SRC-AMY C.S.S.B. 127 78(R)     BILL ANALYSIS


Senate Research Center
C.S.S.B. 127 
By: Fraser, Jackson
Business & Commerce
3/19/2003
Committee Report (Substituted)

DIGEST AND PURPOSE 
 
Currently, the Texas Insurance Code does not include a licensing
requirement for public insurance adjusters or a structure to regulate the
activities of such professionals.  The creation of such would protect
consumers from unfair stigmatization due to residential property claims
and from unethical behavior. C.S.S.B. 127 protects persons from being
unfairly stigmatized by filing residential property claims by establishing
a license for public insurance adjusters.  C.S.S.B. 127 establishes
continuing education requirements, ethics guidelines, licensing and
renewal procedures, and a disciplinary and penalty process for violations
of this section of the insurance code.  

RULEMAKING AUTHORITY

Rulemaking authority is expressly granted to the commissioner of insurance
in SECTION 1.01 (Article 5.35-4, Sections 3, 4, and 5 Insurance Code),
SECTION 2.01 (Article 21.55, Section 9, Insurance Code), and SECTION 3.02
(Article 21.07-5, Sections 6, 11, 18, 21, 23, and 29, Insurance Code) of
this bill. 

SECTION BY SECTION ANALYSIS
 
ARTICLE 1.  WATER DAMAGE CLAIMS

SECTION 1.01.  Amends Chapter 5C, Insurance Code, by adding Article
5.35-4, as follows: 

Art. 5.35-4.  RESTRICTIONS ON USE OF CLAIMS HISTORY FOR WATER DAMAGE;
PERMISSIBLE SURCHARGES. 

Sec. 1.  PURPOSE.  Provides that the purpose of this article is to protect
persons and property from being unfairly stigmatized in obtaining
residential property insurance by filing claims under a residential
property insurance policy.   

Sec. 2.  DEFINITIONS.  Defines "insurer," "residential property
insurance," and "underwriting guideline." 

Sec. 3.   RESTRICTIONS ON USE OF CLAIMS HISTORY FOR WATER DAMAGES. (a)
Requires that underwriting guidelines relating to a water damage claim or
claims used by an insurer be governed by rules adopted by the commissioner
of insurance (commissioner) and prohibits an insurer from using an
underwriting guideline that does not. 

(b) Requires an insurer to file its underwriting guidelines relating to a
water damage claim, or claims in accordance with rules adopted by the
commissioner, with the Texas Department of Insurance (TDI). 

Sec. 4.  PREMIUM SURCHARGES FOR WATER DAMAGE CLAIMS.  (a) Authorizes an
insurer, in accordance with rules adopted by the commissioner, to assess a
premium surcharge for water damage claims at the time the policy is
issued, in addition to the premium that would be charged had the claim not
occurred.  Authorizes the insurer to continue to assess the  premium
surcharge for a period to be determined by the commissioner by rule. 

(b) Authorizes an insurer to assess an additional premium surcharge for
water damage claims made in the previous policy year, as determined by
rule by the commissioner. Requires that this surcharge be in addition to
the premium that would be charged had the claim or claims not occurred and
in addition to the surcharge under Subsection (a). Requires the
commissioner to determine, by rule, the amount of the surcharge, which is
prohibited from exceeding 15 percent of the total premium that would be
charged had the claim or claims not occurred, excluding the amount of the
surcharge provided in Subsection (a).  Authorizes the insurer to continue
to assess the premium surcharge for a period as determined by the
commissioner by rule. 

(c) Authorizes the commissioner to authorize a surcharge, as provided in
Subsection (a) or (b), greater than 15 percent for risks with three or
more water damage claims, in accordance with rules adopted by the
commissioner. 

(d) Authorizes the commissioner to consider the number of, type of, and
amount paid for water damage claims in determining surcharges. 

Sec. 5.  RULEMAKING AUTHORITY.  Requires the commissioner to adopt rules
to accomplish the purposes of this article. 

SECTION 1.02.  Makes application of Article 5.35-4 prospective.  

ARTICLE 2.  CLAIMS HANDLING PROCEDURES AND TIME FRAMES

SECTION 2.01.  Amends Article 21.55, Insurance Code, by adding Section 9,
as follows: 

Sec. 9.  MINIMUM STANDARDS; RULEMAKING AUTHORITY.  (a) Provides that
Sections 2 and 3 of this article provide minimum standards for notice of
and acceptance or rejection of claims. 

(b) Authorizes the commissioner to adopt rules that identify the types of
claims requiring certain procedural standards that surpass those specified
in Sections 2 and 3 of this article.  Authorizes the commissioner, by
rule, to regulate certain procedures. 

(c) Provides that the purpose of any rules adopted under this section
supersede the minimum standards described in Sections 2 and 3 of this
article for types of claims identified by the commissioner under
Subsection (b). 

(d) Provides that any rules under this section is to reduce the response
time, confusion, inconvenience, costs, and losses for claimants with
certain types of claims. 

ARTICLE 3.  LICENSING OF PUBLIC INSURANCE ADJUSTERS

SECTION 3.01  Amends Article 21.07-4, Insurance Code, to include a public
insurance adjuster who is licensed under Article 21.07-5, Insurance Code
(Public Insurance Adjusters), in the list of persons not considered an
"adjuster." 

SECTION 3.02  Amends Chapter 21A, Insurance Code, by adding Article
21.07-5, as follows: 

Art. 21.07-5.  PUBLIC INSURANCE ADJUSTERS

Sec. 1.  DEFINITIONS.  Defines "licensee," "person," and "public insurance
adjuster." 

 Sec. 2.  NOT LAW LICENSE.  Provides that nothing in this article entitles
any person not licensed by the Supreme Court of Texas to practice law in
the state. 

Sec. 3.  LICENSE REQUIRED; EXEMPTION.  (a) Prohibits a person from acting
as or holding oneself out to be a public insurance adjuster, unless the
person holds a license issued by the commissioner under Section 5
(Qualifications for License; Issuance), 15 (Nonresident License), or 16
(Registration Program for Trainees) of this article. 

(b) Provides that certain persons do not require a license.

(c) Authorizes an insured to void a contract with any person in violation
of Subsection (a), and not be liable to pay for past or future services by
that person under that contract or otherwise. 

(d) Authorizes the commissioner to ex parte issue an emergency cease and
desist order in accordance with Chapter 83B (Emergency Cease and Desist
Orders, Issuance of Orders) if the commissioner believes a person to be in
violation of Subsection (a). 

Sec. 4.  APPLICATION FOR LICENSE.  (a)  Requires a license application to
be on a form prescribed by the commissioner. 

(b) Requires the completed application to be notarized and accompanied by
a nonrefundable license application fee for each application, as provided
by Section 11 (Fee for License, Renewal, and Examination). 

Sec. 5.  QUALIFICATIONS FOR LICENSE; ISSUANCE.  Requires the commissioner
to issue a public insurance adjuster license to an applicant who meets
certain criteria regarding age, residency, character, knowledge,
experience, criminal history, and financial responsibilities, and whose
application meets this article's requirements and whose fee has been paid. 

Sec. 6.  FINANCIAL RESPONSIBILITY REQUIREMENTS.  (a)  Requires a public
insurance adjuster, as a condition of continuing licensure, to file proof
of financial responsibility, in an amount to be determined, with respect
to transactions with insureds under this article. Requires the financial
responsibility to include the ability to pay sums the public insurance
adjuster is obligated to pay under any judgment against the public
insurance adjuster by an insured based on certain practices of the public
insurance adjuster or a person for whom the public insurance adjuster is
liable in the adjuster's business transactions under this code. Requires
the commissioner to consider certain circumstances and authorizes the
commissioner to consider certain other circumstances in determining the
financial responsibility amount. 

(b) Authorizes the commissioner to ex parte issue an emergency cease and
desist order in accordance with Chapter 83B (Emergency Cease and Desist
Orders, Issuance of Orders) if the commissioner believes a person is
failing to maintain the required financial responsibility. 

(c) Authorizes the reinstatement of a suspended license, under Subsection
(b), upon the approval of a  prescribed reinstatement application filed
with the commissioner with proof of required financial responsibility.
Authorizes the commissioner to deny the reinstatement application for
certain reasons. 

Sec. 7.  LICENSE AUTHORIZATION.  Provides that a license issued under
Section 5 (Qualifications for License; Issuance) or Section 15
(Nonresident License) of this article authorizes adjusting claims on
behalf of insureds for certain coverages and claims, but only when  the
client is an insured under the insurance policy. 

 Sec. 8.  EXAMINATION FOR LICENSE; ADVISORY COMMITTEE.  (a) Requires each
applicant for a public insurance adjuster license to personally take and
pass an examination to the commissioner's satisfaction. 

(b) Requires the examination to be prescribed by the commissioner and
requires it to be of sufficient scope to reasonably test certain
competencies and knowledge. 

(c) Authorizes the commissioner to appoint a public insurance adjusters
examination advisory committee composed of at least five members to assist
in developing the required examination.  Requires that at least three
members be eligible for the public insurance adjuster license, one be from
the insurance industry but not a public insurance adjuster, and one be a
representative of consumer interests.  Provides that a committee member is
not entitled to compensation but is entitled to reimbursement for
reasonable and necessary expenses incurred in the service of the
committee, subject to any limitation in the General Appropriations Act. 

(d) Requires the commissioner to transmit the examination results and
action taken on the application to the applicant within a reasonable
period, not to exceed 30 days after the date of the examination. 

(e) Provides that an examination is not required for the renewal of a
licence issued under Section 5 (Qualifications for License; Issuance) or
Section 15 (Nonresident License) of this article. 

Sec. 9.  EXAMINATION; FORM; TIME.  (a) Requires that examination answers
be made in writing.  Provides that an oral examination may supplement a
written examination. 

(b) Requires that the examination be given at times and places within the
state deemed necessary, by the commissioner, to serve the commissioner's
and applicant's convenience. 

(c) Authorizes the commissioner to require a waiting period for an
otherwise qualified applicant to retake the examination failing to pass
the examination. 

(d) Requires the scheduling and administration of examinations required
under Section 8 (Examination for License; Advisory Committee) to be
effected by persons approved by the commissioner. 

Sec. 10.  FORM OF LICENSE.  Requires the commissioner to prescribe the
form of licenses issued under Section 5 (Qualifications for License;
Issuance) or Section 15 (Nonresident License) of this article.  Sets forth
the required content of the licenses. 

Sec. 11.  FEE FOR LICENSE, RENEWAL, AND EXAMINATION.  (a) Requires the
commissioner to collect certain nonrefundable fees in advance. 

(b) Require the commissioner to determine, by rule, the renewal fee of a
license or certificate issued under this article. 

Sec. 12.  USE OF FEES COLLECTED.  (a) Requires the authorized fees
collected under this article to be deposited with the comptroller to the
credit of the TDI operating account. 

(b) Authorizes TDI to use any portion of the collected fees to perform
certain actions in enforcement of this article.  Authorizes an employee of
TDI to administer the oath and examine under oath any person considered
necessary in gathering information and evidence, that may be reduced to
writing; requires that all related expenses be paid  from the fees. 

(c) Requires the commissioner to set reasonable fees necessary to
implement this article. 

Sec. 13.  PLACE OF BUSINESS; AGENT FOR SERVICE OF PROCESS.  (a) Requires
each state resident licensee to maintain a place of business in the state
that is accessible to the general public, and to maintain the required
records in the place of business.  Requires the place of business to
appear on face of the license and that the licensee promptly notify the
commissioner of any change in that address. 

(b) Requires each nonresident licensee to maintain an agent in the state
for service of process.  Requires the name and address of the out-of-state
business and that of the agent to appear on the face of the license, and
that the licensee promptly notify the commissioner of any change in either
address. 

(c) Requires that a license issued under this article be posted
conspicuously in the licensee's principal place of business. 

Sec. 14.  LICENSE NOT ASSIGNABLE.  Provides that a license under this
article is not assignable. 

Sec. 15.  NONRESIDENT LICENSE.  (a) Authorizes the commissioner to issue a
nonresident license to a public insurance adjuster license applicant who
is not a permanent resident of this state upon determining the applicant
meets the requirements of this article; has paid the nonresident license
application fee; meets certain criteria regarding age, licensure in the
state of residence, examination performance in the state of residence,
character, knowledge, experience, criminal history, and financial
responsibilities; can provide certain authorization from the applicant's
state of residence that the applicant holds a comparable license to act a
public insurance adjuster or as an adjuster, agent, broker or other
insurance representative if that state does not require a public insurance
adjuster license; and complies with any other applicable requirements
under state law, including providing a complete set of fingerprints upon
request, as provided by Article 1.10C (Access to Certain Criminal History
Record Information). 

(b) Requires a nonresident licensee to comply with all requirements of
this article in performing any public insurance adjuster activities in
this state, including record maintenance requirements in Section 24
(Record Maintenance) of this article.  Provides that failure to comply
with the requirements of that section, as determined by the commissioner
after notice and opportunity for a hearing, constitutes grounds for
suspension of the nonresident license in accordance with Section 30
(Denial, Suspension, or Revocation of License) of this article. 

(c) Requires each nonresident licensee to comply with all other applicable
laws and rules of the state, including state sales tax collection, as
appropriate, for services performed under this article. 

(d)  Requires a nonresident licensee, as a condition of doing business in
the state, to annually, not later than January 1 and on a form prescribed
by the commissioner, submit an affidavit certifying  that the licensee is
familiar with  and understands the laws specified in Section 8
(Examination for License; Advisory Committee) of this article, the
applicable rules adopted under those laws,  and the terms and conditions
of the types of insurance contracts that provide coverage on real and
personal property.  Provides that compliance with the filing requirement
is necessary to the issuance, continuation, reinstatement, or renewal of a
nonresident public insurance adjuster license. 

 (e) Provides that a nonresident licensee is subject to Section 6(b)
(Financial Responsibility Requirements) of this article. 

Sec. 16.  REGISTRATION PROGRAM FOR TRAINEES.  (a) Requires a public
insurance adjuster trainee to register with TDI for a temporary
certificate under this section on a commissioner-prescribed form.
Requires the form to be accompanied by a nonrefundable registration fee as
prescribed by Section 11(a)(4) (Fee for License, Renewal, and Examination)
of this article 

(b) Authorizes a temporary certificate to be issued under this section
only for educational and training purposes and authorizes the holder of
such a certificate to practice only under the direction and sponsorship of
a licensee of this state. 

(c) Requires the sponsor of a public insurance adjuster trainee to attest,
on a commissioner-prescribed form, that the trainee is under the
supervision and control of the sponsor and that the sponsor has meet the
financial requirements of Section 6 (Financial Responsibility
Requirements) of this article. 

(d) Provides that a temporary certificate expires on the 180th day after
the date of issuance and authorizes one renewal on application to the
commissioner.  Sets forth the limit of two consecutive temporary
certificates for an individual. 

(e) Requires each temporary certificate holder under this section to
comply with the financial responsibility requirements imposed under
Section 6 (Financial Responsibility Requirements) of this article. 

Sec. 17.  CONDUCT TO COMPLY WITH CONTRACT.  Requires a licensee to prepare
each claim for the licensee's insured in accordance with the terms and
conditions of the contract of insurance under which recovery is sought. 

Sec. 18. CODE OF ETHICS.  Requires the commissioner to adopt by rule, with
guidance from the public insurance adjusters examination advisory
committee, a code of ethics that fosters the education of public insurance
adjusters concerning ethical, legal, and business principles that should
govern their conduct; recommendations regarding the solicitation of the
adjustment of losses by public insurance adjusters; and any other
principles of conduct or procedures the commissioner deems necessary and
reasonable. 

Sec. 19.  PUBLIC INSURANCE ADJUSTER AUTHORITY.  Provides that this article
does not limit or diminish the authority of a licensee to investigate or
adjust a loss to less than the authority for that purpose that may be
exercised by an adjuster licensed under Article 21.07-4, Insurance Code
(Licensing of Insurance Adjusters). 

Sec. 20.  LICENSE RENEWAL.  (a) Provides that a license under this article
expires on the second anniversary of the date of issuance, unless
suspended or revoked by the commissioner. Authorizes a licensee to renew
an unexpired license by filing a commissioner-prescribed renewal form that
demonstrates continued compliance with license requirements.  Requires
that certain items accompany the renewal application. 

(b) Requires a licensee to submit the completed renewal application,
evidence of compliance with continuing education requirements, and the
renewal fee to the commissioner not later than the 30th day before the
second anniversary date of the license. Provides that the original license
remains in force until the renewal is issued or the commissioner it. 

(c) Authorizes a person whose license has been expired for 90 days or less
to renew  the license by filing a commissioner-prescribed renewal form,
evidence of compliance with continuing education requirements, and paying
one-and-a-half the amount of the renewal fee. 

(d) Prohibits a person whose license has been expired for more than 90
days but less than one year from renewing the license but entitles that
person to a new license without taking the applicable examination if the
person submits a new license application and evidence of compliance with
continuing education requirements, and pays one-and-ahalf the amount of
the renewal fee. 

(e) Prohibits a person whose license has been expired for more than one
year from renewing the license.  Authorizes the person to obtain a new
license by submitting to reexamination, if examination is required for
original licensure, and by complying with the requirements and procedures
for obtaining an original license. 

(f) Authorizes TDI to renew an expired license, without reexamination, of
a person who was licensed in this state, moved to another state, and is
currently licensed and has been in continual practice in the other state
up to and including the date of the application. Requires the person to
pay a fee equal to the license fee to TDI. 

(g) Requires TDI to send written notice of impending license expiration to
the licensee's last known mailing address at least 30 days before
expiration. 

Sec. 21.  CONTINUING EDUCATION REQUIREMENT.  (a) Requires each licensee to
annually complete at least 15 hours of continuing education courses.
Requires the commissioner to prescribe continuing education course
requirements under this section. 

(b) Authorizes the commissioner to waive any continuing education
requirement, notwithstanding Subsection (a), for a nonresident adjuster
with a valid license from another state with continuing education
requirements substantially equivalent to those of this state. 

Sec. 22.  COMMISSION.  (a) Authorizes a licensee to receive a commission
for service, except as provided by Subsection (b),  consisting of certain
methods of compensation. Prohibits the total commission from exceeding 10
percent of the amount of the insurance settlement on the claim. 

(b) Prohibits a licensee from receiving a commission consisting of a
percentage of the amount paid by an insurer to resolve a claim on a claim
which the insurer, not later than 72 hours after the date on which the
loss is reported to the insurer, either pays or commits in writing to pay
the insured the policy limit in accordance with Section 862.053 (Fire
Insurance: Total Loss of Real Property) of this code.  Provides that the
licensee is entitled to reasonable compensation from the insured for
services provided on the insured's behalf, based on the time spent on a
claim that is subject to this subsection and incurred by the licensee,
until the claim is paid or the insured receives a written commitment from
the insurer to pay. 

(c) Requires all persons paying any proceeds of an insurance policy or
making any payment affecting an insured's rights under a policy, except
for the payment of a commission by the insured, to perform certain acts. 

(d) Prohibits a public insurance adjuster from accepting any payment that
violates Subsection (c). 

(e) Prohibits a public insurance adjuster from signing and endorsing any
payment draft  or check on behalf of an insured, notwithstanding any
authorization the insured may have given the public insurance adjuster. 

Sec. 23.  PROHIBITED CONDUCT.  (a )  Prohibits a licensee from directly or
indirectly acting as a public insurance adjuster in this state without
entering into a contract, in writing, on a commissioner-approved form,
executed in duplicate by the licensee and the insured, or the duly
authorized representative thereof.  Requires one copy of the contract to
be kept on file in the state by the licensee at all times for inspection,
without notice, by the commissioner or the duly authorized representative
thereof. 

(b) Prohibits a licensee from soliciting, or attempting to solicit, a
client during a lossproducing natural disaster. 

(c) Prohibits a licensee from soliciting, or attempting to solicit
business on a loss or a claim in any manner except between 9 a.m. and 9
p.m. on a weekday or Saturday, and between noon and 9 p.m. on Sunday, but
not from accepting phone calls or visits during the prohibited hours from
an insured upon the insured's initiation. 

(d) Prohibits a licensee from using any form of contract not approved by
the commissioner.  Sets forth the required content of the required
provision allowing the client to rescind the contract.  Authorizes the
commissioner, by rule, to require additional prominently displayed
content. 

(e) Prohibits a licensee from knowingly making a false report to the
licensee's employer or client and from divulging any information obtained
except at the direction of the employer or client for whom the information
is obtained, except as required by law.  

(f) Prohibits a licensee from using a badge in connection with official
activities of the licensee's business. 

(g) Prohibits a licensee from permitting an employee or agent to perform
activities in the employee's or agent's own name, for which a license is
required under this article. 

(h) Prohibits a licensee from rendering services or performing acts that
constitute practicing law. 

(i) Prohibits a licensee from representing an insured on a claim or
charging a fee while representing the opposing insurance carrier. 

(j) Prohibits a licensee from soliciting, or attempting to solicit,
business, directly or indirectly, or acting in any manner on a bodily
injury loss or any claim for which the client is not an insured under the
insurance policy. 

(k) Prohibits a licensee from acquiring an interest in salvaged property
subject to a claim adjusted by the licensee without the knowledge and
consent of the insured, in writing. 

(l) Prohibits a licensee from engaging in any activities that may
reasonably construed as presenting a conflict of interest. 

(m)  Prohibits a licensee from engaging in certain actions regarding
misrepresentation, advancement of money to clients, and payment of
unlicensed public insurance adjusters. 

Sec. 24.  RECORD MAINTENANCE.  (a) Requires a licensee to keep a complete
record, in the state, of each transaction as a public insurance adjuster.
Sets forth the required content of  those records. 

(b) Requires the required records be maintained in the state for at least
five years after termination of a transaction with the insured and
requires the record to be open to examination by the commissioner. 

Sec. 25.  FIDUCIARY CAPACITY.  (a) Provides that all funds received as
claim proceeds by licensee acting as a public insurance adjuster are
received and held in a fiduciary capacity. Provides that a licensee who
diverts or appropriates fiduciary funds is guilty of theft and is
punishable as provided by law. 

(b) Requires an applicant for a public insurance adjuster license to
endorse an authorization for disclosure of all financial records of any
fiduciary funds to the commissioner as part of the application. Requires
the authorization to continue in effect for the duration of the license. 

Sec. 26.  NOTICE TO LAST ADDRESS.  Provides that a required notice sent by
registered mail to a person's last known address is considered sufficient
notice under this article. 

Sec. 27.  RELOCATION TO ANOTHER STATE. (a) Requires a resident or
nonresident licensed public insurance adjuster, not later than the 30th
day after moving from one state to another, to file certain information
with TDI. 

(b) Prohibits TDI from charging a fee or requiring a license application
under Subsection (a) of this section. 

Sec. 28.  ADVERTISEMENTS.  Requires every advertisement by a licensee to
display certain information as it appears in the commissioner's records. 

Sec. 29. RULES.  Authorizes the commissioner to adopt certain reasonable
and necessary rules to implement this article. 

Sec. 30.  DENIAL, SUSPENSION, OR REVOCATION OF LICENSE.  (a) Authorizes
the commissioner to deny a license application or suspend or revoke a
license for certain reasons. 

(b)  Provides that the person affected by a refusal to issue or renew a
license or a suspension or revocation of a license is entitled to a
hearing as provided by Article 21.01-2, Section 3A(b) (General Provisions
Applicable to Certain License Holders: Denial or Refusal of License
Application; Suspension or Revocation of Licenses; Discipline of License
Holders). 

(c) Authorizes an appeal of a final order to a court of competent
jurisdiction as provided by Chapter 36D (Department Rules and Procedures:
Judicial Review). 

(d) Requires an order suspending a license to specify the suspension
period, not to exceed 12 months. 

(e) Requires a license holder to surrender the revoked or suspended
license to the commissioner on demand. 

(f) Authorizes the commissioner to issue or reinstate a suspended or
revoked license on a finding that the cause for suspension, revocation, or
refusal no longer exists. 

(g) Authorizes a person whose license has been suspended to apply for a
new license after the expiration of the suspension period.  Prohibits a
person whose license has  been revoked or whose application for a license
is denied, except for failing to submit a completed application, from
applying for a new license until the fifth anniversary of certain dates. 

(h)  Authorizes the commissioner to deny a timely application filed under
Subsection (g) if the applicant does not show good cause why the denial or
revocation of the license should not be considered a bar to the issuance
of the new license.  Provides that this subsection does not apply to an
applicant whose license application was denied for certain reasons. 

(i) Authorizes the commissioner to impose an administrative penalty, in
lieu of a license suspension or revocation, not to exceed $2,000 per
violation. 

(j) Authorizes TDI to institute disciplinary proceedings against a
licensee for conduct committed before the effective date of a voluntary
surrender or automatic forfeiture of the license.  Provides that the
surrender or forfeiture of the license does not affect the licensee's
culpability for the conduct. 

Sec. 31.  AUTOMATIC FINES.  Provides that Article 21.01-2, Section 5A
(General Provisions Applicable to Certain License Holders: Automatic
Fines) applies to violations of this article. 

Sec. 32.  CRIMINAL PENALTY; SANCTIONS.  (a) Provides that a violation
under this article is a Class B misdemeanor, except as provided by Section
25(a)(Fiduciary Capacity). 

(b) Provides that in addition to criminal penalties imposed under
Subsection (a), a person in violation of the article is subject to
sanctions provided by Article 21.21, Section 7 (Unfair Competition and
Unfair Practices: Cease and Desist Orders). 

SECTION 3.03.  Amends Article 21.01, Insurance Code, as follows:

Sec. 3.  APPLICATION.  Includes persons licensed in accordance with
Article 21.07-5 (Public Insurance Adjusters) in the list of persons to
whom this subchapter applies. Redesignates Subsections (13)-(19) as
Subsections (14)-(20). 

SECTION 3.04. (a)  Requires the commissioner, if the commissioner appoints
a public insurance adjusters examination advisory committee under Article
21.07-5, Insurance Code (Public Insurance Adjusters),  to appoint the
members not later than the 60th day after the effective date of this Act.
Authorizes the commissioner, if the commissioner has a contract with a
testing service that is in effect on the effective date of this act, to
add the public insurance adjusters examination to the scope of a contract
at a fee not greater than the highest adjuster examination fee charged. 

(b)  Requires the commissioner of insurance to adopt the examination
required by Article 21.07-5, Insurance Code (Public Insurance Adjusters),
not later than January 1, 2004. Authorizes the commissioner to issue a
nonrenewable, except as determined by the commissioner, temporary public
insurance adjuster license, which expires June 1, 2004, to a qualified
individual, except for the examination requirement, pending adoption of
the examination. 

(c) Requires the commissioner to adopt the code of ethics prescribed in
Article 21.07-5, Insurance Code (Public Insurance Adjusters) not later
than September 1, 2004. 

(d) Requires the commissioner to adopt rules, subject to the provisions of
Subsections (a), (b), and (c), to implement Article 21.07-5, Insurance
Code (Public Insurance Adjusters), not later than January 1, 2004. 
 
ARTICLE 4.  EFFECTIVE DATE

SECTION 4.01.  Effective date: upon passage or September 1, 2003.

SUMMARY OF COMMITTEE CHANGES

Differs from the original in the relating clause by expanding the bill's
scope from handling water damage claims to the handling, settling, and use
of certain claims in the insurance business and  related penalties. 

Differs from the original in SECTION 1.01 by renumbering this section and
by changing the purpose from addressing water damage claims to protecting
persons and property from being unfairly stigmatized in obtaining
residential property insurance by filing claims under a residential
property insurance policy.  Differs from the original by removing the
proposed definition for "claim," redefining "insurer" and "residential
property insurance," and including a definition of "underwriting
guideline." Differs from the original by removing proposed Sections 3, 4,
5, and 6 and replacing them with new Sections 3, 4, and 5. 

Differs from the original by replacing proposed SECTIONS 2, 3, and 4 with
SECTIONS 2.01, 3.01, 3.02, 3.03, 3.04, and 4.01. 

Differs from the original in SECTION 4.01 by changing the effective date.