By Dunnam                                             H.B. No. 1433
         77R5392 DLF-D                           
                                A BILL TO BE ENTITLED
 1-1                                   AN ACT
 1-2     relating to audits of billing statements of insurance defense
 1-3     counsel.
 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 21.56A to read as follows:
 1-7           Art. 21.56A.  AUDIT OF DEFENSE COUNSEL BILLING. (a) This
 1-8     article applies to any insurer authorized to write casualty
 1-9     insurance in this state, including a Lloyd's plan insurer,
1-10     reciprocal or interinsurance exchange, county mutual insurance
1-11     company, or farm mutual insurance company.
1-12           (b)  Except as provided by Subsection (c) of this article, an
1-13     insurer that is obligated under a casualty insurance policy to
1-14     defend an insured in a suit may not submit to a third-party
1-15     auditor, or require the insured's attorney to submit to the
1-16     auditor, a billing statement that specifies in detail the services
1-17     performed by the attorney for the insured.
1-18           (c)  An insurer may take an action described by Subsection
1-19     (b) of this article with the prior written consent of the insured,
1-20     obtained after full disclosure to the insured.
1-21           (d)  The commissioner, in consultation with the State Bar of
1-22     Texas, shall adopt rules to implement this article.  The rules must
1-23     specify the disclosure required to be made under Subsection (c) of
1-24     this article.
 2-1           SECTION 2. This Act takes effect September 1, 2001, and
 2-2     applies only to a billing statement in relation to a defense
 2-3     provided under a casualty insurance policy that is delivered,
 2-4     issued for delivery, or renewed on or after January 1, 2002.  A
 2-5     billing statement in relation to a defense provided under a
 2-6     casualty insurance policy that is delivered, issued for delivery,
 2-7     or renewed before January 1, 2002,  is governed by the law as it
 2-8     existed immediately before the effective date of this Act, and that
 2-9     law is continued in effect for that purpose.