By Smithee H.B. No. 3013
77R7072 AJA-F
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the composition and operation of the board of directors
1-3 of certain insurance guaranty associations.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Section 14(b), Article 9.48, Insurance Code, is
1-6 amended to read as follows:
1-7 (b) Board of directors. (1) The association shall exercise
1-8 its powers through a board of directors consisting of the
1-9 commissioner and nine persons appointed by the commissioner, three
1-10 of whom must be employees or officers of the insurers, two of whom
1-11 must be employees or officers of the agents, and four of whom must
1-12 be public representatives as defined herein. The commissioner
1-13 serves as an ex officio, nonvoting member of the board. Board
1-14 members appointed by the commissioner, other than the public
1-15 representatives, shall be chosen to give fair representation to all
1-16 insurers and agents giving due consideration to the various
1-17 categories of premium income, geographical location, and segments
1-18 of the industry represented in Texas. "Public representative" is an
1-19 individual who (i) has been a resident of Texas for at least five
1-20 years immediately preceding appointment, (ii) is not licensed by
1-21 the department [State Board of Insurance] or subject to the
1-22 regulation of the department [State Board of Insurance], (iii) is
1-23 not financially involved in an organization subject to the
1-24 regulation of the department [State Board of Insurance] other than
2-1 ownership of a policy or contract of insurance, (iv) is not a
2-2 member of the immediate family of an individual who is financially
2-3 involved in an organization subject to the regulation of the
2-4 department [State Board of Insurance], (v) is not engaged in or
2-5 employed by an entity having a contract with an organization
2-6 subject to the regulation of the department [State Board of
2-7 Insurance], (vi) is not employed by, on the board of directors of,
2-8 or holding elective office by or under the authority of any unit of
2-9 federal, state, or local government or any organization that
2-10 receives a significant part of its funding from any such unit of
2-11 federal, state, or local government, (vii) is not employed by or
2-12 associated with an organization formed for the purpose of
2-13 representing licensees of the department [State Board of Insurance]
2-14 or organizations or individuals subject to the regulation of the
2-15 department [State Board of Insurance], or (viii) is not required to
2-16 register as a lobbyist under Chapter 305, Government Code, by
2-17 virtue of activities on behalf of an association or other
2-18 organization representing the regulated industry. "Immediate
2-19 family" includes parents, spouse, children, brothers, and sisters
2-20 who reside in the same household. The appointed members [Members]
2-21 of the board shall be appointed by the commissioner [State Board of
2-22 Insurance] to serve staggered six-year terms, with the terms of
2-23 three members expiring each odd-numbered year. Each director shall
2-24 serve until a successor is appointed. A vacancy on the board shall
2-25 be filled for the unexpired term by the commissioner [State Board
2-26 of Insurance]. If an appointed [any] director, other than a public
2-27 representative, ceases to be an officer or employee of a member
3-1 insurer or an agent during a term of office, the office is vacant.
3-2 An appointed director may [All directors are eligible to] serve
3-3 more than one term.
3-4 (2) An appointed director [Directors] may not receive
3-5 any remuneration or emolument of office but is [are] entitled to
3-6 reimbursement for the director's [their] actual expenses incurred
3-7 in performing the director's [their] duties under this article [as
3-8 directors].
3-9 (3) Each appointed director of the association shall
3-10 file a financial statement with the secretary of state in
3-11 accordance with Sections 3 and 4, Chapter 421, Acts of the 63rd
3-12 Legislature, Regular Session, 1973 (Article 6252-9b, Vernon's Texas
3-13 Civil Statutes).
3-14 SECTION 2. Sections 7(a) and (e), Article 21.28-C, Insurance
3-15 Code, are amended to read as follows:
3-16 (a) The board of directors of the association is composed of
3-17 the commissioner and nine persons who serve terms as established in
3-18 the plan of operation. Five members shall be selected by member
3-19 insurers, subject to the approval of the commissioner. To be
3-20 eligible to serve as an insurance industry board member, a person
3-21 must be a full-time employee of a member insurer. Four [The
3-22 remaining] members shall be representatives of the general public
3-23 appointed by the commissioner. The commissioner serves as an ex
3-24 officio, nonvoting member. Vacancies on the board shall be filled
3-25 for the remaining period of the term by a majority vote of the
3-26 remaining board members, subject to the approval of the
3-27 commissioner.
4-1 (e) Each appointed member of the board of directors shall
4-2 file a financial statement with the secretary of state in
4-3 accordance with Sections 3 and 4, Chapter 421, Acts of the 63rd
4-4 Legislature, Regular Session, 1973 (Article 6252-9b, Vernon's Texas
4-5 Civil Statutes).
4-6 SECTION 3. Sections 7(a) and (b), Article 21.28-D, Insurance
4-7 Code, are amended to read as follows:
4-8 (a) The commissioner shall appoint a board of directors of
4-9 the association consisting of nine members, three of whom shall be
4-10 chosen from employees or officers chosen from the 50 member
4-11 companies having the largest total direct premium income based on
4-12 the latest financial statement on file at date of appointment, two
4-13 of whom shall be chosen from the other companies to give fair
4-14 representation to member insurers based on due consideration of
4-15 their varying categories of premium income and geographical
4-16 location, and four of whom shall be representatives of the general
4-17 public. The commissioner serves as an ex officio, nonvoting member
4-18 of the board of directors. Appointed members [Members] serve for
4-19 six-year staggered terms, with the terms of three members expiring
4-20 each odd-numbered year. An appointed member [All directors] shall
4-21 serve until the member's successor is [their successors are]
4-22 appointed, except that in the case of any vacancy, the unexpired
4-23 term of office shall be filled by the appointment of a director by
4-24 the commissioner. If an appointed [a] director ceases to be an
4-25 officer or employee of a member insurer during the director's term
4-26 of office, that office becomes vacant until the director's
4-27 successor is appointed. Appointed [All] directors are eligible to
5-1 succeed themselves in office. A public representative may not be:
5-2 (1) an officer, director, or employee of an insurance
5-3 company, insurance agency, agent, broker, solicitor, adjuster, or
5-4 any other business entity regulated by the department;
5-5 (2) a person required to register with the secretary
5-6 of state under Chapter 305, Government Code; or
5-7 (3) related to a person described by Subparagraph (1)
5-8 or (2) of this paragraph within the second degree of affinity or
5-9 consanguinity.
5-10 (b) Each appointed director of the association shall file a
5-11 financial statement with the secretary of state in accordance with
5-12 Sections 3 and 4, Chapter 421, Acts of the 63rd Legislature,
5-13 Regular Session, 1973 (Article 6252-9b, Vernon's Texas Civil
5-14 Statutes).
5-15 SECTION 4. Section 551.079, Government Code, is amended to
5-16 read as follows:
5-17 Sec. 551.079. COMMISSIONER [STATE BOARD] OF INSURANCE. (a)
5-18 The requirements of this chapter do not apply to a meeting of the
5-19 commissioner of insurance [State Board of Insurance] in the
5-20 discharge of the commissioner's responsibilities to regulate and
5-21 maintain the solvency of a person regulated by the board or to
5-22 oversee a guaranty association.
5-23 (b) The commissioner of insurance or a person designated by
5-24 the commissioner [board] may:
5-25 (1) deliberate and determine the appropriate action to
5-26 be taken concerning the solvency of a person regulated by the Texas
5-27 Department of Insurance [board] in a closed meeting with persons in
6-1 one or more of the following categories:
6-2 (A) [(1)] staff of the department [board];
6-3 (B) [(2)] a regulated person; [or]
6-4 (C) [(3)] representatives of a regulated person;
6-5 or
6-6 (D) the board of directors of a guaranty
6-7 association; or
6-8 (2) meet with the board of directors of a guaranty
6-9 association in a closed meeting the subject of which relates to the
6-10 commissioner's oversight of the guaranty association.
6-11 SECTION 5. This Act takes effect immediately if it receives
6-12 a vote of two-thirds of all the members elected to each house, as
6-13 provided by Section 39, Article III, Texas Constitution. If this
6-14 Act does not receive the vote necessary for immediate effect, this
6-15 Act takes effect September 1, 2001.