HBA-JEK C.S.H.B. 2389 77(R)BILL ANALYSIS


Office of House Bill AnalysisC.S.H.B. 2389
By: Turner, Bob
Insurance
4/9/2001
Committee Report (Substituted)



BACKGROUND AND PURPOSE 

A group of five to 35 citizens of this state may associate themselves to
form a stipulated premium insurance company for the purpose of offering
life, accident, or health insurance with $15,000 in capital stock and
$7,500 in surplus at the company.  Current law restricts the investment
options of these companies to protect their financial stability.  However,
the financial growth of some stipulated premium insurance companies makes
current investment restrictions unnecessary and less profitable for
companies.  C.S.H.B. 2389 authorizes a stipulated premium insurance company
to elect its investments and transactions to be governed by law pertaining
to the investments of large life, health, and accident insurance companies. 

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. 

ANALYSIS

C.S.H.B. 2389 amends the Insurance Code to authorize a stipulated premium
insurance company issuing life, health, or accident coverages or
maintaining certain types of policies to elect that its investments and
transactions be governed by rules and statutes for capital stock domestic
life, health, and accident insurance companies.  The bill requires the
election to be made by written notice to the commissioner of insurance and
specifies that the election will be effective on the first day of the
calendar quarter following the day on which the notice is filed. 

C.S.H.B. 2389 authorizes a stipulated premium insurance company to elect
that its investments and transactions be governed by law regarding domestic
life insurance companies after the second anniversary of the effective date
of the initial election by written notice to the commissioner of insurance.
In the event of a subsequent election, no further election by the
stipulated premium insurance company may be made. 

EFFECTIVE DATE

September 1, 2001.

COMPARISON OF ORIGINAL TO SUBSTITUTE

C.S.H.B. 2389 differs from the original bill by conforming to Texas
Legislative Council style and format.