S.B. 1281 78(R)    BILL ANALYSIS


S.B. 1281
By: Fraser
Insurance
Committee Report (Unamended)



BACKGROUND AND PURPOSE

Currently, rulemaking authority accorded to the Texas Department of
Insurance (TDI) is subject to varying interpretations and the commissioner
of insurance lacks the flexibility to amend or adopt rules as necessary to
address changes in the insurance industry. Additionally, a rule adopted by
the commissioner is void if the reasonable actual costs required for
implementing the rule exceed estimated costs by at least 25 percent. As
proposed, S.B. 1281 grants rulemaking to and modifies existing rulemaking
authority of the commissioner of insurance to allow for the adoption of
rules necessary to implement TDI's duties and powers and for adoption of
rules outside of legislative mandates, under certain circumstances.  

RULEMAKING AUTHORITY
Rulemaking authority is expressly granted to the commissioner of insurance
in SECTION 3 (Section 36.005, Insurance Code) of this bill. 

Rulemaking authority previously granted to the commissioner of insurance
is modified in SECTION 1 (Section 36.001, Insurance Code) and SECTION 4
(Article 3.42(p), Insurance Code) of this bill. 

ANALYSIS

SECTION 1. Amends Section 36.001, Insurance Code, as follows: 

Sec. 36.001. New heading: GENERAL RULEMAKING AUTHORITY. (a) Authorizes the
commissioner of insurance (commissioner) to adopt any rules necessary and
appropriate to implement, rather than for the conduct and execution of,
the powers and duties of the Department of Insurance (TDI) under this code
and other laws of this state, rather than only as authorized by statute.  

(b) No changes to this subsection. 

(c) Deletes this subsection. 

SECTION 2. Amends Section 36.004, Insurance Code, to include provisions of
Section 36.005 as an exception to TDI prohibitions from requiring an
insurer to comply with certain rules and regulations adopted by the
National Association of Insurance Commissioners.  

SECTION 3. Amends Subchapter A, Chapter 36, Insurance Code, by adding
Section 36.005, as follows:  

Sec. 36.005. INTERIM RULES TO COMPLY WITH FEDERAL REQUIREMENTS. 

(a) Authorizes the commissioner to adopt rules to implement state
responsibility in compliance with a federal law of regulation or action of
a federal court relating to a person or activity under TDI's jurisdiction,
under certain circumstances.  

(b) Authorizes the commissioner to adopt rules under this section only
within a certain timeframe. Requires a rule adopted under this section to
remain in effect only until 30 days following the end of the next
legislative session, unless a law is enacted authorizing the rule's
subject matter. Provides  continuance of the rule's effectiveness if
authorized by an enacted law.  

SECTION 4. Amends Article 3.42(p), Insurance Code, to authorize the
commissioner to adopt reasonable rules, rather than rules and regulations,
as necessary to implement and accomplish the purposes of this Article,
rather than specific Article provisions. Requires the commissioner to
adopt rules under this Article in compliance with Chapter 2001
(Administrative Procedure), Government Code, rather than in compliance
with the Administrative Procedure Act. Prohibits a rule adopted under this
article from being repealed or amended until after, rather than on, the
first anniversary of the rule's adoption, unless the commissioner finds
that it is in the significant and material interests of the state's
citizens or a legislative enactment requires amendment, repeal, or
adoption of all or part of a rule. Deletes text referring to a compelling
need for the amendment or repeal of the rule.  

SECTION 5. Repealer: Section 36.002, Insurance Code (Fiscal Impact of
Department Rules). 

SECTION 6. Effective date: upon passage or September 1, 2003. 

EFFECTIVE DATE

On passage or, if the Act does not receive the necessary vote, the Act
takes effect September 1, 2003.