RS C.S.H.B. 3453 75(R) BILL ANALYSIS INSURANCE C.S.H.B. 3453 By: Gutierrez 4-29-97 Committee Report (Substituted) BACKGROUND Although the Texas Motor Vehicle Responsibility Act requires all drivers to carry liability coverage, the Texas Department of Public Safety, the Texas Department of Insurance, and the Texas Department of Transportation estimate that 21% to 27% of Texas Drivers do not carry liability insurance. It is easy to avoid the current paper only proof of insurance. Some drivers purchase a six-month policy, have their vehicle registered and inspected, and then cancel the policy. Other drivers simply purchase or produce fake proof of insurance. Lack of compliance ultimately surfaces in increased premiums for Texas motorists, and the paper only proof of liability insurance card, which is easy to counterfeit, is obviously not an effective verification tool. PURPOSE As proposed, C.S.H.B. 3453 would provide for a standardized insurance card with a magnetic strip on the back to access a computerized system to verify a driver's proof of financial responsibility information. The computerized system will combine cross referenced data from DPS, TxDOT, and all Texas insurance companies to report those drivers that have liability coverage. RULEMAKING AUTHORITY It is the opinion of the committee that rulemaking authority is granted to the Department of Public Safety in SECTION 2 of bill (Sec. 601.441 and Sec. 601.447 of Subchapter N, Chapter 601, Transportation Code), and to the Department of Transportation and the Department of Public Safety in SECTION 4 of the bill (Sec. 502.1715(c) of Subchapter D, Chapter 502, Transportation Code). A deadline for the Department of Public Safety to adopt rules is set in SECTION 5 of the bill. SECTION BY SECTION ANALYSIS SECTION 1. Amends Section 601.053(b) as follows: (b) An operator who does not provide proof of financial responsibility under subsection (a), or furnish electronic evidence of responsibility under subchapter N is presumed to have violated Section 601.051. SECTION 2. Amends Chapter 601, Transportation Code by adding Subchapter N as follows: SUBCHAPTER N. ELECTRONIC EVIDENCE OF FINANCIAL RESPONSIBILITY Sec. 601.441 ESTABLISHMENT OF SYSTEM. The department by rule, shall establish a system for providing financial responsibility by use of magnetic card or similar electronic form of communication with a computerized database. The database must comply with the Driver's Privacy Protection Act of 1994 (18 U.S.C. Section 2721 et seq.). Sec. 601.442 DESIGNATED AGENT. (a) The department may contract with a person to act as the department's designated agent under this subchapter. The contract may be awarded under a competitive bid procedure as established by department rule. The contract may not obligate the department to pay more than is set by the Director of Public Safety from fees collected under Section 502.1715. (b) The contract must provide for the designated agent to provide at their own expense, the necessary equipment for each: county tax assessor-collector's office where vehicle registration forms are collected, motor vehicle inspection stations, location where driver's licenses are accepted, or other fixed location where evidence of financial responsibility is required to be present. (c) The public safety director shall determine a fee which is necessary for the designated agent to implement this subchapter, but which does not cost more than 15 cents per vehicle per month. (d) A contract under this term may be awarded for five years, and may be terminated under guidelines set by the contract. Sec. 601.443 INFORMATION PROVIDED BY INSURANCE COMPANY. (a) Each insurance company providing motor vehicle liability policies in this state shall provide information regarding the following: insurance co., insurance policy number, effective date of policy, expiration date of policy, name, address, phone number date of birth and social security number of each driver, year, make, vehicle ID number of each vehicle covered, any information regarding nonrenewal or cancellation of the policy, and a statement of compliance of policy with the minimum amount of insurance necessary. (b) Information provided under subsection (a) of this section will be provided electronically to the designated agent. The information provided will remain the property of the insurance company and will not be used for any purpose other than law enforcement. Sec. 601.444. INFORMATION PROVIDED BY DEPARTMENT. The department shall provide the following information to the designated agent: holder's name, address and date of birth, driver's license number and expiration date, information on suspension or revocation of the license. Sec. 601.445. INFORMATION PROVIDED BY TEXAS DEPARTMENT OF TRANSPORTATION. (a) The department of Transportation shall provide the designated agent with the following information for each vehicle for which this chapter applies: Owner's name, address, and social security number, vehicle ID number, vehicle description, date title certificate for vehicle was issued. (b) The department of transportation is not required to provide information under this section about a car registered under Chapter 502, subchapter G. Sec. 601.446. FORM OF AND TIME FOR PROVIDING INFORMATION BY AGENCIES; INFORMATION REMAINS PROPERTY OF AGENCIES. Each agency shall provide information required under Sec. 601.444 or 601.445 in electronic format. The department shall provide information under 601.444 within seven days after issuance of license. The Texas Department of Transportation shall provide information under 601.445, and each change to information under this section in a weekly report that will include registration and changes from the preceding week. Information provided under this section shall remain the property of the agency and may not be sold or made available except to enforce state law. Sec. 601.447. CERTAIN OTHER EVIDENCE INSUFFICIENT. Beginning on the date prescribed by the department to be the effective date of the system, evidence of insurance described by Section 601.053(a)(1), (2), or (3) is not sufficient evidence of financial responsibility for purposes of this chapter except during the 21 day period after issuance of the policy. Sec. 601.448. FEES ON POLICY HOLDER. (a) The insurance company shall collect a onetime fee of $1 for the card or device required, when the policy is issued. (b) A fee under this section shall be remitted to the designated agent not later than the third day after the month in which the fee is collected. The fee shall only be used to implement this subchapter. Sec. 601.449. DURATION OF CARD OR DEVICE. A card issued under this subchapter does not expire as long as the person to whom the card was issued owns the vehicle, regardless of whether the policy is changed to another company. If the holder of this card purchases another vehicle, a $1 fee shall be charged for the insurance verification under this subsection. Sec. 601.450. LIABILITY OF CERTAIN OFFICERS, EMPLOYEES, AND AGENTS. An agent of the department of transportation is not liable for an act performed in good faith in accordance with this section. Sec. 601.451. VIOLATION; ADMINISTRATIVE SANCTIONS. (a) Violations of this subchapter by an insurance company is grounds for sanctions by the commissioner of insurance. The commissioner may assess an administrative penalty in an amount not to exceed $250 for each policy involved and each day of non-compliance. (b) The commissioner shall send notice of a transgression by certified mail not later than 10 days after the transgression is determined. Notice shall include a statement of the right to a hearing relating to the alleged violation. (c) Within 20 days after the report is sent, the insurance company may make a request for a hearing or remit the amount of penalty called for. Failure to request a hearing or remit the payment forfeits the right to a hearing. On the 30th day after the notice is received, the insurance company shall pay the penalty in full or if the company wishes to contest the penalty shall forward the amount assessed for deposit into an escrow account. (d) If it is determined that there was no violation the department of insurance shall remit the penalty within 30 days. (e) Failure to remit the amount of administrative penalty under this subsection waives the right to contest the violation or penalty. Sec. 601.452 VIOLATION; CRIMINAL PENALTY. (a) A person commits a violation if the person knowingly releases information maintained by the department or its designated agent except to enforce state law. (b) A violation under this subsection is a Class A misdemeanor. SECTION 3. - Section 502.104, Transportation Code is amended as follows: Adds Sec. 502.1715 to the sections for which a county assessor-collector shall remit a weekly amount collected for. SECTION 4. - Subchapter D, Chapter 502, Transportation Code, is amended by adding Sec. 502.1515, and 502.1715 as follows: Sec. 502.1515. APPLICANT'S SOCIAL SECURITY NUMBER. (a) The department shall require an applicant to provide their social security number. (b) The department shall enter the SS# on the database, but not print the number on the registration receipt. (c) This section applies only in a county in which an automated registration and title system has been implemented. Sec. 502.1715 ADDITIONAL FEE FOR EVIDENCE OF FINANCIAL RESPONSIBILITY SYSTEM. (a) In addition to other fees imposed for registration of a vehicle, an owner shall provide a $3 fee at the time of application for registration of a motor vehicle. (b) Fees collected under this section shall be deposited to the state highway fund. The department may use money appropriated from the state highway fund that represents those fees to administer Subchapter N, Chapter 601 and to reimburse DPS for its expenses administering that chapter. (c) The Department of Transportation and Department of Public Safety shall adopt rules to administer this article. SECTION 5. (a) The department of Public Safety shall contract with an entity to serve as designated agent and adopt rules to implement this article by September 1, 1998. (b) An insurance company is not required to provide information under sec. 601.443, Transportation Code, before September 1, 1998. SECTION 6. Sections 502.1515 and 502.1715, Transportation Code, apply only to registrations issued or renewed on or after the effective date. SECTION 7. - Effective Date, September 1, 1997 SECTION 8. - Emergency Clause. COMPARISON OF ORIGINAL TO SUBSTITUTE C.S.H.B. 3453 amends Sec. 601.441, by striking the word "shall" and substituting the word "may". C.S.H.B. 3453 amends Sec. 601.442 by adding (b) that stipulates that the designated agent will provide the necessary equipment to each county tax assessor-collector's office or TxDOT office where vehicle registration applications are accepted, motor vehicle inspection stations, location where driver's license applications are accepted, and other fixed locations at which evidence of financial responsibility is required by law. C.S.H.B. 3453 amends Sec. 601.446 which stipulates that the information provided by either TxDOT or DPS remains the property of each agency and may not be sold or made available except to enforce a state law. C.S.H.B. 3453 adds subsections (a)(2) and (3), Section 601.053, Transportation Code, to sections which fall under Sec. 601.447.