SRC-JBJ S.B. 121 76(R)   BILL ANALYSIS


Senate Research Center   S.B. 121
76R2988 PB-DBy: Lucio
Economic Development
3/19/1999
As Filed


DIGEST 

Currently, the underwriting guidelines of an insurer may be reviewed by the
Texas Department of Insurance (TDI) and the Office of Public Insurance
Counsel (office).  According to the Texas Commission on Human Rights
(commission), some insurance companies have developed discriminatory
underwriting guidelines in selling homeowners insurance policies.  S.B. 121
would require insurers to develop standard underwriting guidelines and
submit those guidelines to TDI, the commission, and the office for
approval.  

PURPOSE

As proposed, S.B. 121 requires an insurer to submit its underwriting
guidelines for approval to the Texas Department of Insurance, the Office of
Public Insurance Counsel, and the Commission on Human Rights. 

RULEMAKING AUTHORITY

Rulemaking authority is granted to the commissioner of insurance of the
Texas Department of Insurance in SECTION 1 (Section 7, Article 5.36,
Insurance Code) of this bill. 

SECTION BY SECTION ANALYSIS

SECTION 1.  Amends Chapter 5C, Insurance Code, by adding Article 5.36, as
follows: 
 
Art. 5.36.  USE AND APPROVAL OF CERTAIN UNDERWRITING GUIDELINES

 Sec. 1.  DEFINITIONS.  Defines "insurer" and "underwriting guideline." 

Sec. 2.  APPLICATION.  Provides that Article 5.36 applies to homeowners,
farm owners, and ranch owners holding a standard fire policy for single
family homes. 

Sec. 3.  STANDARDIZATION AND APPROVAL OF UNDERWRITING GUIDELINES. Requires
insurers to develop underwriting guidelines specific to Article 5.36 and to
submit those guidelines to the Texas Department of Insurance (TDI). 

Sec. 4.  SUBMISSION TO OFFICE OF PUBLIC INSURANCE COUNSEL AND COMMISSION ON
HUMAN RIGHTS.  Requires TDI to submit within 10 days after recept, proposed
underwriting guidelines to the Office of Public Insurance Counsel (office)
and the Commission on Human Rights (commission).  Requires TDI, the office,
and the commission to review the underwriting guidelines, determine their
approval within 30 days, and notify the affected insurer of the decision.
Requires the commissionerr of TDI, the office, and the commission to enter
into a memoranda of understanding. 

Sec. 5.  USE OF GUIDELINE BY INSURER; EFFECT OF DISAPPROVAL.  Authorizes an
insurer to use guidelines specified in Section 4.  Entitles an insurer a
hearing in the event an insurer's underwriting guideline is not approved. 

Sec. 6.  PROHIBITION; VIOLATION.  Prohibits an insurer from using
underwriting guidelines not approved in this article. Provides that an
insurer who violates this section is  subject to the procedures and
penalties imposed under Article 21.21 of this code. 

 Sec. 7.  Authorizes the TIC commissioner to adopt rules necessary to
implement this article. 

SECTION 2.  Effective date:  September 1, 1999.
  Makes application of this Act prospective.

SECTION 3.  Emergency clause.