of the assessment.

6-10           (i)  The association may authorize the deferment of the

6-11     payment of an assessment made under Subsection (f) or (g) of this

6-12     section.  A deferment may be allowed only if the cash flow of the

6-13     Texas workers' compensation insurance facility account is adequate

6-14     to meet all needs.

6-15           (j)  If a member insurer or the fund elects to defer any

6-16     portion of an assessment as provided by this section, the entire

6-17     unpaid portion of the assessment and any accrued interest must be

6-18     shown as a liability on each financial and annual statement of that

6-19     insurer.

6-20           (k)  A member insurer may not be allowed a credit against any

6-21     tax levied by this state as a result of an assessment paid under

6-22     this section.

6-23           (l)  The association may invest Texas workers' compensation

6-24     insurance facility account funds only in investments authorized for

6-25     the investment of state funds as provided by Chapter 404,

6-26     Government Code.  The association shall develop an investment

6-27     policy for the Texas workers' compensation insurance facility

6-28     account and shall submit that policy to the comptroller for review

6-29     and approval.

6-30           (m)  The association shall submit to the commissioner for

6-31     approval a plan of operation to ensure the fair, reasonable, and

6-32     equitable administration of the Texas workers' compensation

6-33     insurance facility account not later than October 1, 1997.  The

6-34     commissioner shall approve or disapprove the association's plan of

6-35     operation of the Texas workers' compensation insurance facility

6-36     account not later than the 60th day after the date on which the

6-37     association submits the plan to the commissioner.

6-38           (n)  If the commissioner does not approve the plan of

6-39     operation, the association shall submit to the commissioner an

6-40     amended plan of operation with any amendments necessary or suitable

6-41     to ensure the fair, reasonable, and equitable administration of the

6-42     Texas workers' compensation insurance facility account.  The plan

6-43     of operation and any amendments take effect on approval in writing

6-44     by the commissioner.  If the association fails to submit suitable

6-45     amendments to the plan, the commissioner, after notice and hearing,

6-46     shall adopt reasonable rules as necessary or advisable to implement

6-47     this section.  Those rules shall continue in force until modified

6-48     by the commissioner or superseded by a plan submitted by the

6-49     association and approved by the commissioner.

6-50           (o)  In addition to all immunities and protections otherwise

6-51     provided by this article, the association succeeds to all rights,

6-52     defenses,  immunities, and liabilities of the facility in each

6-53     cause of action or other proceeding pending by or against the

6-54     facility on September 1, 1997, or filed after that date.  The

6-55     immunity provisions of Sections 2.05(h) and 2.12, Article 5.76-2 of

6-56     this code, as those provisions existed before their repeal,

6-57     continue to apply to each act or omission that occurs before, on,

6-58     or after September 1, 1997, and that is performed by the persons or

6-59     entities covered by those provisions.

6-60           (p)  If any party institutes or continues an action against

6-61     the facility, the governing committee of the facility, the

6-62     executive director of the facility, a member insurer solely in that

6-63     insurer's capacity as a member insurer, or an agent, servant,

6-64     attorney, consultant, or employee of the facility, whether or not

6-65     serving in that capacity on September 1, 1997, in connection with

6-66     or arising from either the facility's operations or  the

6-67     transactions contemplated by this section, the association shall

6-68     defend, indemnify, and hold harmless that person or entity from

6-69     liability for any act or omission of that person or entity in

 7-1     connection with, or arising from the performance of, the person's

 7-2     or entity's powers and duties on behalf of the facility.  A cause

 7-3     of action or other proceeding described by this subsection shall

 7-4     continue to be governed by and conducted under this section and

 7-5     Article 5.76-2 of this code, as that article existed before its

 7-6     repeal, and the applicable bylaws, rules, and regulations of the

 7-7     facility, and those provisions are continued in effect for the

 7-8     purposes of this section.

 7-9           (q)  The association may enter into negotiations for the

7-10     privatization to a single insurer of all the assets, liabilities,

7-11     and obligations  maintained in the Texas workers' compensation

7-12     insurance facility account.  If the association determines that

7-13     privatization under this subsection is in the best interest of this

7-14     state, the association shall obtain the written approval of the

7-15     commissioner before entering into a privatization agreement to

7-16     consummate the applicable transaction.

7-17           (r)  Any net proceeds from the privatization of the Texas

7-18     workers' compensation insurance facility account shall be rebated

7-19     in accordance with Subsection (g) of this section.

7-20           (s)  If an insurer that assumes the assets, liabilities, and

7-21     obligations maintained in the Texas workers' compensation insurance

7-22     facility account under a privatization agreement approved under

7-23     Subsection (q) of this section becomes an impaired insurer after

7-24     that privatization agreement takes effect, any remaining facility

7-25     claims shall be covered claims under this article.

7-26           (t)  If a conflict exists between this section and any other

7-27     statute relating to the facility or the association, this section

7-28     controls.

7-29           PART 3.  REPEALER; TRANSITION; EMERGENCY               

7-30           SECTION 3.01.  REPEALER.  Except as otherwise provided by

7-31     this Act, the following laws are repealed on the effective date of

7-32     this Act:

7-33                 (1)  Article 5.76-2, Insurance Code; and

7-34                 (2)  Section 18.24(b), Chapter 12, Acts of the 72nd

7-35     Legislature, 2nd Called Session, 1991, as amended by Section 8,

7-36     Chapter 885, Acts of the 73rd Legislature, Regular Session, 1993.

7-37           SECTION 3.02.  SEVERABILITY CLAUSE.  If any provision of this

7-38     Act or the application of this Act to any person or entity or

7-39     circumstance is held invalid by a court of competent jurisdiction,

7-40     that invalidity does not affect other provisions or applications of

7-41     this Act that can be given effect without the invalid provision or

7-42     application, and to this end the provisions of this Act are

7-43     declared to be severable.

7-44           SECTION 3.03.  SAVING CLAUSE.  The repeal of Article 5.76-2,

7-45     Insurance Code, under Section 3.01 of this Act does not affect

7-46     rights and liabilities accruing under that article before the

7-47     effective date of this Act, and that article is continued in effect

7-48     for that purpose and for the purposes expressly provided by this

7-49     Act or Section 26, Article 21.28-C, Insurance Code, as added by

7-50     this Act.

7-51           SECTION 3.04.  EFFECTIVE DATE.  This part takes effect:

7-52                 (1)  on the closing date of the conversion of the Texas

7-53     workers' compensation insurance facility under Part 1 of this Act

7-54     as that date is defined by Section 1.02 of this Act; or

7-55                 (2)  on September 1, 1997, if Part 2 of this Act takes

7-56     effect.

7-57           SECTION 3.05.  EMERGENCY.  The importance of this legislation

7-58     and the crowded condition of the calendars in both houses create an

7-59     emergency and an imperative public necessity that the

7-60     constitutional rule requiring bills to be read on three several

7-61     days in each house be suspended, and this rule is hereby suspended,

7-62     and that this Act take effect and be in force according to its

7-63     terms, and it is so enacted.

7-64                                  * * * * *