C.S.H.B. 1262 78(R)    BILL ANALYSIS


C.S.H.B. 1262
By: Castro
Insurance
Committee Report (Substituted)



BACKGROUND AND PURPOSE 

Automobile claims are settled utilizing the concept of proportionate
responsibility, whereby two parties share financial responsibility for an
accident to which they both contributed.  Problems arise when insurers
pressure employees to meet quotas or provide incentives for assigning
proportionate responsibility.  This can result in insurers paying less
money to a third-party claimant, who may not actually be proportionately
responsible.  C.S.H.B. 1262 prohibits the use of unfair incentives in
settling motor vehicle insurance claims.  

RULEMAKING AUTHORITY

It is the committee's opinion that rulemaking authority is expressly
granted to the Commissioner of Insurance in SECTION 1 (Article 21.56A,
Insurance Code) of this bill. 

ANALYSIS

C.S.H.B. 1262 amends the Insurance Code to prohibit an insurer from
requiring or encouraging  an insurance adjuster or other employee to
determine that in a specific percentage of third-party motor vehicle
insurance claims (claims) for which an insured may be liable that a
third-party claimant was proportionately responsible.  The bill prohibits
an insurer from using a program or policy that establishes quotas or
incentives for assigning proportionate responsibility to a third-party
claimant in violation of this Act.  The bill authorizes the Commissioner
of Insurance to adopt rules as necessary to implement this Act.   

EFFECTIVE DATE

September 1, 2003.

COMPARISON OF ORIGINAL TO SUBSTITUTE

C.S.H.B. 1262 modifies the original by removing the provision prohibiting
the reduction of payments to a third-party claimant through the allocation
of a specific percentage of the dollar amount of a claim to the
proportionate responsibility of a claimant.  The substitute removes the
provision that a violation of the Act is an unfair method of competition
or unfair or deceptive act or practice and an unfair claim settlement
practice.  The substitute prohibits an insurer from engaging in certain
claims settlement practices, in processing third-party motor vehicle
insurance claims for which the insured, instead of the insurer, is
otherwise liable to a third-party claimant.