BILL ANALYSIS Insurance Committee H.B. 347 By: T. Hunter 03-22-95 Committee Report (Substituted) BACKGROUND The 73rd Texas Legislature passed House Bill 1461 which included a provision that required the Texas Insurance Commissioner to adopt an endorsement form (an amendment to an existing policy) which excluded coverage for damage to foundations or slabs of a policyholder's home. Losses caused by specified disasters to a homeowner's, farm and ranch owner's, or a fire insurance policy would still be covered. The endorsement would have only been applicable to homes 10 years old or older. The provision was added as an amendment to House Bill 1461 and had not been part of any public hearing, sunset review, or study by the Texas Department of Insurance to determine if an endorsement was necessary. Prior to House Bill 1461, the Insurance Commissioner had discretion in determining policy forms. In June 1994, the Commissioner of Insurance, as required by statute, published proposed rules and policy forms for the endorsement. A public hearing on those rules was held in July 1994 and the rules were adopted pending a determination of a premium offset which would be set at the 1994 rate hearing. The State Office of Hearing Examiners held a rate hearing in December 1994, but no recommendation was made on the premium offset. Consequently, there are no endorsements in effect today. PURPOSE As proposed House Bill 347 would repeal the mandatory slab/foundation endorsement and would specify that this action would in no way effect the commissioner's authority to promulgate policy and endorsement provisions. RULEMAKING AUTHORITY It is the committee's opinion that this bill does not expressly grant any additional rulemaking authority to a state officer, department, agency or institution. SECTION BY SECTION ANALYSIS SECTION 1. Repeals Article 5.32-2, Insurance Code. SECTION 2. (a) Prohibits the use of an endorsement authorized in Article 5.35-2, Insurance Code, on any policy delivered, issued for delivery, or renewed on or after the effective date of the Act. (b) The repeal of Article 5.35-2, Insurance Code, does not otherwise affect the authority of the commissioner of insurance under other provisions of the Insurance Code to promulgate policy and endorsement provisions regarding the foundation or slab of an insured dwelling. SECTION 3. Emergency Clause and Effective Date COMPARISON OF ORIGINAL TO SUBSTITUTE The substitute to House Bill 347 adds subsection (a) to prohibit the use of an endorsement authorized in Article 5.35-2, Insurance Code, on any policy delivered, issued for delivery, or renewed on or after the effective date of the Act and re-letters corresponding subsection as (b). SUMMARY OF COMMITTEE ACTION In accordance with House rules H.B. 347 was heard in a public hearing on March 22, 1995. The Chair laid out H.B. 347 and recognized Representative T. Hunter to explain the bill. The Chair recognized the following persons to testify in support of H.B. 347: Edwin D. Benjamin, Texas Loss Consultants Association; Rob Schneider, Consumers Union. No one testified in opposition to or neutrally on H.B. 347. The Chair recognized Representative Duncan who offered a substitute to H.B. 347 and moved the Committee adopt the substitute to H.B. 347. The Chair heard no objections and the substitute was adopted. The Chair recognized Representative Duncan who moved the Committee report H.B. 347 as substituted to the full House with the recommendation that it do pass and be printed. Representative Averitt seconded the motion and the motion prevailed by the following vote: AYES (6); NAYES (0); ABSENT (3); PNV (0).