By Burnam H.B. No. 3095
76R2750 PB-D
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to access to motor vehicle insurance coverage and to the
1-3 verification of compliance with certain motor vehicle insurance
1-4 requirements; providing penalties.
1-5 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-6 ARTICLE 1. RESTRICTIONS ON USE OF CERTAIN UNDERWRITING GUIDELINES
1-7 SECTION 1.01. Subchapter B, Chapter 21, Insurance Code, is
1-8 amended by adding Article 21.21-11 to read as follows:
1-9 Art. 21.21-11. PROHIBITION ON USE IN MOTOR VEHICLE INSURANCE
1-10 OF UNDERWRITING GUIDELINES BASED ON CREDIT HISTORY OR CREDIT RATING
1-11 Sec. 1. DEFINITIONS. In this article:
1-12 (1) "Insurer" means an insurer authorized to write
1-13 motor vehicle insurance in this state, including:
1-14 (A) a county mutual insurance company;
1-15 (B) a Lloyd's plan company; and
1-16 (C) a reciprocal or interinsurance exchange.
1-17 (2) "Underwriting guideline" means a rule, standard,
1-18 marketing decision, or practice that is used by an insurer or an
1-19 agent of an insurer to examine, bind, accept, reject, cancel, or
1-20 limit insurance coverage to groups of consumers of insurance.
1-21 Sec. 2. APPLICATION. This article applies only to a
1-22 personal automobile insurance policy.
1-23 Sec. 3. PROHIBITION; EXEMPTION. (a) An insurer may not use
1-24 an underwriting guideline that is based in whole or in part on the
2-1 credit history or credit rating of an insured, an applicant for
2-2 insurance coverage, or any person other than the named insured or
2-3 the applicant who would be insured under the policy.
2-4 (b) This section does not apply to the use of a credit
2-5 history or credit rating by an insurer solely to determine whether
2-6 the insurer will offer an installment payment plan for the payment
2-7 of premiums to an insured or applicant for insurance.
2-8 Sec. 4. PENALTY. An insurer who violates this article
2-9 commits an unfair practice in violation of Article 21.21 of this
2-10 code and is subject to the penalties imposed under that article.
2-11 ARTICLE 2. INSURANCE COVERAGE FOR GOOD DRIVERS
2-12 SECTION 2.01. The heading of Article 21.49-2B, Insurance
2-13 Code, is amended to read as follows:
2-14 Art. 21.49-2B. AVAILABILITY, CANCELLATION, AND NONRENEWAL OF
2-15 CERTAIN PROPERTY AND CASUALTY POLICIES
2-16 SECTION 2.02. Article 21.49-2B, Insurance Code, is amended
2-17 by adding Section 4A to read as follows:
2-18 Sec. 4A. COVERAGE FOR GOOD DRIVERS. (a) In this section:
2-19 (1) "Good driver" means an individual who:
2-20 (A) has been licensed for at least three years
2-21 to drive the type of motor vehicle to be insured;
2-22 (B) during the previous three years, has not:
2-23 (i) been substantially at fault in a motor
2-24 vehicle accident that resulted in bodily injury, death, or property
2-25 damage;
2-26 (ii) been convicted of a violation of a
2-27 traffic safety regulation that involved a moving vehicle;
3-1 (iii) had more than one dismissal of a
3-2 charge under Subchapter B, Chapter 543, Transportation Code; and
3-3 (iv) been convicted of an offense under
3-4 Section 49.04, Penal Code, or Section 106.041, Alcoholic Beverage
3-5 Code; and
3-6 (C) has never made a fraudulent insurance claim.
3-7 (2) "Traffic safety regulation" means a law or
3-8 ordinance of this state or a political subdivision of this state
3-9 relating to the operation of a motor vehicle other than a
3-10 regulation relating to the conduct of a pedestrian or the parking
3-11 of a motor vehicle.
3-12 (b) Except as otherwise provided by this article, a motor
3-13 vehicle insurer may not cancel, nonrenew, or refuse to offer a
3-14 policy of motor vehicle insurance to a good driver.
3-15 (c) At least 30 days before the date a motor vehicle insurer
3-16 who does not offer a policy regulated by Article 5.101 of this code
3-17 is required to renew a policy under which a good driver is an
3-18 insured, or on application for a policy by an individual who
3-19 qualifies as a good driver, the motor vehicle insurer shall provide
3-20 to the named insured or applicant a notice, in the form prescribed
3-21 by the commissioner, that includes:
3-22 (1) an explanation of the different types of motor
3-23 vehicle insurance companies in this state and the manner in which
3-24 the rates for the policies of those insurance companies are subject
3-25 to regulation under this code;
3-26 (2) a list of the affiliates of that insurer who offer
3-27 a policy regulated under Article 5.101 of this code; and
4-1 (3) other information the commissioner by rule
4-2 requires.
4-3 (d) A violation of this section is an unfair and deceptive
4-4 practice in the business of insurance under Article 21.21 of this
4-5 code. Compliance with this section does not create an exemption
4-6 from Article 21.21-6 of this code, as added by Chapter 415, Acts of
4-7 the 74th Legislature, Regular Session, 1995, or other requirements.
4-8 ARTICLE 3. COVERAGE WRITTEN THROUGH
4-9 TEXAS AUTOMOBILE INSURANCE PLAN ASSOCIATION
4-10 SECTION. 3.01. Section 5(a), Article 21.81, Insurance Code,
4-11 is amended to read as follows:
4-12 (a) Except as otherwise provided by this subsection, the
4-13 rates for insurance provided through the association [At least
4-14 annually, the commissioner] shall be 150 percent of [conduct a
4-15 hearing for] the benchmark [purpose of determining appropriate]
4-16 rates set under the flexible rating program established under
4-17 Article 5.101 of this code [to be charged for insurance provided
4-18 through the association]. Surcharges assessed for at-fault
4-19 accidents and convictions for insurance provided through the [The]
4-20 association [may appear as a matter of right,] shall be set by the
4-21 commissioner and may exceed the surcharges established under Rule
4-22 42, Texas Automobile Rules and Rating Manual, as that rule existed
4-23 on February 1, 1997. There is no limit on the maximum allowable
4-24 surcharge [admitted as a party to present testimony at the hearing,
4-25 and may file information for consideration by the commissioner].
4-26 [The commissioner shall determine and prescribe rates that are
4-27 just, reasonable, adequate, not excessive, not confiscatory, and
5-1 not unfairly discriminatory for the risks to which they apply.
5-2 Rates shall be set in an amount sufficient to carry all claims to
5-3 maturity and to meet the expenses incurred in the writing and
5-4 servicing of the business. In making a determination, the
5-5 commissioner shall consider the reports of aggregated premiums
5-6 earned and losses and expenses incurred in the writing of motor
5-7 vehicle insurance through the plan collected under the statistical
5-8 plan provided for by Subsection (b) of this section.]
5-9 SECTION 3.02. Section 3, Article 5.101, Insurance Code, is
5-10 amended by amending Subsection (c) and by adding Subsection (r) to
5-11 read as follows:
5-12 (c) In promulgating the benchmark rate, the commissioner may
5-13 give due consideration to:
5-14 (1) past and prospective loss experience within the
5-15 state and outside the state if the state data are not credible;
5-16 (2) the peculiar hazards and experience of individual
5-17 risks, past and prospective, within and outside the state;
5-18 (3) a reasonable margin for profit;
5-19 (4) expenses of operation, which may not include
5-20 disallowed expenses under Subsection (o) of this section;
5-21 (5) the extent and nature of competition in that
5-22 market;
5-23 (6) the availability or lack of availability in that
5-24 market;
5-25 (7) the level and range of rates and rate changes
5-26 among insurers;
5-27 (8) investment and underwriting experience of
6-1 insurers;
6-2 (9) reinsurance availability;
6-3 (10) consumer complaints;
6-4 (11) extent of denials and restrictions of coverage;
6-5 (12) the volume of cancellations and nonrenewals;
6-6 [and]
6-7 (13) the amount that expected costs incurred may
6-8 exceed expected premium and other revenue earned for all insurance
6-9 provided through the Texas Automobile Insurance Plan Association
6-10 under Article 21.81 of this code; and
6-11 (14) any other factor considered appropriate by the
6-12 commissioner.
6-13 (r) In setting a benchmark rate for uninsured motorist
6-14 coverages, the commissioner shall consider all rate-regulated
6-15 market experience, including experience for insurance provided
6-16 through the Texas Automobile Insurance Plan Association under
6-17 Article 21.81 of this code.
6-18 ARTICLE 4. VERIFICATION OF ESTABLISHMENT
6-19 OF FINANCIAL RESPONSIBILITY
6-20 Section 4.01. Chapter 601, Transportation Code, is amended
6-21 by adding Subchapter N to read as follows:
6-22 SUBCHAPTER N. VERIFICATION OF COMPLIANCE WITH AND ENFORCEMENT OF
6-23 FINANCIAL RESPONSIBILITY REQUIREMENTS
6-24 Sec. 601.501. DEFINITION. In this subchapter, "verification
6-25 date" means the date on which the department mails a written
6-26 request to the owner of a motor vehicle requiring the owner to
6-27 state whether the owner has established financial responsibility in
7-1 accordance with Section 601.051(a).
7-2 Sec. 601.502. VERIFICATION OF ESTABLISHMENT OF FINANCIAL
7-3 RESPONSIBILITY THROUGH RANDOM SAMPLING. (a) The department shall
7-4 randomly select samples of registrations of motor vehicles subject
7-5 to this chapter, or samples of owners of motor vehicles subject to
7-6 this chapter, to verify whether the owner has established financial
7-7 responsibility in accordance with Section 601.051(a). A sample
7-8 selected under this section may not be classified on the basis of
7-9 the owner's race, color, religion, sex, national origin, age,
7-10 marital status, physical or mental disability, economic status, or
7-11 geographic location.
7-12 (b) In addition to the general random sampling of motor
7-13 vehicle registrations, the department may randomly select other
7-14 persons to verify that the person has established financial
7-15 responsibility, including:
7-16 (1) a person who, during the preceding four years:
7-17 (A) has been convicted of a violation of Section
7-18 601.191, 601.195, or 601.196, including a violation that occurred
7-19 while the person was operating a motor vehicle owned by another
7-20 person; or
7-21 (B) has received deferred adjudication under
7-22 Article 45.54, Code of Criminal Procedure, for a violation of
7-23 Section 601.191, 601.195, or 601.196; or
7-24 (2) a person whose driver's license or motor vehicle
7-25 registration has been suspended during the preceding four years.
7-26 (c) In preparation for random selection of samples and
7-27 verification of establishment of financial responsibility, the
8-1 department shall send to the owner of a randomly selected motor
8-2 vehicle, or to a randomly selected motor vehicle owner, a request
8-3 for information about the motor vehicle and the owner's method of
8-4 establishing financial responsibility. The request must require
8-5 the owner to state whether the owner has, as of the verification
8-6 date, established financial responsibility in accordance with
8-7 Section 601.051(a).
8-8 (d) The department shall establish by rule the frequency of
8-9 sample selection for the verification process, not to exceed 20,000
8-10 contacts per month.
8-11 (e) The department shall prescribe by rule:
8-12 (1) the methods employed for the random selection of
8-13 samples and the procedures necessary for implementation of the
8-14 verification process;
8-15 (2) the form for verification of financial
8-16 responsibility; and
8-17 (3) the information to be requested in the prescribed
8-18 form.
8-19 (f) The department may require the information provided by
8-20 the owner to include a statement by the owner that the owner had,
8-21 as of the verification date, established financial responsibility:
8-22 (1) through liability insurance under Subchapter D,
8-23 including:
8-24 (A) the name and address of the insurer;
8-25 (B) the number of the insurance policy; and
8-26 (C) the expiration date of the insurance
8-27 coverage;
9-1 (2) by filing a surety bond with the department under
9-2 Section 601.121, including:
9-3 (A) the name and address of the company issuing
9-4 the bond;
9-5 (B) the identification number of the bond; and
9-6 (C) the expiration date of the bond;
9-7 (3) by depositing cash or securities with the
9-8 comptroller under Section 601.122, including a copy of the
9-9 certificate issued by the comptroller showing compliance;
9-10 (4) by depositing cash or a cashier's check with the
9-11 county judge of the county in which the motor vehicle is registered
9-12 under Section 601.123, including a copy of the certificate issued
9-13 by the county judge showing compliance; or
9-14 (5) through self-insurance under Section 601.124,
9-15 including a copy of the certificate of self-insurance issued by the
9-16 department.
9-17 (g) Not later than the 30th day after the verification date,
9-18 the owner to whom the notice is sent shall furnish the requested
9-19 information to the department in the form prescribed by the
9-20 department, accompanied by the owner's signed affirmation that the
9-21 information is true and correct.
9-22 (h) An owner whose response indicates that the owner had not
9-23 established financial responsibility in accordance with Section
9-24 601.051, or who fails to respond to the request, is considered to
9-25 have registered or maintained registration of a motor vehicle in
9-26 violation of Section 601.051.
9-27 (i) If the owner responds to the request for information by
10-1 asserting that the owner had, as of the verification date,
10-2 established financial responsibility in accordance with a method
10-3 authorized by Section 601.051(a), the department may conduct a
10-4 verification investigation as provided by Section 601.503.
10-5 Sec. 601.503. VERIFICATION INVESTIGATION. (a) To verify a
10-6 response received from an owner under Section 601.502, the
10-7 department may furnish necessary information to the insurer,
10-8 surety, or officer named in the response. Not later than the 30th
10-9 day after the date of receipt of the information, the insurer,
10-10 surety, or officer shall inform the department whether, as of the
10-11 verification date, financial responsibility had been established
10-12 for the affected motor vehicle in accordance with Section
10-13 601.051(a).
10-14 (b) If the response received from an owner under Section
10-15 601.502 states that financial responsibility has been established
10-16 through self-insurance, the department shall examine the
10-17 department's records to verify that a certificate of self-insurance
10-18 has been issued in accordance with Section 601.124.
10-19 Sec. 601.504. NOTICE; SUSPENSION; REINSTATEMENT. (a) If
10-20 the department determines that an owner has registered or
10-21 maintained the registration of a motor vehicle without establishing
10-22 financial responsibility in accordance with Section 601.051(a), the
10-23 department shall notify the owner that the owner's motor vehicle
10-24 registration is suspended on the 45th day after the date of the
10-25 mailing of the notice unless the owner, not later than the 30th day
10-26 after the date of the mailing of the notice, provides proof in the
10-27 manner prescribed by the department that financial responsibility
11-1 was in effect on the verification date.
11-2 (b) After notice, the department shall suspend the
11-3 registration of a motor vehicle determined by the department to be
11-4 in violation of Section 601.051(a), including a motor vehicle
11-5 operated in violation of Section 601.191 by an operator other than
11-6 the owner of the vehicle. A suspension under this subsection is
11-7 not affected by the fact that, after the verification date or the
11-8 date of conviction of a violation, the owner:
11-9 (1) established the required financial responsibility;
11-10 or
11-11 (2) terminated ownership of the affected motor
11-12 vehicle.
11-13 (c) The department may also suspend the registration of a
11-14 motor vehicle registered in this state on receipt of notice of the
11-15 conviction of the operator of the motor vehicle in another state of
11-16 an offense that, if committed in this state, would constitute a
11-17 violation of Section 601.051(a).
11-18 (d) For a first violation, the department shall terminate
11-19 the suspension on payment by the owner of a $75 fine and submission
11-20 to the department of evidence acceptable to the department of:
11-21 (1) proof of financial responsibility established in a
11-22 manner prescribed by Section 601.502(f); and
11-23 (2) full payment for that coverage for the subsequent
11-24 six months.
11-25 (e) For a second violation within the preceding four years,
11-26 the department shall terminate the suspension on payment by the
11-27 owner of a $175 fine and submission to the department of evidence
12-1 acceptable to the department of:
12-2 (1) proof of financial responsibility established in a
12-3 manner prescribed by Section 601.502(f); and
12-4 (2) full payment for that coverage for the subsequent
12-5 six months.
12-6 (f) For a third or subsequent violation within the preceding
12-7 four years, the department may not terminate the suspension. The
12-8 owner's motor vehicle registration is suspended for 180 days and
12-9 may be reinstated only on submission by the owner of evidence
12-10 acceptable to the department of:
12-11 (1) proof of financial responsibility established in a
12-12 manner prescribed by Section 601.502(f); and
12-13 (2) full payment for that coverage for the subsequent
12-14 six months.
12-15 (g) The department shall deposit a fee collected under this
12-16 section in the general revenue fund.
12-17 SECTION 4.02. Section 601.051, Transportation Code, is
12-18 amended to read as follows:
12-19 Sec 601.051. REQUIREMENT OF FINANCIAL RESPONSIBILITY. (a)
12-20 A person may not operate, register, or maintain registration of a
12-21 motor vehicle in this state unless financial responsibility is
12-22 established for that vehicle through:
12-23 (1) a motor vehicle liability insurance policy that
12-24 complies with Subchapter D;
12-25 (2) a surety bond filed under Section 601.121;
12-26 (3) a deposit under Section 601.122;
12-27 (4) a deposit under Section 601.123; or
13-1 (5) self-insurance under Section 601.124.
13-2 (b) An owner of a motor vehicle may not permit another
13-3 person to operate, register, or maintain registration of the motor
13-4 vehicle in this state unless financial responsibility is
13-5 established for that vehicle and evidenced through a method
13-6 described by Subsection (a).
13-7 SECTION 4.03. Section 601.191, Transportation Code, is
13-8 amended to read as follows:
13-9 Sec. 601.191. OPERATION OF MOTOR VEHICLE IN VIOLATION OF
13-10 FINANCIAL RESPONSIBILITY REQUIREMENTS [MOTOR VEHICLE LIABILITY
13-11 INSURANCE REQUIREMENT; OFFENSE]. (a) A person commits an offense
13-12 if the person operates a motor vehicle in violation of Section
13-13 601.051(a) [601.051].
13-14 (b) An [Except as provided by Subsections (c) and (d), an]
13-15 offense under this section is a misdemeanor punishable by a fine of
13-16 not less than $175 or more than $350.
13-17 (c) It is a defense to prosecution under this section or
13-18 under Section 601.195 that the person charged with a violation
13-19 produces in court satisfactory evidence that, at the time of the
13-20 arrest, the owner or operator had established financial
13-21 responsibility in accordance with Section 601.051(a) [If a person
13-22 has been previously convicted of an offense under this section, an
13-23 offense under this section is a misdemeanor punishable by a fine of
13-24 not less than $350 or more than $1,000.]
13-25 [(d) If the court determines that a person who has not been
13-26 previously convicted of an offense under this section is
13-27 economically unable to pay the fine, the court may reduce the fine
14-1 to less than $175].
14-2 SECTION 4.04. The following laws are repealed:
14-3 (1) Section 601.193, Transportation Code;
14-4 (2) Subchapter H, Chapter 601, Transportation Code;
14-5 and
14-6 (3) Subchapter I, Chapter 601, Transportation Code.
14-7 ARTICLE 5. TRANSITION; EFFECTIVE DATE
14-8 SECTION 5.01. (a) The change in law made by this Act to
14-9 Section 601.191, Transportation Code, applies only to the
14-10 punishment for an offense committed on or after the effective date
14-11 of this Act. For purposes of this section, an offense is committed
14-12 before the effective date of this Act if any element of the offense
14-13 occurs before the effective date.
14-14 (b) An offense committed before the effective date of this
14-15 Act is covered by the law in effect when the offense was committed,
14-16 and the former law is continued in effect for this purpose.
14-17 SECTION 5.02. Article 21.21-11, Insurance Code, as added by
14-18 this Act, and Articles 21.49-2B and 21.81, Insurance Code, as
14-19 amended by this Act, apply only to an insurance policy delivered,
14-20 issued for delivery, or renewed on or after January 1, 2000. A
14-21 policy delivered, issued for delivery, or renewed before January 1,
14-22 2000, is governed by the law as it existed immediately before the
14-23 effective date of this Act, and that law is continued in effect for
14-24 that purpose.
14-25 SECTION 5.03. This Act takes effect September 1, 1999.
14-26 SECTION 5.04. The importance of this legislation and the
14-27 crowded condition of the calendars in both houses create an
15-1 emergency and an imperative public necessity that the
15-2 constitutional rule requiring bills to be read on three several
15-3 days in each house be suspended, and this rule is hereby suspended.