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By:  Seaman                                                       H.B. No. 2965



A BILL TO BE ENTITLED

AN ACT

relating to insurance premium finance agreements.                             
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:                        
	SECTION 1.  Sec. 651.051, Insurance Code, is amended to read 
as follows:     
	Sec. 651.051.  (a) Unless the person is a license holder, a 
person may not:
		(1)  negotiate, transact, or engage in the business of 
insurance premium financing in this state; or
		(2)  contract for, charge, or receive directly or 
indirectly on or in connection with an insurance premium financing 
any charge, regardless of whether the charge is for interest, 
compensation, consideration, expense, or otherwise, if in the 
aggregate the amount of the charge exceeds the amount the person 
would be permitted by law to charge if the person were not a license 
holder.
	(b)  This subchapter does not apply to a person who purchases 
or otherwise acquires a premium finance agreement from a licensee 
if the licensee retains the right to service the agreement and to 
collect payments due under the agreement and remains responsible 
for servicing the premium finance agreement in compliance with this 
chapter.
	SECTION 2.  Sec. 651.158, Insurance Code, is amended to read 
as follows:     
	Sec. 651.158.  PREPAYMENT AND REFUND.  (a)  Notwithstanding 
the provisions of any premium finance agreement to the contrary, an 
insured may pay the balance due under the agreement in full at any 
time before the maturity of the final installment of the balance.
	(b)  If an insured pays a premium finance agreement in full 
as authorized by this section and the agreement included an amount 
for a charge, the insured is entitled to receive for the prepayment 
by cash or renewal a refund credit in accordance with Subchapter H, 
Chapter 342, Finance Code, and rules adopted under that subchapter.  
If the amount of the credit for prepayment is less than $5 [$1], the 
insured is not entitled to a refund credit.
	SECTION 3.  EFFECTIVE DATE.  This Act takes effect 
immediately if it receives a vote of two-thirds of all the members 
elected to each house, as provided by Section 39, Article III, Texas 
Constitution.  If this Act does not receive the vote necessary for 
immediate effect, this Act takes effect September 1, 2005.