1-1     By:  Sibley                                           S.B. No. 1897

 1-2           (In the Senate - Filed March 18, 1997; March 25, 1997, read

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

 1-4     April 4, 1997, reported adversely, with favorable Committee

 1-5     Substitute by the following vote:  Yeas 9, Nays 0; April 4, 1997,

 1-6     sent to printer.)

 1-7     COMMITTEE SUBSTITUTE FOR S.B. No. 1897                  By:  Sibley

 1-8                            A BILL TO BE ENTITLED

 1-9                                   AN ACT

1-10     relating to insurance company loss or claim reserves.

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

1-12           SECTION 1.  Article 21.39, Insurance Code, is amended to read

1-13     as follows:

1-14           Art. 21.39.  LOSS OR CLAIM RESERVES.  (a)  Every insurer

1-15     shall maintain reserves in an amount estimated in the aggregate to

1-16     provide for the payment of all the insurer's losses or claims

1-17     incurred on or prior to the date of statement, whether reported or

1-18     unreported, that [which] are unpaid as of that [such] date [and for

1-19     which such insurer may be liable], and also reserves in an amount

1-20     estimated to provide for the expenses of adjustment or settlement

1-21     of the unpaid [such] claims.  The commissioner may also adopt

1-22     appropriate reserve standards to provide for future incurred claims

1-23     in accordance with Subsection (b) of this article.

1-24           (b)  The commissioner [Board of Insurance Commissioners]

1-25     shall adopt reserve standards in accordance with this code and

1-26     actuarial standards of practice published by the American Academy

1-27     of Actuaries.  The standards for accident and health claim reserves

1-28     for claims incurred on or prior to the date of valuation shall

1-29     permit use of date of service as the date of incurral as determined

1-30     by a qualified actuary in accordance with actuarial standards of

1-31     practice.

1-32           (c)  The commissioner may consider adopting each current

1-33     formula for establishing reserves applicable to each line of

1-34     insurance recommended by the National Association of Insurance

1-35     Commissioners only in accordance with Subsection (b) of this

1-36     article [and all companies writing the line of insurance to which

1-37     each such adopted formula is applicable shall establish reserves in

1-38     compliance therewith].

1-39           SECTION 2.  (a)  As soon as practicable after the effective

1-40     date of this Act, the Commissioner of Insurance shall adopt reserve

1-41     standards under Article 21.39, Insurance Code, as amended by this

1-42     Act.

1-43           (b)  Until reserve standards adopted by the Commissioner of

1-44     Insurance under Article 21.39, Insurance Code, as amended by this

1-45     Act, become effective, an insurer shall comply with the

1-46     requirements established under Article 21.39, Insurance Code, as

1-47     they existed immediately before the effective date of this Act.

1-48           SECTION 3.  The importance of this legislation and the

1-49     crowded condition of the calendars in both houses create an

1-50     emergency and an imperative public necessity that the

1-51     constitutional rule requiring bills to be read on three several

1-52     days in each house be suspended, and this rule is hereby suspended,

1-53     and that this Act take effect and be in force from and after its

1-54     passage, and it is so enacted.

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