HBA-JEK C.S.H.B. 3589 77(R)BILL ANALYSIS Office of House Bill AnalysisC.S.H.B. 3589 By: Hunter State, Federal & International Relations 4/5/2001 Committee Report (Substituted) BACKGROUND AND PURPOSE In 1999, the legislature established the Texas Film Industry Development Loan Guarantee Program and the Texas Film Industry Administrative Fund to assist film makers in borrowing money to make films. The application for a loan guarantee requires a film producer to provide to the comptroller an indemnity against loss that equals the amount guaranteed by the state. The indemnity must be issued by a Texas-licensed insurance company, surety company, or financial institution. C.S.H.B. 3589 adds a surplus lines insurance company to this list, and sets forth provisions regarding a loan guarantee. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that rulemaking authority is expressly delegated to the comptroller of public accounts in SECTION 3 (Section 403.332, Government Code) of this bill. ANALYSIS C.S.H.B. 3589 amends the Government Code to add a surplus lines insurer to the entities that are authorized to issue an indemnity against loss (indemnity) to a film producer who is producing the film with the proceeds from a loan guaranteed under the loan guarantee indemnity program (program). The bill provides that a surplus lines insurer must meet the requirements and rules for surplus lines insurance adopted by the commissioner of insurance. The bill authorizes the comptroller to require the payment of a guarantee fee for approval of the issuance of a loan guarantee and to set the guarantee fee in an amount sufficient to fund the administration of the program. The bill authorizes the comptroller by rule to adopt a guarantee-to-reserve ratio that determines the amount of loan guarantees that may be made to exceed the amount available in the Texas Film Industry Administrative Fund (fund). The bill prohibits the ratio of guarantees to the amount of money available in the fund from exceeding five to one, and requires the comptroller to review and adjust the guarantee-toreserve ratio annually. EFFECTIVE DATE September 1, 2001. COMPARISON OF ORIGINAL TO SUBSTITUTE C.S.H.B. 3589 differs from the original bill by providing that a surplus lines insurer must meet rules adopted by the commissioner of insurance rather than rules adopted by the State Board of Insurance to issue an indemnity against loss to a film producer who is producing a film under the loan guarantee indemnity program.