HBA-EVB S.B. 901 76(R)    BILL ANALYSIS


Office of House Bill AnalysisS.B. 901
By: Sibley
Insurance
4/24/1999
Engrossed



BACKGROUND AND PURPOSE 

Currently, trade associations often establish group insurance programs for
their members, including health and general business coverage. A common
feature of these programs is that insurers are allowed to rebate dividends
to group members in a successful year. In Texas, dividend sharing is
permissible for certain health insurance programs and worker's compensation
policies; however, insurers are not allowed to provide dividends to special
group members or associations for auto and general liability programs. S.B.
901 allows insurers to share profits with policyholders who are part of a
group program established by a nonprofit business association and who
participate in the group program because of membership in the association.
S.B. 901 regulates dividends payable to policyholders under certain group
insurance programs.  

RULEMAKING AUTHORITY

It is the opinion of the Office of House Bill Analysis that this bill does
not expressly delegate any additional rulemaking authority to a state
officer, department, agency, or institution. 

SECTION BY SECTION ANALYSIS

SECTION 1.Amends Article 5.08, Insurance Code, as follows:

(a)  Deletes text that sets forth an exception as provided by Subsection
(b) to make a conforming change.  

(b)  Prohibits any classes of distribution of profits between insured of a
class being made or established except on the approval of the commissioner
of insurance (commissioner), rather than on the approval of the State Board
of Insurance (board). Makes conforming and nonsubstantive changes. 

(c)  Redesignated from existing Subsection (b). Makes conforming changes.

(d) Provides that this article does not prohibit an insurer, on approval by
the commissioner, from sharing profits with policyholders who are part of a
group program established by a nonprofit business association and who
participate in the group program because of membership in the association.
Requires an insurer that elects to make distributions under this subsection
to file a written description of its distribution program with the
commissioner for approval by the commissioner and requires notification to
the commissioner in writing of each distribution made under the program.
Requires the commissioner to act on the insurer's distribution program
within five business days of receipt of the insurer's distribution program,
otherwise the distribution program is required to be deemed approved.
Defines "nonprofit business association." 

SECTION 2.  Amends Article 5.20, Insurance Code, as follows:

(a)  Prohibits any insurer or employee thereof, and any broker or agent,
from knowingly issuing any policy of insurance or changing, demanding, or
receiving a premium thereon except in accordance with the applicable filing
which has been approved by the commissioner, rather than board, except as
provided by this article. 
 
(b)  Created from existing text. Makes conforming changes.

(c) Provides that this article does not prohibit an insurer, on approval by
the commissioner, from sharing profits with policyholders who are part of a
group program established by a nonprofit business association and who
participate in the group program because of membership in the association.
Requires an insurer that elects to make distributions under this subsection
to file a written description of its distribution program with the
commissioner for approval by the commissioner and requires notification to
the commissioner in writing of each distribution made under the program.
Provides that if the commissioner does not act on the insurer's
distribution program within five business days of receipt of the insurer's
distribution program, the distribution program is considered approved.
Defines "nonprofit business association." 

(d)  Redesignated from Subsection (b).

SECTION 3.  Emergency clause.
Effective date: upon passage.