By Dunnam                                             H.B. No. 1383
         77R5391 DLF-D                           
                                A BILL TO BE ENTITLED
 1-1                                   AN ACT
 1-2     relating to certain attorneys employed by or under contract to
 1-3     insurers.
 1-4           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
 1-5           SECTION 1.  Subchapter E, Chapter 21, Insurance Code, is
 1-6     amended by adding Article 21.56B to read as follows:
 1-7           Art. 21.56B. INDEPENDENCE OF COUNSEL.  (a)  The commissioner,
 1-8     in consultation with the State Bar of Texas, shall adopt rules
 1-9     under this article to ensure the independence of counsel provided
1-10     to an insured under a casualty insurance policy. The rules must:
1-11                 (1)  require notice to the insured of the insured's
1-12     right to independent counsel to represent the insured's interests;
1-13     and
1-14                 (2)  specify circumstances in which, because of
1-15     conflict of interest or other relevant issues, an insurer may not
1-16     offer or provide to the insured the services of an attorney in the
1-17     employ of or under contract to the insurer.
1-18           (b)  An insurer that, under a policy of casualty insurance,
1-19     is obligated to defend an insured in a suit may not offer or
1-20     provide to the insured the services of an attorney in the employ
1-21     of or under contract to the insurer unless the insurer complies
1-22     with rules adopted by the commissioner under this article.
1-23           (c)  This article applies to any insurer that issues a policy
1-24     of casualty insurance that is delivered, issued for delivery, or
 2-1     renewed in this state, including a policy written by a Lloyd's plan
 2-2     insurer, reciprocal or interinsurance exchange, county mutual
 2-3     insurance company, farm mutual insurance company, or surplus lines
 2-4     insurer.
 2-5           SECTION 2.  (a)  The commissioner of insurance shall adopt
 2-6     the rules required by Article 21.56B, Insurance Code, as added by
 2-7     this Act, not later than December 15, 2001.
 2-8           (b)  Article 21.56B, Insurance Code, as added by this Act,
 2-9     applies only to an attorney's services offered or provided to an
2-10     insured under a casualty insurance policy that is delivered, issued
2-11     for delivery, or renewed on or after January 1, 2002.  An
2-12     attorney's services offered or provided to an insured under a
2-13     casualty policy that is delivered, issued for delivery, or renewed
2-14     before January 1, 2002, is governed by the law as it existed
2-15     immediately before the effective date of this Act, and that law is
2-16     continued in effect for that purpose.
2-17           SECTION 3.  This Act takes effect September 1, 2001.