BILL ANALYSIS


                                                         S.B. 702
                                                        By: Truan
                                             Economic Development
                                                         03-22-95
                                       Committee Report (Amended)
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:

     Art.  5.33B.  REDUCTION IN HOMEOWNERS INSURANCE PREMIUMS FOR
     APPROVED SPRINKLER SYSTEMS
     
     Sec.  1.  DEFINITIONS.  Defines "commission,"
       "commissioner," "fire protection sprinkler system,"
       "homeowners insurance," and "inspector."
       
       Sec.  2.  ELIGIBILITY FOR PREMIUM REDUCTION.  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.  APPROVAL PROCEDURE.  (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.  PREMIUM REDUCTION CERTIFICATE.  (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.  AMOUNT OF PREMIUM REDUCTION.  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.