HBA-CCH, MPM, KDB H.B. 1203 77(R)    BILL ANALYSIS


Office of House Bill AnalysisH.B. 1203
By: Brimer
Business & Industry
2/19/2001
Introduced



BACKGROUND AND PURPOSE 

Current law authorizes a state agency or an institution of higher education
(agency) to purchase its own insurance policies.  As a result, a state
agency may purchase an unnecessary or questionable policy which may pose an
additional cost to the state.  House Bill 1203 requires the State Office of
Risk Management (office) to administer insurance services obtained by state
agencies and operate as a full-service insurance and risk manager, and in
administering insurance services, the office may purchase insurance
coverage for state agencies.   

RULEMAKING AUTHORITY

It is the opinion of the Office of House Bill Analysis that rulemaking
authority is expressly delegated to the State Office of Risk Management in
SECTION 9 (Section 2, Article. 21.49-15A, Insurance Code) and to the risk
management board in SECTION 12 of this bill. 

ANALYSIS

House Bill 1203 amends the Labor Code to require the State Office of Risk
Management (office) to administer insurance services obtained by state
agencies and institutions of higher education (state agencies).  The bill
requires the office to operate as a full-service insurance and risk manager
for state agencies, and to maintain and review records of property,
casualty, or liability insurance coverages purchased by or for a state
agency.  The bill authorizes the office, in acting as a full-service
insurance and risk manager for state agencies, to purchase coverage for a
state agency under any line of insurance other than health or life
insurance, including liability insurance, or to advise and assist the state
agency in the purchase of coverage (Secs. 412.001 and 412.011). 

H.B. 1203 provides that members of the risk management board that governs
the office must have demonstrated experience in the field of insurance and
insurance regulation (Sec. 412.021).  

The bill requires the director to furnish copies of all rules adopted by
the risk management board (board) to the commissioner of the Texas
Department of Insurance (commissioner) (Sec. 412.041). 

H.B. 1203 amends the Insurance Code and further amends the Labor Code to
require each state agency to actively manage the risks of that agency by
cooperating with the office and the Texas Department of Insurance in the
purchase of property, casualty, and liability lines of insurance coverage
(Sec. 412.051, Labor Code).  The bill requires each state agency that
purchases property, casualty, or liability insurance coverage in a manner
other than through the services provided by the office and the insurer
providing the coverage to report the purchase to the office within 30 days
of the date on which the policy coverage is scheduled to take effect.   In
addition to the information contained in the report, the office may require
the state agency to submit copies of insurance forms, policies, and other
relevant information (Sec. 412.051, Labor Code and Art. 21.49-15A,
Insurance Code). 

The bill requires the office to adopt rules to implement these provisions
and to consult with the commissioner in adopting the rules.  The bill
provides that failure by an insurer to comply with the reporting
requirements constitutes grounds for the imposition of sanctions against
the insurer (Art. 21.49-15A, Insurance Code). 

H.B. 1203 amends the Labor Code to repeal the provision that risk
management does not apply to  state agencies that have medical malpractice
insurance coverage, workers' compensation insurance coverage, or other
self-insurance coverage with associated risk management programs before
January 1, 1989 (SECTION 10). 

The office is required to adopt rules to implement the changes in this bill
no later than December 1, 2001. An insurer is not required to comply with
the reporting requirements until January 1, 2002 (SECTION 12). 

EFFECTIVE DATE

September 1, 2001.