S.B. 115 78(R)    BILL ANALYSIS


S.B. 115
By: Van de Putte
Insurance
Committee Report (Unamended)

BACKGROUND 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.  

RULEMAKING AUTHORITY

It is the committee's opinion that rulemaking authority is expressly
granted to the Commissioner of Insurance in SECTION 1 (Article 5.45,
Insurance Code) and SECTION 2 (Article 5.35, Insurance Code) of this bill. 

ANALYSIS

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

Art. 5.45. NOTICE ON RENEWAL OF CERTAIN POLICIES. 

(a) Provides that an insurer that renews a residential or farm and ranch
property insurance policy must provide the 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) Provides that a notice written under this article must be written in
plain language. 

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

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

(1) Requires  the commissioner to promulgate a comparison form for that
policy, for any policy form and endorsements approved by the commissioner
under Subsections (a), (b), or (c) of this article. 

(2) Requires the comparison form to be developed with the assistance of
the office of public insurance counsel and with input from the public and
to be designed to explain the features and limitations of the policy
compared to other approved policies.  Provides that an insurer using a
policy form may be required to develop the comparison form and submit it
to the commissioner.  Requires the comparison form to made available to
the general public.   
   
(3) Requires the comparison form be designed to be easily read and
understood and meet the requirements of Subsection (h) the article.
Requires the comparison form, at a minimum, to show the features of the
policy compared to the HO-B, HO-A, and at least one other policy form
widely in use in this state. 

(4)  Authorizes the commissioner to adopt rules to carry out the purposes
of the subsection. 

 SECTION 3.  Sets forth a prospective clause.

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

EFFECTIVE DATE

On passage or, if the Act does not receive the necessary vote, the Act
takes effect September 1, 2003.