SRC-LBB H.B. 1131 78(R)   BILL ANALYSIS


Senate Research Center   H.B. 1131
78R4436 PB-FBy: Flores (Carona)
Business & Commerce
5/17/2003
Engrossed


DIGEST AND PURPOSE 

Under current law an insurer's interest in auto repair facilities is not
regulated.  Insurer-owned auto repair facilities may eliminate checks and
balances, thereby compromising consumer protections.  H.B. 1131 prohibits
an insurer from holding or acquiring any ownership interest in a repair
facility.  Additionally, the bill requires an insurer that has an
ownership interest in such a facility to divest itself of the interest by
September 1, 2005.  H.B. 1131 requires an insurer that, prior to September
1, 2005, has an interest in a repair facility to disclose the interest and
give policyholders a choice in repair facilities.  This bill authorizes an
individual aggrieved  by an insurer's violation of these requirements to
bring an action for injunctive or other appropriate relief to compel the
insurer to comply with the requirements. 

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 Subtitle A, Title 14, Occupations Code, by adding
Chapter 2306, as follows: 

CHAPTER 2306. INSURER INTERESTS IN REPAIR FACILITIES PROHIBITED

 Sec. 2306.001.  DEFINITIONS.  Defines "insurer" and "repair facility."

Sec. 2306.002.  INTEREST PROHIBITED.   Prohibits an insurer from holding
or acquiring any ownership interest in a  repair facility. 

Sec. 2306.003.  ACTION TO COMPEL COMPLIANCE.  (a)  Authorizes an
individual aggrieved by a violation of this chapter by an insurer to bring
an action for injunctive or other appropriate relief to compel the insurer
to comply with the requirements adopted under this chapter. 

(b)  Provides that a plaintiff who prevails in an action under this
section is entitled to recover reasonable attorney's fees and court costs. 

Sec. 2306.004.  DIVESTITURE REQUIREMENTS; DISCLOSURE.  (a)  Requires an
insurer that, on September 1, 2003, has an ownership interest in a repair
facility to divest itself of any interest in the facility not later than
September 1, 2005. 

(b)  Requires the insurer to disclose to each insured that the insured has
the right to use any repair facility selected by the insured, during the
period in which the insurer maintains its interest in the repair facility
before the divestiture required under this section.  Requires the insurer
to make the disclosure in writing in the manner prescribed by the
commissioner of insurance and  provide the disclosure: 

   (1)  at the time the policy is delivered, issued for delivery, or
renewed; and 
(2)  when a claim covered by the policy is reported to the insurer by the
insured. 

  (c)  Provides that this section expires December 1, 2005.

SECTION 2.  Makes application of this Act prospective.

SECTION 3.  (a)  Effective date:  September 1, 2003, except as provided by
Subsection (b) of this section. 

(b)  Provides that Section 2306.003, Occupations Code, as added by this
Act, takes effect September 1, 2005.