HBA-TYH, ATS H.B. 2559 76(R)BILL ANALYSIS


Office of House Bill AnalysisH.B. 2559
By: Turner, Bob
Insurance
7/22/1999
Enrolled



BACKGROUND AND PURPOSE 

Prior to the 76th Legislature, the Insurance Code authorized stipulated
premium companies to assume liability on a life insurance risk on any one
life under certain conditions.  Group II life insurance agents, who were
not required to take an examination or meet continuing education
requirements, could have been licensed to sell life insurance policies with
a value of $10,000 or less. In general, these types of policies were not
heavily marketed because they were usually only used to pay for funeral
expenses and outstanding bills. 

H.B. 2559 increases from $10,000 to $15,000 the maximum amount of a life
insurance policy that may be sold by a Group II agent.  In addition, this
bill increases from $10,000 to $15,000 the minimum amount of a life
insurance policy for which an applicant for a license, who desires to write
life insurance, is required to submit to a personal written examination.
This bill also requires a stipulated premium company with adequate reserves
to reinsure the insurance amount that exceeds $15,000, rather than $10,000,
on a life insurance risk on any one life, and increases from $10,000 to
$15,000 the maximum amount for which a stipulated premium company is
authorized to assume liability on a life insurance risk on any one life. 

RULEMAKING AUTHORITY

It is the opinion of the Office of House Bill Analysis that this bill does
not expressly delegate any additional rulemaking authority to a state
officer, department, agency, or institution. 

SECTION BY SECTION ANALYSIS

SECTION 1.  Amends Section 3, Article 21.07, Insurance Code, as amended by
Chapters 596 and 972, Acts of the 75th Legislature, Regular Session, 1997,
to reenact and amend it, as follows: 

Sec. 3.  ISSUANCE OF LICENSE UNDER CERTAIN CIRCUMSTANCES.  Requires the
commissioner of insurance (commissioner), rather than the Texas Department
of Insurance (department), to issue a license to a person, corporation, or
bank in such form as the department may prepare authorizing such applicant
to write the types of insurance authorized by law to be issued by
applicant's appointing insurance carrier.  Increases from $10,000 to
$15,000 the maximum amount of a life insurance policy that may be sold by
an applicant, if not a partnership, corporation, or bank.  Makes
nonsubstantive changes. 

SECTION 2.  Amends the heading to Section 4A, Article 21.07, Insurance
Code, to make a conforming change. 

SECTION 3.  Amends Sections 4A(a), (c), and (e), Article 21.07, Insurance
Code, as follows: 

(a) Increases from $10,000 to $15,000 the minimum amount of a life
insurance policy for which an applicant for a license, who desires to write
life insurance, is required to submit to a personal written examination. 

(c) Makes a conforming change.

(e) Makes a conforming change.
 
SECTION 4.  Amends Section 3, Article 22.07, Insurance Code, to require a
stipulated premium company with adequate reserves to reinsure the insurance
amount that exceeds $15,000, rather than $10,000, on a life insurance risk
on any one life. 

SECTION 5.  Amends Section 1(b), Article 22.13, Insurance Code, to increase
from $10,000 to $15,000 the maximum amount for which a stipulated premium
company is authorized to assume liability on a life insurance risk on any
one life.  Makes conforming changes. 

SECTION 6.  Amends Article 22.23(a), Insurance Code, to make a conforming
change. 

SECTION 7.Effective date: September 1, 1999.
  Makes application of this Act prospective.

SECTION 8.Emergency clause.