By:  Sibley                                           S.B. No. 1897

                                A BILL TO BE ENTITLED

                                       AN ACT

 1-1     relating to insurance company loss or claim reserves.

 1-2           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

 1-3           SECTION 1.  Article 21.39, Insurance Code, is amended to read

 1-4     as follows:

 1-5           Art. 21.39.  LOSS OR CLAIM RESERVES.  (a)  Every insurer

 1-6     shall maintain reserves in an amount estimated in the aggregate to

 1-7     provide for the payment of all the insurer's losses or claims

 1-8     incurred on or prior to the date of statement, whether reported or

 1-9     unreported, that [which] are unpaid as of that [such] date [and for

1-10     which such insurer may be liable], and also reserves in an amount

1-11     estimated to provide for the expenses of adjustment or settlement

1-12     of the unpaid [such] claims.  The commissioner may also adopt

1-13     appropriate reserve standards to provide for future incurred claims

1-14     in accordance with Subsection (b) of this article.

1-15           (b)  The commissioner [Board of Insurance Commissioners]

1-16     shall adopt reserve standards in accordance with this code and

1-17     actuarial standards of practice published by the American Academy

1-18     of Actuaries.  The standards for accident and health claim reserves

1-19     for claims incurred on or prior to the date of valuation shall

1-20     permit use of date of service as the date of incurral as determined

1-21     by a qualified actuary in accordance with actuarial standards of

1-22     practice.

1-23           (c)  The commissioner may consider adopting each current

 2-1     formula for establishing reserves applicable to each line of

 2-2     insurance recommended by the National Association of Insurance

 2-3     Commissioners only in accordance with Subsection (b) of this

 2-4     article [and all companies writing the line of insurance to which

 2-5     each such adopted formula is applicable shall establish reserves in

 2-6     compliance therewith].

 2-7           SECTION 2.  (a)  As soon as practicable after the effective

 2-8     date of this Act, the Commissioner of Insurance shall adopt reserve

 2-9     standards under Article 21.39, Insurance Code, as amended by this

2-10     Act.

2-11           (b)  Until reserve standards adopted by the Commissioner of

2-12     Insurance under Article 21.39, Insurance Code, as amended by this

2-13     Act, become effective, an insurer shall comply with the

2-14     requirements established under Article 21.39, Insurance Code, as

2-15     they existed immediately before the effective date of this Act.

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,

2-21     and that this Act take effect and be in force from and after its

2-22     passage, and it is so enacted.