HBA-TYH, ATS H.B. 3304 76(R)BILL ANALYSIS Office of House Bill AnalysisH.B. 3304 By: Thompson Insurance 7/21/1999 Enrolled BACKGROUND AND PURPOSE Prior to the 76th Legislature, Article 1.28 (Out-of-State Books, Records, Accounts, and Offices), Insurance Code, authorized a domestic insurer, if it provided written notice to the commissioner of insurance of its intent to relocate books and records and if the commissioner did not disapprove within 30 days after that notice is given, to locate and maintain all or any portion of its books, records, and accounts and its principal offices outside of Texas at a location within the United States. Although the expenses incurred by the Texas Department of Insurance (department) to examine the books, records, accounts, or principal offices of a domestic insurer located outside Texas were prohibited from being used as a credit on or offset to the amount of premium taxes to be paid by the insurer to the state, the department had been hesitant to approve the relocation of books and records because the reimbursements for expenses were not deposited in the department's examiners' fund. Due to this, each out-of-state examination costed the department funds that could have been used for other examinations. H.B. 3304 sets forth requirements and guidelines for the maintenance of the books and records of certain insurers. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that rulemaking authority is expressly delegated to the commissioner of insurance in Section 1 (Article 1.28, Insurance Code) of this bill. SECTION BY SECTION ANALYSIS SECTION 1. Amends Article 1.28, Insurance Code, as follows: Sec. 1. (a) Provides that this article does not apply to or prohibit the location and maintenance of the normal books, records, and accounts, including policyholder and claim files of a domestic insurance company, relating to the business produced by or through an agency of the company whether or not such an agency is an affiliated under Article 21.49-1 (Insurance Holding Company System Regulatory Act), Insurance Code, at the branch office or agency office, if that office is located in the United States. Makes conforming changes. (b) Provides that the domestic insurance company must be a health maintenance organization that is affiliated with other health maintenance organizations or health care providers. (c)-(e) Makes no change. (f) Prohibits a separate notice of intent from being required if the domestic insurer has an agreement to maintain its books and records outside of the state with an affiliate and such agreement has been approved or deemed approved as required by Article 21.49-1, Insurance Code, and such agreement contains substantially all the information required for such notice under this article. (g) Requires the commissioner of insurance (commissioner) to adopt rules allowing the maintenance of the books and records of a domestic insurer subject to this article with a nonaffiliated entity other than an agency and to allow a domestic health maintenance organization to comply with this article. Sec. 2. Makes no change. SECTION 2. Effective date: September 1, 1999. Provides that this act clarifies the law as it existed immediately before the effective date of this Act and may not be interpreted to imply that the law as it existed immediately before the effective date of this Act is inconsistent with the law as amended by this Act. SECTION 3. Emergency clause.