SRC-MWN S.B. 1568 77(R)   BILL ANALYSIS


Senate Research Center   S.B. 1568
By: Harris
Business & Commerce
4/23/2001
As Filed


DIGEST AND PURPOSE 

Currently, banks sell debt cancellation agreements and debt suspension
agreements as principal and there is no state regulation of those
contracts. As proposed, S.B. 1568 prohibits banks from selling either as
principal or agent a debt cancellation agreement or a debt suspension
agreement or contracting for, charging, or receiving any amount in
connection with the offering or sale of such agreements, unless the bank
first obtains a certificate of authority from the commissioner of
insurance. 

RULEMAKING AUTHORITY

Rulemaking authority is expressly granted to the commissioner of insurance
in SECTION 1 (Section 3, Article 21.82, Insurance Code) of this bill. 

SECTION BY SECTION ANALYSIS

SECTION 1. Amends Chapter 21F, Texas Insurance Code, by adding Article
21.82, as follows: 

Art. 21.82. CERTIFICATIONS OF AUTHORITY FOR NATIONAL AND STATE BANKS 
 
Sec. 1. DEFINITIONS. Defines "bank," "authorized product," "debt
cancellation agreement," and "debt suspension agreement." 

Sec. 2. CERTIFICATE OF AUTHORITY TO UNDERWRITE DEBT CANCELLATION AND DEBT
SUSPENSION AGREEMENT. (a) Prohibits a bank, without first obtaining a
certificate of authority, from selling either as principal or agent debt
cancellation agreements or a debt suspension agreements or contracting for,
charging, or receiving any amount in connection with the offering or sale
of such agreements. 

(b) Provides that a bank is entitled to receive a certificate of authority
on notification to the commissioner of insurance (commissioner) of its
intentions to operate under this subchapter. Requires the commissioner,
upon receipt, to immediately issue a certificate of authority. 

(c) Provides that the holder of a certificate of authority is subject to
disciplinary action as provided by Chapter 81, Texas Insurance Code, for
violations exclusively relating to conduct in the underwriting, pricing,
marketing and claims handling of authorized products. 

(d) Provides that the holder of a certificate of authority is not subject
to any visitorial power granted to the department by the Texas Insurance
Code, save and except that a holder is required to submit information and
data that relate exclusively to certain criteria. 

Sec. 3. DEBT CANCELLATION AND DEBT SUSPENSION AGREEMENTS TO BE  REGULATED
AS INSURANCE. (a) Requires debt cancellation and debt suspension agreements
to be regulated with respect to certain criteria. Requires debt
cancellation agreements that provide for the cancellation of indebtness
upon death to be regulated as credit life insurance. 

(b) Requires the commissioner by rule to classify debt cancellation and
debt suspension agreements according to their functional insurance
equivalent and identify these articles or sections of the Texas Insurance
Code which apply. Provides that rulemaking authority is restricted to
certain conditions. 

SECTION 3. Effective date: September 1, 2001.