SRC-PNG H.B. 3177 76(R)   BILL ANALYSIS


Senate Research Center   H.B. 3177
By: Lewis, Glenn (Jackson)
Economic Development
5/13/1999
Engrossed


DIGEST 

Current law protects consumers who buy property and casualty insurance from
licensed insurers who become insolvent, by providing for the Texas Property
and Casualty Insurance Guaranty Association (association) to pay
policyholders' claims. An insolvent domestic insurer is placed into
receivership by a state district judge in Travis County. The judge orders
the commissioner of insurance to take charge of the company. The
commissioner may then hire a special deputy receiver to gather and pay out
company assets to creditors. Article 21.28 (Liquidation, Rehabilitation,
Reorganization or Conservation of Insurers), Insurance Code, sets forth the
statutory requirement for filing claims against insolvent insurance
companies placed in receivership. All persons who may have claims against
an insolvent insurer are required to present them to the receiver within
the deadline set by the receivership court, which in no event is less than
90 days after the date of the entry of the order specifying such time.
Subject to court approval, the receiver may accept claims filed after the
date specified by the court if the claims are filed with the receiver by
the 90th day after the date notice of the claimant's right to file a proof
of claim is mailed to the claimant. Claims that are not filed within the
time specified by the court are prohibited from participating in any
distribution of the assets by the receiver. Nonetheless, some Texas court
have permitted claimants to file late in extenuating circumstances. It is
unclear, however, whether the association is responsible for paying these
claims. H.B. 3177 prohibits a covered claim from including any claim filed
with the Texas Property and Casualty Insurance Guaranty Association after
18 months following the order of impairment, rather than after a certain
date, unless the court finds that a compelling reason exists for the time
to be extended to address unusual or extenuating circumstances, 

PURPOSE

As proposed, H.B. 3177 prohibits a covered claim from including any claim
filed with the Texas Property and Casualty Insurance Guaranty Association
after 18 months following the order of impairment, unless the court finds
that a compelling reason exists for the time to be extended to address
unusual or extenuating circumstances, 

RULEMAKING AUTHORITY

This bill does not grant any additional rulemaking authority to a state
officer, institution, or agency. 

SECTION BY SECTION ANALYSIS

SECTION 1. Amends Section 8(d), Article 21.28-C, Insurance Code, to
prohibit a covered claim from including any claim filed with the Texas
Property and Casualty Insurance Guaranty Association after 18 months
following the order of impairment, rather than after a certain date, unless
the court finds that a compelling reason exists for the time to be extended
to address unusual or extenuating circumstances, notwithstanding Article
21.28 of this code.  Deletes text regarding certain settlements, releases,
or judgments entered by the insured. 

SECTION 2. Makes application of this Act retroactive.

SECTION 3. Emergency clause. 
  Effective date: 90 days after adjournment.