SRC-MLC, TAG S.B. 126 78(R)   BILL ANALYSIS


Senate Research Center   S.B. 126
By: Fraser
Business and Commerce
2/28/2003
As Filed


DIGEST AND PURPOSE 
 
Currently, Texas law allows a person who applies for a residential
property insurance policy to be declined such insurance coverage on the
sole basis of a single previous claim for water damage either on the
covered property or by the applicant.  Because residential property
insurance is required for a home loan, a declination of such insurance
coverage may disenable or hinder persons selling their property from
purchasing other property.  As proposed, S.B. 126 provides as an unfair
underwriting guideline in the business of insurance the use of an
underwriting guideline based solely on a single previous claim for water
damage either on the covered property or by the applicant in determining
whether to decline to write a residential property insurance policy. 

RULEMAKING AUTHORITY

This bill does not expressly grant any additional rulemaking authority to
a state officer, institution, or agency. 

SECTION BY SECTION ANALYSIS

SECTION 1.  Amends Section 4, Article 21.21, Insurance Code, as follows:

 Sec. 4.  New heading: UNFAIR METHODS OF COMPETITION AND UNFAIR OR 
DECEPTIVE ACTS OR PRACTICES DEFINED. Adds Subdivision (12) to a list of
items defined as unfair methods of competition and unfair and deceptive
acts or practices in the business of insurance: 

(12) Unfair Underwriting Guideline.  (a)  Provides that using an
underwriting guideline based solely on a single previous claim for water
damage either by the applicant or on the covered property in determining
whether to decline to write a residential property insurance policy is an
unfair underwriting guideline. 

(b)  Authorizes an insurer to cancel, during the first 90 days that the
policy is in effect, a residential property insurance policy written by
the insurer under Paragraph (a) of this clause if, during the first 90
days that the policy is in effect, a water damage claim is filed that is
paid or is payable under the residential property insurance policy.  

  (c) Defines "residential property insurance" and "underwriting
guideline." 

SECTION 2.  Makes application of this Act prospective.

SECTION 3.  Effective date:  June 1, 2003, or September 1, 2003.