By Smithee                                            H.B. No. 1703
         77R4490 AJA-F                           
                                A BILL TO BE ENTITLED
 1-1                                   AN ACT
 1-2     relating to regulation of nonadmitted captive insurance companies.
 1-3           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
 1-4           SECTION 1.  Section 101.053(b), Insurance Code, is amended to
 1-5     read as follows:
 1-6           (b)  Sections 101.051 and 101.052 do not apply to:
 1-7                 (1)  the lawful transaction of surplus lines insurance
 1-8     under Article 1.14-2;
 1-9                 (2)  the lawful transaction of reinsurance by insurers;
1-10                 (3)  a transaction in this state that:
1-11                       (A)  involves a policy that:
1-12                             (i)  is lawfully solicited, written, and
1-13     delivered outside this state; and
1-14                             (ii)  covers, at the time the policy is
1-15     issued, only subjects of insurance that are not resident, located,
1-16     or expressly to be performed in this state; and
1-17                       (B)  takes place after the policy is issued;
1-18                 (4)  a transaction:
1-19                       (A)  that involves an insurance contract
1-20     independently procured through negotiations occurring entirely
1-21     outside this state;
1-22                       (B)  that is reported; and
1-23                       (C)  on which premium tax is paid in accordance
1-24     with this chapter;
 2-1                 (5)  a transaction in this state that:
 2-2                       (A)  involves group life, health, or accident
 2-3     insurance, other than credit insurance, and group annuities in
 2-4     which the master policy for the group was lawfully issued and
 2-5     delivered in a state in which the insurer or other person was
 2-6     authorized to do insurance business; and
 2-7                       (B)  is authorized by a statute of this state;
 2-8                 (6)  an [a management or accounting] activity in this
 2-9     state by or on the sole behalf of a nonadmitted captive insurance
2-10     company that insures solely [directors' and officers' liability
2-11     insurance for]:
2-12                       (A)  directors' and officers' liability insurance
2-13     for the directors and officers of the company's parent and
2-14     affiliated companies;
2-15                       (B)  the risks of the company's parent and
2-16     affiliated companies; or
2-17                       (C)  both the individuals and entities described
2-18     by Paragraphs (A) and (B);
2-19                 (7)  the issuance of a qualified charitable gift
2-20     annuity under Chapter 102; or
2-21                 (8)  a lawful transaction by a servicing company of the
2-22     Texas workers' compensation employers' rejected risk fund under
2-23     Section 4.08, Article 5.76-2, as that article existed before its
2-24     repeal.
2-25           SECTION 2.  This Act takes effect September 1, 2001.