SRC-AMY S.B. 115 78(R)    BILL ANALYSIS


Senate Research CenterS.B. 115
By: Van de Putte
Business & Commerce
6-3-2003
Enrolled

DIGEST AND PURPOSE 

Many insurance companies have switched from the formerly dominant home
insurance form, the HO-B policy form, to national policy forms; a policy
form covering only losses resulting from specifically delineated perils,
the HO-A; or a modified HO-B form that reduces and limits the
comprehensive coverage offered under the standard HO-B.  Many consumers
were not informed when insurers made these changes.  The commissioner of
insurance issued a Commissioner's Bulletin, No. B-0017-02, to remind
insurers of their responsibility to fully explain any changes in types of
coverage and premium costs to policy holders and applicants.  However,
insurers' responsibilities in such situations remain unclear and current
law only applies to regulated insurers.  S.B. 115 requires an insurer to
provide written notice in plain language to consumers of any difference in
each form of the policy offered on renewal and the policy held prior to
renewal. This bill also provides for the development of a comparison form.
S.B. 115 also authorizes the commissioner of insurance to adopt rules to
enforce these requirements. 

RULEMAKING AUTHORITY

Rulemaking authority is expressly granted to the commissioner of insurance
in SECTION 1 (Subchapter C, Chapter 5, Insurance Code) and SECTION 2
(Article 5.35, Insurance Code) of this bill. 

SECTION BY SECTION ANALYSIS

SECTION 1.  Amends Subchapter C, Chapter 5, Insurance Code, by adding
Article 5.45, as follows: 

Art. 5.45.  NOTICE ON RENEWAL OF CERTAIN POLICIES.  (a) Requires an
insurer, including certain companies and types, to provide a policy holder
with written notice of any difference in each form of the policy offered
to the policy holder on renewal and the form of the policy held
immediately before renewal. 

(b) Requires a notice written under this article to be written in plain
language. 

(c) Authorizes the commissioner of insurance (commissioner) to adopt rules
as necessary to implement this article. 

SECTION 2.  Amends Article 5.35, Insurance Code, by adding Subsection (k),
as follows: 

(k) Requires the commissioner, for any policy form and endorsements
approved by the commissioner under Subsections (a), (b), or (c) of this
article to promulgate a comparison form for that policy.  Sets forth
requirements governing the development, design, and content of the
comparison form.  Authorizes the commissioner to adopt rules to carry out
the purposes of this subsection.  

SECTION 3.  Makes application of this Act prospective to the 30th day
after the effective date of this Act. 

SECTION 4.  Effective date: upon passage or September 1, 2003.