BILL ANALYSIS
C.S.H.B. 2915
By: Duncan
04-26-95
Committee Report (Substituted)
BACKGROUND
Article 3.42, Texas Insurance Code, currently requires that
all life, health and accident insurance policies, forms, riders,
endorsements and contracts of any kind, be filed with and approved
by the Texas Department of Insurance prior to their use by
insurance companies. The statute gives the Department an initial
60 day period to review the form, and to either approve or
disapprove the form within the 60 days. The form is "deemed
approved" at the expiration of 60 days unless it has been either
approved or disapproved prior thereto. The statute permits the
insurer to request and grant the Department an additional 60 day
review period.
Subsection (c)(1) of Article 3.42 currently permits an insurer
to file the policy form with the Texas Department of Insurance, and
to immediately issue, deliver and use the policy prior to
Departmental approval if the filing is accompanied by a certificate
from the insurer that the filed form complies in all respects with
the Insurance Code and the rules and regulations applicable
thereto. The Texas Department of Insurance reviews the filed form
within the 60 day period, and the insurer may extend the review
period by an additional 60 days.
Because of the large number of filed forms and the review by
the Texas Department of Insurance, there is a major back-log of
filed forms being reviewed, considerable delay in form review and
approval, and usually there is a required additional 60 day
extended period for review and approval of the form.
PURPOSE
As substituted, H.B. 2915 amends Article 3.42, Insurance Code
to provide for changes to the filing and use of life, health, and
accident insurance policy forms.
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. Amends Article 3.42, Insurance Code as follows:
Reduces the additional review period from 60 to 45 days (the
initial review period remains at 60 days), and provides that
the form is deemed approved at the end of the extended 45 days
unless it has been either approved or disapproved prior
thereto. Only one extension is permitted.
Provides that the Commissioner may order an insurer to make
complete restitution to a financially damaged insured but may
not otherwise impose sanctions or penalties on the insurer for
use of the "file and use" certified form if it is determined
that:
(i) Texas insureds have been financially damaged
by a "file and use" certified form which was
not approved by the Texas Department of
Insurance
(ii) the filed form does not comply with the
Insurance Code, the rules or regulations; and
(iii) that the insurer intentionally used and issued
the form with knowledge that it did not comply
with the Insurance Code or the applicable
rules
Provides that a disapproval must detail the changes necessary
for approval and that the insurer may refile within 45 days
after disapproval, and the Commissioner has 45 days to approve
or disapprove the refiling.
Provides that if a policy form has been on file for at least
180 days and has been previously approved, deemed approved or
exempted from approval, the Commissioner may withdraw the
previous approval of the form only if it violates or does not
comply with the Insurance Code or a rule relating thereto,
unless there is fraud or gross misrepresentation.
Provides that if an accident or sickness form has been on file
for at least 360 days and has been previously approved, the
Commissioner may withdraw approval of the form only if it
violates or does not comply with the Insurance Code or a rule
relating thereto, unless the Commissioner finds fraud or gross
misrepresentation.
Reduces maximum fees to current actual fees charged.
The amendment makes several technical, non-substantive changes
throughout the statute.
SECTION 2. Effective Date.
SECTION 3. Emergency Clause.
COMPARISON OF ORIGINAL TO SUBSTITUTE
The CSHB 2915 extends from 30 to 45 days the additional
review period for "file and use" policy forms; and upon disapproval
of a form, the insurer may refile a corrected form within 45 days,
and the Commissioner has 45 days to approve or disapprove. The
Commissioner may also withdraw approval of a form for fraud or
gross misrepresentation. The CSHB 2915 also provides that adopted
rules may not be repealed or amended until after the first
anniversary of the rule and deletes certain sections from HB 2915
which prevented the Texas Department of Insurance from imposing
sanctions.
SUMMARY OF COMMITTEE ACTION
In accordance with House rules, H.B. 2915 was heard in a
public hearing on April 26, 1995. The Chair (Counts) laid out H.B.
2915 and a substitute to H.B. 2915 and recognized Representative
Duncan to explain the difference between the substitute to H.B.
2915 and the filed bill. The Chair recognized the following person
to testify in support of H.B. 2915: Will D. Davis, Texas Legal
Reserve Officials Association. The Chair recognized the following
person to testify in opposition to H.B. 2915: Robert Schneider,
Consumers Union.
The Chair recognized Representative Duncan who moved the
Committee adopt the substitute to H.B. 2915. The Chair heard no
objections and the substitute to H.B. 2915 was adopted. The Chair
recognized Representative G. Lewis who moved the Committee report
H.B. 2915 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).