1-1 AN ACT
1-2 relating to the books and records of certain insurers.
1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-4 SECTION 1. Article 1.28, Insurance Code, is amended to read
1-5 as follows:
1-6 Art. 1.28. OUT-OF-STATE BOOKS, RECORDS, ACCOUNTS, AND
1-7 OFFICES
1-8 Sec. 1. (a) On giving written notice of intent to the
1-9 commissioner of insurance, and if the commissioner of insurance
1-10 does not disapprove within 30 days after that notice is given, a
1-11 domestic insurance company, including a life, health, and accident
1-12 insurance company, fire and marine insurance company, surety and
1-13 trust company, general casualty company, title insurance company,
1-14 fraternal benefit society, mutual life insurance company, local
1-15 mutual aid association, statewide mutual assessment company, mutual
1-16 insurance company other than life, farm mutual insurance company,
1-17 county mutual insurance company, Lloyds plan, reciprocal exchange,
1-18 group hospital service corporation, health maintenance
1-19 organization, stipulated premium insurance company, nonprofit legal
1-20 services corporation, or any other entity licensed under the
1-21 Insurance Code or chartered or organized under the laws of this
1-22 state that is an affiliated member of an insurance holding company
1-23 system, as defined by Article 21.49-1, Insurance Code, as added by
1-24 Chapter 356, Acts of the 62nd Legislature, Regular Session, 1971
2-1 (Article 21.49-1, Vernon's Texas Insurance Code), may locate and
2-2 maintain all or any portion of its books, records, and accounts and
2-3 its principal offices outside this state at a location within the
2-4 United States if the company meets the requirements of this
2-5 section. This article does not apply to or prohibit the location
2-6 and maintenance of the normal books, records, and accounts
2-7 including policyholder and claim files [of either a branch office
2-8 or agency office] of a domestic insurance company, relating to the
2-9 business produced by or through an agency of the company whether or
2-10 not such agency is an affiliate under Article 21.49-1, at the
2-11 branch office or agency office, if that office is located in the
2-12 United States.
2-13 (b) The domestic insurance company must be:
2-14 (1) an affiliate of an insurance holding company
2-15 system as defined in Article 21.49, Insurance Code, as added by
2-16 Chapter 356, Acts of the 62nd Legislature, Regular Session, 1971
2-17 (Article 21.49-1, Vernon's Texas Insurance Code), that has made the
2-18 necessary filings as required by that article and that is in
2-19 compliance with that article; [or]
2-20 (2) a nonprofit legal services corporation whose
2-21 claims and daily affairs are handled under contract by a foreign
2-22 insurer licensed to do a similar business in this state; or
2-23 (3) a health maintenance organization that is
2-24 affiliated with other health maintenance organizations or health
2-25 care providers.
2-26 (c) The ultimate controlling person of the insurance holding
2-27 company system, the immediate controlling person of the domestic
3-1 insurance company, or an intermediate controlling person of the
3-2 domestic insurance company must be legally domiciled, licensed, or
3-3 admitted to transact business in a jurisdiction within the United
3-4 States.
3-5 (d) The books, records, accounts, or offices of the domestic
3-6 insurance company are under the company's direct supervision,
3-7 management, and control.
3-8 (e) Both the domestic insurance company and the controlling
3-9 person of the affiliated insurance holding company system must
3-10 appoint and maintain a person in this state as attorney for service
3-11 of process in the manner provided by Section 2(b), Article 1.36, of
3-12 this code. The commissioner is authorized to accept service and
3-13 notify the insurance company, in the manner provided by Section 3,
3-14 Article 1.36, of this code, if the insurance company does not
3-15 appoint or maintain an attorney for acceptance of process.
3-16 (f) A separate notice of intent shall not be required if the
3-17 domestic insurer has an agreement to maintain its books and records
3-18 outside of the state with an affiliate and such agreement has been
3-19 approved or deemed approved as required by Article 21.49-1,
3-20 Insurance Code, and such agreement contains substantially all the
3-21 information required for such notice under this article.
3-22 (g) The commissioner shall adopt rules allowing the
3-23 maintenance of the books and records of a domestic insurer subject
3-24 to this article with a nonaffiliated entity other than an agency
3-25 and to allow a domestic health maintenance organization to comply
3-26 with this article.
3-27 Sec. 2. (a) A credit on or offset to the amount of premium
4-1 taxes to be paid by the domestic insurance company to the state in
4-2 a taxable year may not be allowed on:
4-3 (1) examination expenses incurred by representatives
4-4 of the department that are directly attributable to an examination
4-5 of the books, records, accounts, or principal offices of a domestic
4-6 insurance company located outside this state;
4-7 (2) examination expenses or fees paid to a state other
4-8 than this state; or
4-9 (3) examination expenses paid in a different taxable
4-10 year.
4-11 (b) This article prevails over any conflicting provisions in
4-12 Articles 1.16, 4.10, 9.59, and 4.11 of this code or any other law
4-13 of this state.
4-14 SECTION 2. This Act takes effect September 1, 1999. This
4-15 Act clarifies the law as it existed immediately before the
4-16 effective date of this Act and may not be interpreted to imply that
4-17 the law as it existed immediately before the effective date of this
4-18 Act is inconsistent with the law as amended by this Act.
4-19 SECTION 3. The importance of this legislation and the
4-20 crowded condition of the calendars in both houses create an
4-21 emergency and an imperative public necessity that the
4-22 constitutional rule requiring bills to be read on three several
4-23 days in each house be suspended, and this rule is hereby suspended.
_______________________________ _______________________________
President of the Senate Speaker of the House
I certify that H.B. No. 3304 was passed by the House on May
11, 1999, by a non-record vote; that the House refused to concur in
Senate amendments to H.B. No. 3304 on May 26, 1999, and requested
the appointment of a conference committee to consider the
differences between the two houses; and that the House adopted the
conference committee report on H.B. No. 3304 on May 30, 1999, by a
non-record vote.
_______________________________
Chief Clerk of the House
I certify that H.B. No. 3304 was passed by the Senate, with
amendments, on May 24, 1999, by a viva-voce vote; at the request of
the House, the Senate appointed a conference committee to consider
the differences between the two houses; and that the Senate adopted
the conference committee report on H.B. No. 3304 on May 30, 1999,
by a viva-voce vote.
_______________________________
Secretary of the Senate
APPROVED: _____________________
Date
_____________________
Governor