SRC-PNG S.B. 1076 76(R)   BILL ANALYSIS


Senate Research Center   S.B. 1076
76R6738 DWS-FBy: Carona
Economic Development
4/1/1999
As Filed


DIGEST 

Currently, when consumers make a small loan, they have an option of
purchasing credit insurance from regulated loan licensees to insure the
amount of the loan in the event of an unexpected occurrence.  Consumers
also have the option of purchasing from these licensees non-credit
insurance such as term life, disability, accident and health, or loss of
income coverage and other products such as home security plans, automobile
club memberships and extended service contracts.  While consumers may
finance the premiums for credit insurance, state law does not permit such
financing for non-credit insurance.  This bill would authorize customers of
regulated loan licensees to finance the charges for non-credit insurance
and other products. 

PURPOSE

As proposed, S.B. 1076 authorizes customers of regulated loan licensees to
finance the charges for non-credit insurance and other products. 

RULEMAKING AUTHORITY

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

SECTION BY SECTION ANALYSIS

ARTICLE 1.  AMENDMENTS TO TITLE 79, V.T.C.S.

SECTION 1.01.  Amends Article 5069-3A.701 et seq., V.T.C.S., by adding
Article 3A.717, as follows: 

Art.  3A.717.  NONCREDIT INSURANCE AND OTHER PRODUCTS.  Authorizes an
authorized lender to offer certain types of non-credit insurance and other
products, in connection with or subsequent to a loan made under Subchapter
E or G, subject to the applicable provisions of the insurance laws of this
state.  Authorizes the cost of non-credit insurance or another product
under Subsection (a) to be collected from the borrower only under certain
conditions. 

SECTION 1.02.  Amends Article 5069-3A.710, V.T.C.S., as follows:

Art.  3A.710.  New heading: PAYMENT FOR INSURANCE OR OTHER PRODUCT FROM
LOAN PROCEEDS.  Provides that a lender who offers insurance, rather than
accepts insurance, or another product as permitted by this subchapter may
deduct the premium for the insurance or charge for the other product from
the proceeds of the loan and shall pay the deducted amounts to the
insurance company writing the insurance or to the vendor of the other
product.  Deletes text authorizing the lender to deduct an identifiable
charge for the insurance. 

SECTION 1.03.  Amends Article 5069-3A.852(b), V.T.C.S., to authorize a
lender to assess and collect from the borrower an amount incurred by the
lender for the premium, received in connection with the sale of insurance
or the charge for any other product authorized under this chapter, on a
loan subject to Subchapter E or a secondary mortgage loan subject to
Subchapter G.  Makes conforming changes. 
 
ARTICLE 2.  AMENDMENTS TO FINANCE CODE

SECTION 2.01.  Amends Chapter 342I, Finance Code, by adding Section
342.4021, as follows: 

Sec.  342.4021.  NONCREDIT INSURANCE AND OTHER PRODUCTS.  Makes conforming
changes. 

SECTION 2.02.  Amends Section 342.410, Finance Code, as follows:

Sec.  342.410.  New heading: PAYMENT FOR INSURANCE OR OTHER PRODUCT FROM
LOAN PROCEEDS.  Makes conforming changes. 

SECTION 2.03.  Amends Section 342.502(b), Finance Code, to make conforming
changes. 

ARTICLE 3.  EFFECTIVE DATE; APPLICATION; EMERGENCY

SECTION 3.01.  Effective date: September 1, 1999, except as provided by
Subsections (b) and (c). Provides that Article 1 of this Act takes effect
only if the Act of the 76th Legislature, Regualr Session, 1999, relating to
nonsubtantive additions to and corrections in enacted codes does not take
effect.  Provides that Article 2 of this Act takes effect only if the Act
of the 76th Legislature, Regular Session, 1999 relating to nonsubstantive
additions to and corrections in enacted codes takes effect. 

SECTION 3.02.  Makes application of this Act prospective.

SECTION 3.03.  Emergency clause.