RS C.S.H.B. 1869 75(R)    BILL ANALYSIS


INSURANCE
C.S.H.B. 1869
By: Burnam
4-15-97
Committee Report (Substituted)



BACKGROUND 

Regulators, financial advisors, and even the insurance industry
consistently advise people to shop for the best rates and service, but
current insurance company practices may discourage even the most astute
person from shopping around. After changing companies, people often find
that if they file a claim during the first 60 days (auto)  or 90 days
(homeowners), the insurer cancels the policy.  Further coverage may be
denied altogether or the applicant may be placed in a higherpriced company
within the insurer's group of companies.  This may occur even if the
person had a perfect claim history for years. 

PURPOSE 

Requires insurers to wait until the policy comes up for renewal to
evaluate claims occurring after the effective date of the policy. 

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 Section 4, Article 21.49-2B, Insurance Code, by adding
subsection (j) as follows: 

(j) Notwithstanding subsection (i) of this section, an insurer may not
cancel a personal automobile policy or homeowner's, farm or ranch owner's
policy based on: 

(1) A claim that arose on or after the first day the policy was put into
effect. 

(2) An accident that occurred on or after the first day of the policy
regardless of whether or not a claim was filed under the policy. 

SECTION 2. - Article 21.49-2B, Insurance Code, as amended applies to a
plan issued or renewed on or after January 1, 1998. 

SECTION 3. - Emergency Clause

COMPARISON OF ORIGINAL TO SUBSTITUTE

The substitute removes language in the original bill that would have
reduced the number of days in which an insurer could cancel a policy from
60 and 90 days to 30 days for a personal automobile policy or a homeowners
or farm and ranch policy, respectively.