SRC-TBR S.B. 1717 77(R)   BILL ANALYSIS


Senate Research Center   S.B. 1717
FFOaja1By: Van de Putte
Business & Commerce
5/9/2001
As Filed


DIGEST AND PURPOSE 

In an effort to reduce their exposure and increase profits, insurance
companies or their representatives attempt to reach settlement agreements
with third parties who are involved in an automobile accident with parties
covered by the insurance company.  It is the practice of insurance
companies to contact third-parties in order to obtain a statement regarding
the accident; a practice that many times is detrimental to the interests of
the third-party.  Solicitation of accident victims is prohibited by law.
This prohibition applies to everyone, including attorneys, physicians,
chiropractors and insurance companies. Insurance companies may only contact
their named insured client because they have a contractual relationship
with them.  Insurance companies do not have a contractual relationship with
accident victims, but their practice is to contact them anyway.  As
proposed, S.B. 1717 amend the Insurance Code, Chapter 5A, to require a
cooling off period before an insurer can attempt to settle or take
statements from a third party. 

RULEMAKING AUTHORITY

This bill does not expressly grant any additional rulemaking authority to a
state officer, institution, or agency. 

SECTION BY SECTION ANALYSIS

SECTION 1.  Amends Chapter 5A, Insurance Code, by adding Article 5.06-8, as
follows: 

 Art. 5.06-8.  RELEASE FROM LIABILITY; PROHIBITION; PENALTY

Sec. 1.  DEFINITIONS.  Defines "motor vehicle insurer," "release
agreement," and "representative." 

Sec. 2.  PROHIBITION.  (a)  Provides that a representative of a motor
vehicle insurer may not obtain or attempt to obtain a release agreement
from a person on or before the 30th day after the date of the motor vehicle
accident that is the subject of the release agreement or, except as
provided by the Texas Rules of Civil Procedure, obtain or attempt to obtain
from an actual or potential third party claimant, for the purpose of
negotiating a release agreement, a written or oral statement regarding a
motor vehicle accident on or before the 15th day after the date of the
accident. 

(b)  Provides that a release agreement obtained in violation of Subsection
(a)(1) of this section is voidable by the person from whom the release
agreement was obtained. 

(c)  Provides that a statement obtained in violation of Subsection (a)(2)
of this section is not admissible against the person who made the statement
in an action relating to damages arising out of the motor vehicle accident
that is the subject of the statement. 

Sec. 3.  PENALTY.  Provides that an insurer or a representative of an
insurer who violates this article is subject to an administrative penalty
under Chapter 84 of this code. 
 
SECTION 2.  (a)  Effective date: September 1, 2001.

(b)  Makes application of this Act prospective.