SRC-DBM S.B. 901 76(R)BILL ANALYSIS


Senate Research CenterS.B. 901
By: Sibley
Economic Development
7/23/1999
Enrolled


DIGEST 

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 will allow insurers to share its 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. 

PURPOSE

As enrolled, S.B. 901 regulates dividends payable to policyholders under
certain group insurance programs. 

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 Article 5.08, Insurance Code, to provide that nothing in
this article, rather than subsection, shall be construed as prohibiting an
insurer from sharing its profits.  Prohibits certain distribution from
being made or established except on the approval of the commissioner of
insurance (commissioner), rather than Board of Insurance Commissioners
(board).   Provides that this article does not prohibit an insurer, upon
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 and to notify 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 shall be deemed approved.  Defines "nonprofit
business association."  Makes conforming changes. 

SECTION 2.  Amends Article 5.20, Insurance Code, to provide that, except as
provided by this article, no insurer or employee thereof, and no broker or
agent shall knowingly issue any insurance policy, nor charge, demand, or
receive, a premium thereon except in accordance with the applicable filing
which has been approved by the commissioner.  Makes conforming changes. 

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