By Burnam H.B. No. 1796
75R5529 DLF-F
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to certain conduct in the sale of insurance.
1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-4 SECTION 1. Subchapter B, Chapter 21, Insurance Code, is
1-5 amended by adding Articles 21.21-9 and 21.21-10 to read as follows:
1-6 Art. 21.21-9. REFUSAL TO INSURE BASED ON ACT OF OTHER
1-7 INSURER
1-8 Sec. 1. DEFINITION. In this article, "insurer" means any
1-9 insurer described by Section 2 of this article.
1-10 Sec. 2. SCOPE OF ARTICLE. This article applies to each
1-11 entity authorized to do business as an insurance company or to
1-12 provide insurance in this state, including:
1-13 (1) a domestic or foreign, stock or mutual, life,
1-14 health, or accident insurance company;
1-15 (2) a domestic or foreign, stock or mutual, fire and
1-16 casualty insurance company;
1-17 (3) a Mexican casualty company;
1-18 (4) a domestic or foreign Lloyd's plan insurer;
1-19 (5) a domestic or foreign reciprocal or insurance
1-20 exchange;
1-21 (6) a domestic or foreign fraternal benefit society;
1-22 (7) a stipulated premium insurance company;
1-23 (8) a nonprofit legal service corporation;
1-24 (9) a statewide mutual assessment company;
2-1 (10) a local mutual aid association;
2-2 (11) a local mutual burial association;
2-3 (12) an association exempt under Article 14.17 of this
2-4 code;
2-5 (13) a nonprofit hospital, medical, or dental service
2-6 corporation, including a corporation subject to Chapter 20 of this
2-7 code;
2-8 (14) a county mutual insurance company;
2-9 (15) a farm mutual insurance company;
2-10 (16) a risk retention group;
2-11 (17) a purchasing group; or
2-12 (18) a surplus lines carrier.
2-13 Sec. 3. PROHIBITIONS. (a) An insurer or an agent of an
2-14 insurer may not refuse to issue coverage under a personal
2-15 automobile insurance policy, life insurance policy, residential
2-16 property insurance policy, or accident or health insurance policy,
2-17 and may not refuse to submit an application or to issue a binder or
2-18 conditional receipt for that coverage, in whole or in part, because
2-19 another insurer has refused to issue or renew coverage for the
2-20 applicant or has canceled the applicant's coverage.
2-21 (b) An insurer or an agent of an insurer may not refuse to
2-22 issue coverage under a personal automobile insurance policy or
2-23 residential property insurance policy and may not refuse to submit
2-24 an application or to issue a binder or conditional receipt for that
2-25 coverage, in whole or in part, because the applicant is insured or
2-26 was previously insured by a county mutual or surplus lines insurer.
2-27 Sec. 4. EXCEPTIONS. (a) An insurer may refuse to issue
3-1 coverage to an applicant under an underwriting guideline applicable
3-2 to all applicants, if the underwriting guideline:
3-3 (1) is applied without regard to whether another
3-4 insurer has previously refused to issue or renew coverage for the
3-5 applicant or has canceled the applicant's coverage; and
3-6 (2) otherwise conforms to law.
3-7 (b) An insurer or agent may ask an applicant whether another
3-8 insurer has refused to issue or renew coverage for the applicant or
3-9 has canceled the applicant's coverage.
3-10 Sec. 5. PENALTY. An insurer or agent who violates this
3-11 article commits an unfair method of competition and an unfair act
3-12 or practice in the business of insurance for purposes of Article
3-13 21.21 of this code and is subject to the sanctions imposed under
3-14 that article.
3-15 Art. 21.21-10. PROHIBITED MARKETING
3-16 Sec. 1. DEFINITION. In this article, "insurer" means any
3-17 insurer described by Section 2, Article 21.21-9, of this code.
3-18 Sec. 2. PROHIBITION. An insurer or an agent of an insurer
3-19 may not condition the issuance, renewal, price, continuation, or
3-20 amount of coverage under a personal automobile insurance policy on
3-21 the purchase from the insurer, or any affiliated insurer, of any
3-22 other policy.
3-23 Sec. 3. EXCEPTIONS. (a) This article does not prohibit an
3-24 agent or insurer from offering a discount that is applied in
3-25 accordance with a rating manual approved by the department.
3-26 (b) An insurer may condition the issuance, renewal, or
3-27 continuation of any umbrella or excess coverage insurance policy on
4-1 the purchase of an underlying insurance policy.
4-2 Sec. 4. PENALTY. An insurer or agent who violates this
4-3 article commits an unfair method of competition and an unfair act
4-4 or practice in the business of insurance for purposes of Article
4-5 21.21 of this code and is subject to the sanctions imposed under
4-6 that article.
4-7 SECTION 2. This Act takes effect September 1, 1997, and
4-8 applies only to an insurance policy that is delivered, issued for
4-9 delivery, or renewed on or after January 1, 1998. A policy that is
4-10 delivered, issued for delivery, or renewed before January 1, 1998,
4-11 is governed by the law as it existed immediately before the
4-12 effective date of this Act, and that law is continued in effect for
4-13 that purpose.
4-14 SECTION 3. The importance of this legislation and the
4-15 crowded condition of the calendars in both houses create an
4-16 emergency and an imperative public necessity that the
4-17 constitutional rule requiring bills to be read on three several
4-18 days in each house be suspended, and this rule is hereby suspended.