By Duncan                                       S.B. No. 1625

      75R4586 SAW-F                           

                                A BILL TO BE ENTITLED

 1-1                                   AN ACT

 1-2     relating to the board of directors of the Life, Accident, Health,

 1-3     and Hospital Service Insurance Guaranty Association.

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

 1-5           SECTION 1.  Sections 7(a) and (d), Article 21.28-D, Insurance

 1-6     Code, are amended to read as follows:

 1-7           (a)  The commissioner [State Board of Insurance] shall

 1-8     appoint a board of directors of the association consisting of nine

 1-9     members, three of whom shall be chosen from employees or officers

1-10     chosen from the 50 [ten] member companies having the largest total

1-11     direct premium income based on the latest financial statement on

1-12     file at date of appointment, two of whom shall be chosen from the

1-13     other companies to give fair representation to member insurers

1-14     based on due consideration of their varying categories of premium

1-15     income and geographical location, and four of whom shall be

1-16     representatives of the general public.  Members serve for six-year

1-17     staggered terms, with the terms of three members expiring each

1-18     odd-numbered year.  All directors shall serve until their

1-19     successors are appointed, except that in the case of any vacancy,

1-20     the unexpired term of office shall be filled by the appointment of

1-21     a director by the commissioner [State Board of Insurance].  If a

1-22     director ceases to be an officer or employee of a member insurer

1-23     during the director's term of office, that office becomes vacant

1-24     until the director's successor is appointed.  All directors are

 2-1     eligible to succeed themselves in office.  A public representative

 2-2     may not be:

 2-3                 (1)  an officer, director, or employee of an insurance

 2-4     company, insurance agency, agent, broker, solicitor, adjuster, or

 2-5     any other business entity regulated by the department [State Board

 2-6     of Insurance];

 2-7                 (2)  a person required to register with the secretary

 2-8     of state under Chapter 305, Government Code;  or

 2-9                 (3)  related to a person described by Subparagraph (1)

2-10     or (2) of this paragraph within the second degree of affinity or

2-11     consanguinity.

2-12           (d)  A director of the association [or any member company or

2-13     other entity represented by the director] may not receive any money

2-14     or valuable thing directly, indirectly, or through any substantial

2-15     interest in any other corporation, firm, or business unit for

2-16     negotiating, procuring, participating, recommending, or aiding in a

2-17     transaction, reinsurance agreement, merger, purchase, sale,

2-18     contribution, or exchange of assets, policies of insurance, or

2-19     property made by the association or the supervisor, conservator, or

2-20     receiver on behalf of an impaired insurer.  A [The] director of the

2-21     association [, company, or entity] may not have a pecuniary

2-22     interest [be pecuniarily or contractually interested], as

2-23     principal, co-principal, agent, or beneficiary, directly,

2-24     indirectly, or through any substantial interest in any other

2-25     corporation, firm, or business unit, in the transaction,

2-26     reinsurance agreement, merger, purchase, sale, contribution, or

2-27     exchange.

 3-1           SECTION 2.  This Act takes effect September 1, 1997.

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

 3-3     crowded condition of the calendars in both houses create an

 3-4     emergency and an imperative public necessity that the

 3-5     constitutional rule requiring bills to be read on three several

 3-6     days in each house be suspended, and this rule is hereby suspended.