SRC-MWN S.B. 605 77(R)BILL ANALYSIS


Senate Research CenterS.B. 605
By: Sibley
Business & Commerce
7/9/2001
Enrolled


DIGEST AND PURPOSE 

The federal Gramm-Leach-Bailey Act (GLBA) provides for states to review
affiliations between banks, securities firms, insurance companies, and
other financial companies during the 60 days prior to the effective date or
change of control. The Texas Insurance Code in some cases provides the
Texas Department of Insurance (TDI) a longer period of time to review
affiliations. This provision could be interpreted as preventing or
restricting affiliations which are prohibited under the provisions of GLBA.
S.B. 605 amends the Texas Insurance Code to shorten the review time for
affiliation filings to 60 days so that Texas laws will conform with GLBA.
S.B. 605 also requires TDI to review and take action on all affiliation
filings within 60 days, thereby shortening the review period in some cases.

RULEMAKING AUTHORITY

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

SECTION BY SECTION ANALYSIS

SECTION 1. Amends Section 5(a)(1), Article 21.49-1, Insurance Code, to
require the statement filed under this Subsection (a) to be filed not later
than the 60th day before the proposed effective date of the acquisition or
change of control and subject to public inspection at the office of the
commissioner of insurance (commissioner), and requires a copy thereof to be
sent by the acquiring party to the domestic insurer. 

SECTION 2. Amends Sections 5(c)(1) and (2), Article 21.49-1, Insurance
Code, to require the commissioner to approve or deny any acquisition or
change referred to in Subsection (a) not later than the 60th day after the
date the statement required by that subsection is filed. Authorizes the
60-day period to be waived by the person filing the statement and the
domestic insurer. Requires the commissioner, on the request of either the
person filing the statement or the domestic insurer, to hold a public
hearing on a denial. Requires the commissioner, in considering whether to
approve or deny, to consider whether immediately upon the acquisition or
change of control the domestic insurer referred to in Subsection (a) would
not be able to satisfy the requirements for the insurance of a new
certificate of authority or a license  to write the line or lines of
insurance for which it is presently licensed; and the effect of such
acquisition or change of control would be substantially to lessen
competition in any line or subclassification lines of insurance in this
State or tend to create a monopoly therein. Requires the public hearing
referred to in this subsection to be held not later than the 60th day,
rather than 45 days, after the date of the denial, rather than the
statement required by Subsection (a) is filed, and at least 20 days' notice
thereof is required to be given by the commissioner to the person filing
the statement and to the domestic insurer unless such person and the
domestic insurer waive such notice. Deletes text regarding matters placed
on the commissioner's contested case docket. Makes conforming changes. 

SECTION 3. Makes application of this Act prospective.

SECTION 4. Effective date: upon passage or September 1, 2001.