SRC-JEC H.B. 928 78(R)   BILL ANALYSIS


Senate Research Center   H.B. 928
By: Eiland (Armbrister)
State Affairs
5/2/2003
Engrossed


DIGEST AND PURPOSE 

Current law contains two provisions governing the investments of life
insurance companies.  Article 3.33, Insurance Code, is newer, and governs
the investments of larger companies.  The older provision, Article 3.39,
Insurance Code, governs smaller companies.  Some smaller companies have
"outgrown" Article 3.39 and could enjoy more efficient investment
operations under the more modern code.  H.B. 928 allows smaller companies
to elect to be governed by Article 3.33. 

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 Subchapter G, Chapter 884, Insurance Code, as effective
June 1, 2003, by adding Section 884.311, as follows: 

Sec. 884.311.  LAW GOVERNING INVESTMENTS; ELECTION.  (a)  Authorizes a
stipulated premium insurance company issuing life, health, or accident
coverages or maintaining policies in force that were issued in accordance
with Subchapter I to elect that the company's investments and transactions
be governed by Article 3.33 (Authorized Investments and Loans for Capital
Stock Domestic Life, Health and Accident Insurance Companies). 

(b)  Requires the election under Subsection (a) to be made by written
notice to the commissioner of insurance (commissioner) and provides that
it is effective on the first day of the calendar quarter following the day
on which the notice is filed with the commissioner. 

(c)  Authorizes the stipulated premium insurance company, after the second
anniversary of the effective date of an initial election authorized by
this section, to elect that the company's investments and transactions be
governed by Article 3.39 (Authorized Investments and Loans for "Domestic"
Life Insurance Companies). 

(d)  Requires the subsequent election under Subsection (c) to be made by
written notice to the commissioner and provides that it is effective on
the first day of the calendar quarter following the day on which the
notice is filed with the commissioner. 

(e)  Authorizes a stipulated premium insurance company, after it has made
a subsequent election under Subsection (c), to make another election under
this section, subject to the approval of the commissioner. 

SECTION 2.  Amends Section 1, Article 3.33, Insurance Code, to provide
that this article and the rules promulgated to interpret and implement it
apply to all domestic insurance companies as defined in Section 841.001,
rather than Section 5 of Article 3.01, and other insurers specifically
made subject to  the provisions hereof, including a stipulated premium
insurance company electing to be governed by this article under Section
884.311.  Modifies statutory references. 

SECTION 3.  Effective date:  September 1, 2003.