SRC-LBB S.B. 1519 78(R)   BILL ANALYSIS


Senate Research Center   S.B. 1519
78R3958 PB-DBy: Lucio
Business & Commerce
4/25/2003
As Filed


DIGEST AND PURPOSE 

Currently, Article 21.11-1 of the Insurance Code governs cancellation and
suspension of agency contracts for independent agents, but this law does
not apply to the termination or suspension of captive agents where the
policies and the insurance business are owned by the insurer and not by
the agent.  As proposed, S.B. 1519 specifies the grounds under which an
insurer may terminate for cause a contractual agreement with a captive
agent who holds a general property and casualty agent license and the
grounds under which an insurer is prohibited from canceling or terminating
a contractual agreement with a captive agent or reducing or restricting a
captive agent's authority to conduct business under the contract. 

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 A, Chapter 21, Insurance Code, by adding
Article 21.14A, as follows: 

Art. 21.14A.  PROCEDURES ON TERMINATION OF PROPERTY AND CASUALTY AGENT

 Sec. 1.  DEFINITION.  Defines "agent."

Sec. 2.  TERMINATION FOR CAUSE.  (a)  Authorizes an insurer to terminate a
contractual agreement with an agent under certain conditions. 
  
(b)  Provides that the termination by an insurer of a contractual
agreement with an agent for a cause described by Subsection (a) of this
section is not a wrongful or unjustified termination for purposes of this
article. 

Sec. 3.  PROHIBITED GROUNDS FOR TERMINATION.  (a)  Prohibits an insurer
from canceling or terminating a contractual agreement with an agent or
reducing or restricting an agent's authority to conduct business under the
contract based on certain conditions. 
  
(b)  Prohibits an insurer, in order to avoid the prohibition provided by
Subsection (a) of this section, from committing certain acts in a manner
designed to impact a selected agent or the business produced by that
agent. 
  
(c)  Provides that the termination by an insurer of a contractual
agreement with an agent in violation of Subsection (a) of this section may
be a wrongful or unjustified termination for purposes of this article. 

SECTION 2.  Effective date:  September 1, 2003.