1-1     By:  Cain                                             S.B. No. 1291

 1-2           (In the Senate - Filed March 12, 1997; March 18, 1997, read

 1-3     first time and referred to Committee on Economic Development;

 1-4     April 22, 1997, reported favorably by the following vote:  Yeas 9,

 1-5     Nays 0; April 22, 1997, sent to printer.)

 1-6                            A BILL TO BE ENTITLED

 1-7                                   AN ACT

 1-8     relating to permitting policyholder dividends for multiple lines of

 1-9     insurance.

1-10           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

1-11           SECTION 1.  Chapter 5, Insurance Code, is amended by adding

1-12     Article 5.41-2 to read as follows:

1-13           Art. 5.41-2.  MULTIPLE LINE DIVIDENDS

1-14           Sec. 1.  An insurer may pay to a commercial policyholder or

1-15     group of commercial policyholders a dividend which covers more than

1-16     one class or line of commercial business.  This dividend may only

1-17     be paid to the policyholder or group of policyholders after

1-18     adequate loss reserves are established on an aggregate basis for

1-19     the classes or lines of commercial insurance included within the

1-20     dividend, and the insurer must have sufficient surplus from which

1-21     to pay the dividend.  An insurer shall file a notice of its intent

1-22     to pay such dividend with the department at least 15 days prior to

1-23     the payment of the dividend.

1-24           Sec. 2.  Limitation of the payment of a dividend on one or

1-25     more classes or lines of commercial business to a group of

1-26     commercial policyholders shall not be unfair discrimination so long

1-27     as the group has clearly identifiable underwriting characteristics

1-28     or is an association or group of business entities engaged in

1-29     similar undertakings.

1-30           Sec. 3.  The classes or lines of commercial business for

1-31     which dividends are authorized under this article include any or

1-32     all of the commercial classes or lines of commercial business

1-33     regulated by this chapter.

1-34           SECTION 2.  The importance of this legislation and the

1-35     crowded condition of the calendars in both houses create an

1-36     emergency and an imperative public necessity that the

1-37     constitutional rule requiring bills to be read on three several

1-38     days in each house be suspended, and this rule is hereby suspended.

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