RS C.S.H.B. 531 75(R)BILL ANALYSIS INSURANCE C.S.H.B. 531 By: Shields 4-20-97 Committee Report (Substituted) BACKGROUND Currently there is no provision in the Insurance Code that allows the Insurance Commissioner to expunge de minimis code or minor technical rule violations from the records of any insurance agent or company no matter how long ago the violation occurred and no matter how minor or technical. Thus, insurance agents and companies are forever required to disclose all minor code or rule violations that resulted in action by the Commissioner against them every time the agent or company renews a license or applies for a different kind of license even if no other violation of the code or rules has occurred. Failure to report a past violation on a renewal application is grounds for further discipline, even if the omission is by error. This legislation is designed to allow the Insurance Commissioner to rectify this situation by providing insurance agents and companies, who have such minor insurance code or rule violations a mechanism to have those violations expunged. PURPOSE To allow the Insurance Commissioner to expunge violations from an agents record, when such violations are older than six years old; the agent has had no other violation of any nature during those six years; and the violation to be expunged caused no harm to any policyholder or insurance company and/or did not involve fraud or criminal activity. RULEMAKING AUTHORITY It is the opinion of the committee that express rulemaking authority is granted to the Commissioner of Insurance in SECTION 1 of the bill (subsection (h), Article 1.10F, Texas Insurance Code). SECTION BY SECTION ANALYSIS SECTION 1: Amends Chapter 1, Insurance Code, by adding Article 1.10F. Art. 1.10 F - EXPUNCTION OF CERTAIN RECORDS. (a) Defines "license," and "person." (b) Provides that a person is entitled to expunction of department records if (1) no other violation has been committed during the previous six years; (2) the violation did not injure a policy holder or insurance company; (3) the violation did not result in the assessment of a monetary penalty against the person; and (4) the violation did not involve fraud or criminal activity. (c) States that a person entitled to expunction may file a petition for the expunction with the Commissioner. (d) Requires the person seeking the expunction to pay an advance fee to cover the costs of the expunction proceeding. (e) Provides that the commissioner shall set a hearing and give notice to appropriate parties. (f) Requires that the commissioner issue an expunction order if the person is found to be entitled to it under Subsection (b). (g) Provides that records expunged cannot be used or released for any purpose in considering the issuance of a new or renewed license, used in inquiries by other states for seeking a new license, or included in any database after the date of expunction; and that the person whose record is expunged can deny the violation occurred or that an expunction order was issued; (h) The commissioner shall adopt rules to enforce this article. SECTION 2: Effective date, September 1, 1997. SECTION 3: Emergency Clause. COMPARISON OF ORIGINAL TO SUBSTITUTE SECTION 1. Adds definition of "license" in subsection (a), and limits the definition of "person" to an individual or partnership. Adds subdivision (3) to subsection (b) stating that an expunction cannot be granted if a monetary penalty was assessed. Rewrites language under subsection (g) to specify the areas where the department may not release, disseminate, or use the expunged record, and that the record may not be kept in a database after it is expunged. Removes subdivision (3) from subsection (g) explaining what an agent may say in a criminal proceeding when questioned about the violation.