By Sibley S.B. No. 1793
77R9967 PB-F
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the board of directors of certain guaranty
1-3 associations.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Section 14(b)(1), Article 9.48, Insurance Code, is
1-6 amended to read as follows:
1-7 (1) The association shall exercise its powers through
1-8 a board of directors consisting of nine persons, three of whom must
1-9 be employees or officers of the insurers, two of whom must be
1-10 employees or officers of the agents, and four of whom must be
1-11 public representatives as defined herein. The commissioner, or the
1-12 commissioner's designee, shall serve as a nonvoting ex officio
1-13 member of the board of directors. An ex officio member is not
1-14 subject to the requirements imposed on appointed members under this
1-15 article. Board members, other than the public representatives,
1-16 shall be chosen to give fair representation to all insurers and
1-17 agents giving due consideration to the various categories of
1-18 premium income, geographical location, and segments of the industry
1-19 represented in this state [Texas]. "Public representative" is an
1-20 individual who (i) has been a resident of this state [Texas] for at
1-21 least five years immediately preceding appointment, (ii) is not
1-22 licensed by the department [State Board of Insurance] or subject to
1-23 the regulation of the department [State Board of Insurance], (iii)
1-24 is not financially involved in an organization subject to the
2-1 regulation of the department [State Board of Insurance] other than
2-2 ownership of a policy or contract of insurance, (iv) is not a
2-3 member of the immediate family of an individual who is financially
2-4 involved in an organization subject to the regulation of the
2-5 department [State Board of Insurance], (v) is not engaged in or
2-6 employed by an entity having a contract with an organization
2-7 subject to the regulation of the department [State Board of
2-8 Insurance], (vi) is not employed by, on the board of directors of,
2-9 or holding elective office by or under the authority of any unit of
2-10 federal, state, or local government or any organization that
2-11 receives a significant part of its funding from any such unit of
2-12 federal, state, or local government, (vii) is not employed by or
2-13 associated with an organization formed for the purpose of
2-14 representing licensees of the department [State Board of Insurance]
2-15 or organizations or individuals subject to the regulation of the
2-16 department [State Board of Insurance], or (viii) is not required to
2-17 register as a lobbyist under Chapter 305, Government Code, by
2-18 virtue of activities on behalf of an association or other
2-19 organization representing the regulated industry. "Immediate
2-20 family" includes parents, spouse, children, brothers, and sisters
2-21 who reside in the same household. Members of the board shall be
2-22 appointed by the commissioner [State Board of Insurance] to serve
2-23 staggered six-year terms, with the terms of three members expiring
2-24 each odd-numbered year. Each director shall serve until a
2-25 successor is appointed. A vacancy on the board shall be filled for
2-26 the unexpired term by the commissioner [State Board of Insurance].
2-27 If any director, other than a public representative, ceases to be
3-1 an officer or employee of a member insurer or an agent during a
3-2 term of office, the office is vacant. All directors are eligible
3-3 to serve more than one term.
3-4 SECTION 2. Section 7(a), Article 21.28-C, Insurance Code, is
3-5 amended to read as follows:
3-6 (a) The board of directors of the association is composed of
3-7 nine persons who serve terms as established in the plan of
3-8 operation. Five members shall be selected by member insurers,
3-9 subject to the approval of the commissioner. To be eligible to
3-10 serve as an insurance industry board member, a person must be a
3-11 full-time employee of a member insurer. The remaining members
3-12 shall be representatives of the general public appointed by the
3-13 commissioner. Vacancies on the board shall be filled for the
3-14 remaining period of the term by a majority vote of the remaining
3-15 board members, subject to the approval of the commissioner. The
3-16 commissioner, or the commissioner's designee, shall serve as a
3-17 nonvoting ex officio member of the board of directors. An ex
3-18 officio member is not subject to the requirements imposed on
3-19 appointed members under this article.
3-20 SECTION 3. Section 7(a), Article 21.28-D, Insurance Code, is
3-21 amended to read as follows:
3-22 (a) The commissioner shall appoint a board of directors of
3-23 the association consisting of nine members, three of whom shall be
3-24 chosen from employees or officers chosen from the 50 member
3-25 companies having the largest total direct premium income based on
3-26 the latest financial statement on file at date of appointment, two
3-27 of whom shall be chosen from the other companies to give fair
4-1 representation to member insurers based on due consideration of
4-2 their varying categories of premium income and geographical
4-3 location, and four of whom shall be representatives of the general
4-4 public. The commissioner, or the commissioner's designee, shall
4-5 serve as a nonvoting ex officio member of the board of directors.
4-6 An ex officio member is not subject to the requirements imposed on
4-7 appointed members under this article. Members serve for six-year
4-8 staggered terms, with the terms of three members expiring each
4-9 odd-numbered year. All directors shall serve until their
4-10 successors are appointed, except that in the case of any vacancy,
4-11 the unexpired term of office shall be filled by the appointment of
4-12 a director by the commissioner. If a director ceases to be an
4-13 officer or employee of a member insurer during the director's term
4-14 of office, that office becomes vacant until the director's
4-15 successor is appointed. All directors are eligible to succeed
4-16 themselves in office. A public representative may not be:
4-17 (1) an officer, director, or employee of an insurance
4-18 company, insurance agency, agent, broker, solicitor, adjuster, or
4-19 any other business entity regulated by the department;
4-20 (2) a person required to register with the secretary
4-21 of state under Chapter 305, Government Code; or
4-22 (3) related to a person described by Subparagraph (1)
4-23 or (2) of this paragraph within the second degree of affinity or
4-24 consanguinity.
4-25 SECTION 4. Section 551.079, Government Code, is amended to
4-26 read as follows:
4-27 Sec. 551.079. TEXAS DEPARTMENT [STATE BOARD] OF INSURANCE.
5-1 (a) The requirements of this chapter do not apply to a meeting of
5-2 the commissioner of insurance or the commissioner's designee with
5-3 the board of directors of a guaranty association established under
5-4 Article 9.48, 21.28-C, or 21.28-D, Insurance Code, [State Board of
5-5 Insurance] in the discharge of the commissioner's duties and
5-6 responsibilities to regulate and maintain the solvency of a person
5-7 regulated by the Texas Department of Insurance [board].
5-8 (b) The commissioner of insurance [board] may deliberate and
5-9 determine the appropriate action to be taken concerning the
5-10 solvency of a person regulated by the Texas Department of Insurance
5-11 [board] in a closed meeting with persons in one or more of the
5-12 following categories:
5-13 (1) staff of the Texas Department of Insurance
5-14 [board];
5-15 (2) a regulated person; [or]
5-16 (3) representatives of a regulated person; or
5-17 (4) members of the board of directors of a guaranty
5-18 association established under Article 9.48, 21.28-C, or 21.28-D,
5-19 Insurance Code.
5-20 SECTION 5. This Act takes effect September 1, 2001.