HBA-ATS H.B. 3086 76(R)    BILL ANALYSIS


Office of House Bill AnalysisH.B. 3086
By: Wise
Insurance
4/6/1999
Introduced



BACKGROUND AND PURPOSE 

Article 1.14-1 (Unauthorized Insurance), Insurance Code, regulates the
business of insurance in Texas.  An entity that wishes to engage in the
business of insurance must obtain a license or certificate of authority
from the Texas Department of Insurance.  Unless exempted by the statute, an
unlicensed person or company may not engage in the business of insurance.
The article outlines those practices which constitute doing insurance
business in Texas. If unlicensed companies and agents do engage in the
business of insurance, the article provides for a criminal penalty.
However, the determination of what constitutes a violation must be made in
conjunction with other provisions of the Insurance Code.  Because of this
difficulty, prosecutors are often reluctant to file criminal charges
against those who operate outside the regulatory framework.  Lack of
criminal prosecution may result in inadequate regulation of unlicensed
insurers. 

H.B. 3086 sets forth that a person commits an offense if the person engages
in the business of insurance without authority from the Texas Department of
Insurance to do so or without being exempted from authorization by the
department, or after the person's authority to engage in the practice of
insurance has been revoked or suspended by the commissioner of insurance.
Under this bill, a person means an individual, a corporation, an
association, a partnership, a reciprocal exchange, an interinsurance
exchange, a Lloyd's plan, a fraternal benefit society, and any other legal
entity engaged in the business of insurance, including an agent, a broker,
an adjuster, or a life insurance counselor. 

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 the heading to Section 2, Article 1.14-1, Insurance
Code, to make a conforming change. 

SECTION 2.  Amends Section 2, Article 1.14-1, Insurance Code, by amending
Subsections (a) and (c) and adding Subsection (d), as follows: 

(a) Deletes the definition of "insurer" as used in this article
(Unauthorized Insurance) and replaces it with a new definition of "insurer"
(a person engaged as a principal in the business of insurance).  Defines
"person" to mean an individual, a corporation, an association, a
partnership, a reciprocal exchange, an interinsurance exchange, a Lloyd's
plan, a fraternal benefit society, and any other legal entity engaged in
the business of insurance, including an agent, a broker, an adjuster, or a
life insurance counselor.  Makes conforming and nonsubstantive changes. 

(c) Makes a nonsubstantive change.

(d) Specifies that venue of an act described by Section (a)(1) of this
section that is committed by mail is in the location where the matter
transmitted by mail is delivered and takes effect. 

 SECTION 3.  Amends Section 3(b), Article 1.14-1, Insurance Code, to make
conforming changes. 

SECTION 4.  Amends Section 13(a), Article 1.14-1, Insurance Code, to set
forth that a person commits an offense if the person engages in the
business of insurance without authority from the Texas Department of
Insurance (department) to do so or without being exempted from
authorization from the department, or after the person's authority to
engage in the practice of insurance has been revoked or suspended by the
commissioner of insurance, rather than if the person violates Section 3(b)
(Unauthorized Insurance Prohibited) of this article. 

SECTION 5.  Repealers: Sections 3(a) (Unauthorized Insurance Prohibited)
and 13(c) (Criminal Penalty), Article 1.14-1, Insurance Code. 

SECTION 6.  Makes application of Section 4 of this Act prospective.

SECTION 7.  Effective date: September 1, 1999.

SECTION 8.  Emergency clause.