H.B. 1131 78(R)    BILL ANALYSIS


H.B. 1131
By: Flores
Licensing & Administrative Procedures
Committee Report (Unamended)



BACKGROUND AND PURPOSE 

Under current law an insurer's interest in repair facilities is not
regulated.  Insurer owned repair facilities may eliminate checks and
balances thereby compromising consumer protections.  A possible conflict
of interest could arise if an insurer paid for a consumer's repair work
completed at an auto repair facility owned by the insurer. 

House Bill 1131 will prohibit an insurer from holding or acquiring any
ownership interest in a repair facility.  Additionally, the bill would
require an insurer that has an ownership interest in these repair
facilities to divest itself of the interest by September 1, 2005.  The
bill would require 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 would protect the
consumer and would enable and foster open and evenhanded competition
within the auto repair industry. 



RULEMAKING AUTHORITY

It is the committee's opinion that rulemaking authority is expressly
granted to the commissioner of insurance in SECTION 1 (Section 2306.004(b)
, Occupations Code) of this bill. 

SECTION BY SECTION ANALYSIS

SECTION 1.  Subtitle A, Title 14, Occupations Code, is amended by adding
Chapter 2306 to read 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 injuctive or other appropriate relief
to compel the insurer to comply with the requirements 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) Authorizes an insurer who has ownership or interest in a repair
facility on September 1, 2003 to divest itself from any interest in the
repair facility no later than September 1, 2005. 

(b) Requires the insurers 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. Requires the disclosure to provide for the time
the policy is delivered, issued for delivery, or renewed and provide when
a claim covered by the policy is reported to the insurer by the insured. 

(c)  This section expires December 1, 2005.

SECTION 2.  Prospective Application.

SECTION 3. (a) Effective date: September 1, 2003.

(b) Effective date for Section 2306.003, Occupation Code, September 1,
2005.