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.