BILL ANALYSIS

Insurance Committee

By: Truan (Smithee)
04-26-95
Committee Report (Unamended)

BACKGROUND

     Residential fire safety technology is affordable and
available, but not being adequately promoted by state policy. 
Homeowners get credit on their insurance policies for having alarm
systems, but not for having systems to put out the fire.  A
building can be destroyed or seriously damaged by fire before the
fire department can respond to the alarm.

PURPOSE

     As proposed, S.B. 702 entitles a policy holder to an
homeowners insurance premium reduction if the person installs an
inspector approved sprinkler system.

RULEMAKING AUTHORITY

     It is the committee's opinion that rulemaking authority is
granted to the Commission on Fire Protection under SECTION 1
(Section 3(a), Article 5.43-3, Insurance Code) and the commissioner
of insurance under SECTION 2 (Section 5, Article 5.33B, Insurance
Code) of this bill.

SECTION BY SECTION ANALYSIS

SECTION 1.

Amends Section 3(a), Article 5.43-3, Insurance Code, to authorize
the Commission on Fire Protection to create a specialized licensing
or registration program for fire protection sprinkler system
contractors under rules adopted under this section.

SECTION 2.

Amends Chapter 5C, Insurance Code, by adding Article 5.33B, as
follows:

Sec.  1:

Defines "commission," "commissioner," "fire protection sprinkler
system," "homeowners insurance," and "inspector."

Sec.  2:

Entitles a policyholder to a premium reduction (reduction) for
homeowners insurance if the policyholder has installed an 
inspector approved fire protection sprinkler system (system) on the
covered property.

Sec.  3:

(a) Authorizes a person with a system in the person's residence to
contract with an inspector for a reduction certification
inspection.

(b) Requires the inspector to inspect the property and file a
written report in the form prescribed the Texas Department of
Insurance (department) stating the inspector's findings and whether
or not the system meets applicable standards and qualifies the
applicant's property for the reduction.

(c) Defines "applicable standards."

Sec.  4:

(a) Requires the department to issue a reduction certificate
entitling the applicant to a reduction on the homeowners insurance
if the inspector's report states that the applicant's property
qualifies for the reduction.

(b) Entitles the policyholder to a reduction on presentation of the
certificate to the insurer issuing the policy.

Sec.  5:

Requires the commissioner of insurance protection to establish, by
rule, the amount of reduction applicable to a homeowners policy.

SECTION 3.

Effective date: September 1, 1995.  Makes application of this Act
prospective beginning January 1, 1996.

SECTION 4. Emergency clause.


SUMMARY OF COMMITTEE ACTION

     In accordance with House rules, S.B. 702 was heard in a public
hearing on April 26, 1995.  The Chair (Duncan) laid out S.B. 702
and recognized Representative Smithee to explain the bill.  The
Chair recognized the following persons to testify neutrally on S.B.
702:
Lyndon Anderson, Texas Department of Insurance; Jack Woods, Texas
Commission on fire Protection.  

     The Chair recognized Representative G. Lewis who moved the
Committee report S.B. 702 as engrossed to the full House with the
recommendation that it do pass, be printed, and sent to the
Committee on Local and Consent.   Representative Averitt seconded
the motion and the motion prevailed by the following vote:  AYES
(6); NAYES (0); ABSENT (3); PNV (0).