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.