1-1 By: Thompson (Senate Sponsor - Sibley) H.B. No. 3304
1-2 (In the Senate - Received from the House May 11, 1999;
1-3 May 12, 1999, read first time and referred to Committee on Economic
1-4 Development; May 14, 1999, reported favorably by the following
1-5 vote: Yeas 7, Nays 0; May 14, 1999, sent to printer.)
1-6 A BILL TO BE ENTITLED
1-7 AN ACT
1-8 relating to the books and records of certain insurers.
1-9 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-10 SECTION 1. Article 1.28, Insurance Code, is amended to read
1-11 as follows:
1-12 Art. 1.28. OUT-OF-STATE BOOKS, RECORDS, ACCOUNTS, AND
1-13 OFFICES
1-14 Sec. 1. (a) On giving written notice of intent to the
1-15 commissioner of insurance, and if the commissioner of insurance
1-16 does not disapprove within 30 days after that notice is given, a
1-17 domestic insurance company, including a life, health, and accident
1-18 insurance company, fire and marine insurance company, surety and
1-19 trust company, general casualty company, title insurance company,
1-20 fraternal benefit society, mutual life insurance company, local
1-21 mutual aid association, statewide mutual assessment company, mutual
1-22 insurance company other than life, farm mutual insurance company,
1-23 county mutual insurance company, Lloyds plan, reciprocal exchange,
1-24 group hospital service corporation, health maintenance
1-25 organization, stipulated premium insurance company, nonprofit legal
1-26 services corporation, or any other entity licensed under the
1-27 Insurance Code or chartered or organized under the laws of this
1-28 state that is an affiliated member of an insurance holding company
1-29 system, as defined by Article 21.49-1, Insurance Code, as added by
1-30 Chapter 356, Acts of the 62nd Legislature, Regular Session, 1971
1-31 (Article 21.49-1, Vernon's Texas Insurance Code), may locate and
1-32 maintain all or any portion of its books, records, and accounts and
1-33 its principal offices outside this state at a location within the
1-34 United States if the company meets the requirements of this
1-35 section. This article does not apply to or prohibit the location
1-36 and maintenance of the normal books, records, and accounts
1-37 including policyholder and claim files [of either a branch office
1-38 or agency office] of a domestic insurance company, relating to the
1-39 business produced by or through an agency of the company whether or
1-40 not such agency is an affiliate under Article 21.49-1, at the
1-41 branch office or agency office, if that office is located in the
1-42 United States.
1-43 (b) The domestic insurance company must be:
1-44 (1) an affiliate of an insurance holding company
1-45 system as defined in Article 21.49, Insurance Code, as added by
1-46 Chapter 356, Acts of the 62nd Legislature, Regular Session, 1971
1-47 (Article 21.49-1, Vernon's Texas Insurance Code), that has made the
1-48 necessary filings as required by that article and that is in
1-49 compliance with that article; [or]
1-50 (2) a nonprofit legal services corporation whose
1-51 claims and daily affairs are handled under contract by a foreign
1-52 insurer licensed to do a similar business in this state; or
1-53 (3) a health maintenance organization that is
1-54 affiliated with other health maintenance organizations or health
1-55 care providers.
1-56 (c) The ultimate controlling person of the insurance holding
1-57 company system, the immediate controlling person of the domestic
1-58 insurance company, or an intermediate controlling person of the
1-59 domestic insurance company must be legally domiciled, licensed, or
1-60 admitted to transact business in a jurisdiction within the United
1-61 States.
1-62 (d) The books, records, accounts, or offices of the domestic
1-63 insurance company are under the company's direct supervision,
1-64 management, and control.
2-1 (e) Both the domestic insurance company and the controlling
2-2 person of the affiliated insurance holding company system must
2-3 appoint and maintain a person in this state as attorney for service
2-4 of process in the manner provided by Section 2(b), Article 1.36, of
2-5 this code. The commissioner is authorized to accept service and
2-6 notify the insurance company, in the manner provided by Section 3,
2-7 Article 1.36, of this code, if the insurance company does not
2-8 appoint or maintain an attorney for acceptance of process.
2-9 (f) A separate notice of intent shall not be required if the
2-10 domestic insurer has an agreement to maintain its books and records
2-11 outside of the state with an affiliate and such agreement has been
2-12 approved or deemed approved as required by Article 21.49-1,
2-13 Insurance Code, and such agreement contains substantially all the
2-14 information required for such notice under this article.
2-15 (g) The commissioner shall adopt rules allowing the
2-16 maintenance of the books and records of a domestic insurer subject
2-17 to this article with a nonaffiliated entity other than an agency
2-18 and to allow a domestic health maintenance organization to comply
2-19 with this article.
2-20 Sec. 2. (a) A credit on or offset to the amount of premium
2-21 taxes to be paid by the domestic insurance company to the state in
2-22 a taxable year may not be allowed on:
2-23 (1) examination expenses incurred by representatives
2-24 of the department that are directly attributable to an examination
2-25 of the books, records, accounts, or principal offices of a domestic
2-26 insurance company located outside this state;
2-27 (2) examination expenses or fees paid to a state other
2-28 than this state; or
2-29 (3) examination expenses paid in a different taxable
2-30 year.
2-31 (b) This article prevails over any conflicting provisions in
2-32 Articles 1.16, 4.10, 9.59, and 4.11 of this code or any other law
2-33 of this state.
2-34 SECTION 2. This Act takes effect September 1, 1999. This
2-35 Act clarifies the law as it existed immediately before the
2-36 effective date of this Act and may not be interpreted to imply that
2-37 the law as it existed immediately before the effective date of this
2-38 Act is inconsistent with the law as amended by this Act.
2-39 SECTION 3. The importance of this legislation and the
2-40 crowded condition of the calendars in both houses create an
2-41 emergency and an imperative public necessity that the
2-42 constitutional rule requiring bills to be read on three several
2-43 days in each house be suspended, and this rule is hereby suspended.
2-44 * * * * *