79R1862 PB-D

By:  Hughes                                                       H.B. No. 3139



A BILL TO BE ENTITLED

AN ACT

relating to regulation of rebates offered by premium finance 
companies and certain related persons or entities.
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:                        
	SECTION 1.  The heading to Subchapter C, Chapter 651, 
Insurance Code, as effective April 1, 2005, is amended to read as 
follows:

SUBCHAPTER C. REGULATION OF INSURANCE PREMIUM

FINANCE COMPANIES AND OTHERS
	SECTION 2.  Section 651.110, Insurance Code, as effective 
April 1, 2005, is amended to read as follows:
	Sec. 651.110.  LIMITATIONS ON CERTAIN REBATES [REBATE OF 
FINANCE CHARGE].  (a)  This section applies to:
		(1)  an [An] insurance premium finance company;
		(2)  a person or entity that services premium finance 
agreements; or 
		(3)  [or] an affiliate, employee, agent, or other 
representative of an insurance premium finance company or a person 
or entity that services premium finance agreements.
	(a-1)  A person or entity described by Subsection (a) may 
not:        
		(1)  pay, allow, or offer to pay or allow in any manner 
to an insurance agent or broker or an employee of an insurance agent 
or broker or to any other person any consideration or compensation 
that relates in any way to premium financing provided to an insured 
whose coverage has been placed by the insurance agent or broker, 
without regard to whether the consideration or compensation is paid 
or allowed, from the charge for financing specified in the premium 
finance agreement or from another source;  or
		(2)  give or offer to give any valuable consideration 
or inducement of any kind directly or indirectly to an insurance 
agent or broker or an employee of an insurance agent or broker.
	(b)  Subsection (a-1)(2) [(a)(2)] does not prohibit the 
giving or offering of an article of merchandise that has a value of 
$1 or less on which there is an advertisement of the insurance 
premium finance company.
	(c)  Subsection (a-1) [(a)] does not prohibit a person or 
entity described by Subsection (a) [an insurance premium finance 
company] from making a payment under a contractual agreement with a 
validly organized and operating association of insurance agents or 
a subsidiary of the association if no part of a payment received 
under the agreement:
		(1)  is distributed to an insurance agent or broker or 
an employee of an insurance agent or broker; or
		(2)  inures directly to the benefit of a member of the 
association or an employee of the member.
	(d)  A contractual agreement under Subsection (c):                             
		(1)  must be in writing; and                                                  
		(2)  is not valid until commissioner [department] 
approval is received.
	SECTION 3.  (a)  The change in law made by this Act applies 
only to an act committed or a transaction that occurs on or after 
the effective date of this Act.
	(b)  An act committed or a transaction that occurs before  
the effective date of this Act is covered by the law in effect on the 
date that the act was committed or the transaction occurred, and the 
former law is continued in effect for that purpose.
	SECTION 4.  This Act takes effect September 1, 2005.