SRC-JEC S.B. 891 78(R)   BILL ANALYSIS


Senate Research Center   S.B. 891
78R3994 DLF-DBy: Duncan
State Affairs
4/16/2003
As Filed


DIGEST AND PURPOSE 

Current law allows the joint underwriting association (JUA) to write
professional (medical) liability insurance coverage for physicians and
certain health care providers, including not-forprofit and for-profit
nursing homes.  The Long Term Care Legislative Oversight Committee found
during the interim that, according to nursing home facilities' testimony,
insurance companies are unwilling to write a general liability policy that
is not paired with a professional liability policy. As proposed, S.B.
891allows JUA to write general liability policies in connection with
medical liability coverage issued by JUA.  

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 Section 3, Article 21.49-3, Insurance Code, by adding
Subsection (d), to authorize the joint underwriting association (JUA) to
provide general liability insurance coverage to be issued in connection
with medical liability insurance issued by JUA. 

SECTION 2.  Reenacts and amends Section 4A, Article 21.49-3, Insurance
Code, as amended by Chapters 921 and 1284, Acts of the 77th Legislature,
Regular Session, 2001, as follows: 

Sec. 4A.  POLICYHOLDER'S STABILIZATION RESERVE FUND FOR PHYSICIANS AND
HEALTH CARE PROVIDERS OTHER THAN FOR-PROFIT AND NOT-FORPROFIT NURSING
HOMES.  (a)  Creates a policyholder's stabilization reserve fund for
physicians and health care providers, other than for-profit and
not-for-profit nursing homes, which shall be administered as provided
herein and in the plan of operation of JUA.  Provides that the
stabilization reserve fund created by this section is separate and
distinct from the stabilization reserve fund for for-profit and
not-for-profit nursing homes created by Section 4B of this article. 

(b)  Requires each policyholder to pay annually into the stabilization
reserve fund a charge, the amount of which shall be established annually
by advisory directors chosen by health care providers, other than
for-profit and not-for-profit nursing homes, and physicians eligible for
insurance in JUA in accordance with the plan of operation.  Requires the
charge to be in proportion to each premium payment due for liability
insurance through the association.  Requires such charge to be separately
stated in the policy, but prohibits the charge from constituting a part of
premiums or being subject to premium taxation, servicing fees, acquisition
costs, or any other such charges. 

(c)  Requires the stabilization reserve fund to be collected and
administered by the association and treated as a liability of the
association along with and in the same manner as premium and loss
reserves.  Requires the fund to be valued annually by the board of
directors as of the close of the last preceding year. 
            
[Subsections (d) and (e) as amended by Acts 2001, 77th Leg., Ch. 921,
Section 5] 
 
(d)  Requires collections of the stabilization reserve fund charge to
continue until such time as the net balance of the stabilization reserve
fund is not less than the projected sum of premiums for physicians and
health care providers, other than for-profit and not-for-profit nursing
homes, to be written in the year following valuation date.  Removes an
exception as provided by Subsection (e) of this section. 

(e)  Deletes the existing text of Subsection (e), regarding the initiation
or continuation of the stabilization reserve fund charge under certain
circumstances. 

[Subsection (e) as amended by Acts 2001, 77th Leg., Ch. 1284, Section 5.07]

(e)  Requires the stabilization reserve fund to be credited with all
stabilization reserve fund charges collected from physicians and health
care providers, other than for-profit and not-for-profit nursing homes,
and to be charged with any deficit sustained by physicians and health care
providers, other than for-profit and not-for-profit nursing homes, from
the prior year's operation of the association.   

(f)  Deletes the existing text of Subsection (f), regarding crediting the
stabilization reserve fund with charges collected from policyholders. 

SECTION 3.  Effective date:  September 1, 2003.