78R477 AJA-D
By: Seaman H.B. No. 97
A BILL TO BE ENTITLED
AN ACT
relating to policy forms for certain residential property insurance
policies.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Article 5.35, Insurance Code, is amended to read
as follows:
Art. 5.35. POLICY FORMS. (a) Notwithstanding any other
law, this article applies to a farm mutual insurance company or a
reciprocal or interinsurance exchange.
(b) The commissioner may [shall] adopt policy forms and
endorsements for each kind of insurance subject to this subchapter
other than a line regulated under Article 5.13-2 of this code that
may be used by an insurer [without filing for approval to use such
forms].
[(b) The commissioner may also adopt policy forms and
endorsements of national insurers or policy forms and endorsements
adopted by a national organization of insurance companies or
similar organization on policy forms and endorsements. Policy
forms and endorsements may be adopted under this subsection for
each kind of insurance subject to this subchapter other than a line
regulated under Article 5.13-2 of this code on the request of an
insurer. For purposes of this subsection, "national insurer" means
an insurer subject to this article that, either directly or
together with its affiliates as part of an insurance holding
company system as those terms are defined by Article 21.49-1 of this
code, is licensed to do business and write the kinds of insurance
that are subject to this subchapter in 26 or more states and
maintains minimum annual direct written premiums for residential
property insurance of $750 million in the aggregate for all
states.]
(c) An insurer may use [The commissioner may approve the use
of] policy forms and endorsements other than those adopted under
Subsection (b) of this article [adopted by a national organization
of insurance companies or a similar organization,] if the [such]
forms or endorsements are filed with [and are approved by] the
department [commissioner] in accordance with this article.
(d) An insurer shall:
(1) make available to consumers detailed descriptions
of each policy form subject to this article that is offered by the
insurer, including side-by-side comparisons of each policy form
offered by the insurer; and
(2) notify the commissioner of the insurer's intent to
use or discontinue use of a form or endorsement adopted or filed
under this article not later than the 60th day before the date the
insurer uses or discontinues use of the form or endorsement. [An
insurer may use an endorsement to the policy forms adopted or
approved by the commissioner under this article if the endorsement
is approved by the commissioner pursuant to this article.]
(e) At least once during each state fiscal year, the
department, in cooperation with the office of public insurance
counsel, shall publish a consumer information booklet that explains
and outlines the differences among the policy forms and
endorsements subject to the article that are offered by insurers
and provide the booklet to consumers free of charge. The department
shall maintain similar information on the department's website and
update the information as necessary. [Unless adopted or approved by
the commissioner pursuant to Subsection (a), (b), or (c) of this
article or, in the case of an endorsement, under Subsection (d) of
this article, an insurance policy or endorsement for use in writing
the types of insurance subject to this article may not be delivered
or issued for delivery in this state.]
(f) Each filing pursuant to Subsection (c) [or (d)] of this
article shall be made not later than the 60th day before the date of
any use or delivery for use. [At the expiration of the 60-day
period, a filed form or endorsement is approved unless before the
expiration of the 60 days the commissioner either disapproves the
form or endorsement by order or approves the form or endorsement.
Approval of a form or endorsement by the commissioner constitutes a
waiver of any unexpired portion of the 60-day period. The
commissioner may extend, by not more than an additional 30 days, the
period during which the commissioner may approve or disapprove a
form or endorsement by giving notice to the filer of the extension
before the expiration of the initial period. At the expiration of
any extension and in the absence of any earlier approval or
disapproval, the form or endorsement shall be considered approved.
For good cause shown, the commissioner may withdraw the
commissioner's approval at any time after notice and hearing.]
(g) [(1)] The commissioner may order an insurer to withdraw
a policy form or endorsement filed under Subsection (c) of
[disapprove a policy form or endorsement filed under] this article
[, or withdraw any previous approval thereof,] if the policy form or
endorsement:
(1) [(A)] violates or does not comply with this code,
or any valid rule relating thereto duly adopted by the
commissioner, or is otherwise contrary to law; or
(2) [(B)] contains provisions or has any titles or
headings which are unjust, unfairly discriminate, encourage
misrepresentation, are deceptive, or violate public policy.
(h) [(2)] The commissioner's order to withdraw a policy
[disapproving any] form or endorsement or any notice of the
commissioner's intention to issue an order to withdraw a policy
form or endorsement [withdraw a previous approval] must state the
grounds for ordering the withdrawal [disapproval] in enough detail
to reasonably inform the filer of the grounds. An order to withdraw
a policy [of withdrawal of a previously filed] form or endorsement
takes effect on the effective date of the order [expiration of the
prescribed period but not sooner than the 60th day after the
effective date of the withdrawal order, as prescribed by the
commissioner].
(i) [(h)] The commissioner may not adopt and may order the
withdrawal of a [or approve] policy form [forms] for personal fire
or homeowner's insurance or any endorsement to the policy if the
policy or endorsement is not in plain language. For the purposes of
this subsection, a policy or endorsement is written in plain
language if it achieves the minimum score established by the
commissioner on the Flesch reading ease test or an equivalent test
selected by the commissioner or, at the option of the commissioner,
if it conforms to the language requirements in a National
Association of Insurance Commissioners model act relating to plain
language. This subsection does not apply to policy language that is
mandated by state or federal law.
(j) [(i) An insurer may not use in this state any form or
endorsement after disapproval of the form or endorsement or
withdrawal of approval by the commissioner.
[(j)] Notwithstanding Article 1.35A of this code, the
office of public insurance counsel may submit written comments to
the commissioner and otherwise participate regarding individual
company filings made pursuant to this article.
(k) In addition to any other remedy available under law, the
commissioner shall order an insurer to pay restitution to the
holder of a policy or endorsement used in violation of this article.
(l) At the request of the commissioner, an insurer shall
provide to the department any information, including information
relating to the insurer's underwriting practices, that the
commissioner considers necessary to implement this article.
Underwriting guidelines obtained under this section are subject to
Section 38.002 of this code.
(m) The commissioner may adopt rules as necessary to
implement this article.
SECTION 2. Section 1, Article 5.25-2, Insurance Code, is
amended to read as follows:
Sec. 1. In this article:[,]
(1) "List" ["list"] means the list of fire and
lightning losses in excess of $100 paid under policy forms adopted
or used [approved by the board] under Article 5.35 of this
subchapter in a particular city or town prepared by the Department
[State Board] of Insurance for distribution to the city or town.[;]
(2) "Board" ["board"] means the Department [State
Board] of Insurance.
SECTION 3. Article 5.35-1, Insurance Code, is amended to
read as follows:
Art. 5.35-1. COVERAGES FOR SPOUSES AND FORMER SPOUSES. A
homeowner's policy or fire policy adopted or used [promulgated]
under Article 5.35 of this code may not be delivered, issued for
delivery, or renewed in this state unless the policy contains the
following language: "It is understood and agreed that this policy,
subject to all other terms and conditions contained in this policy,
when covering residential community property, as defined by state
law, shall remain in full force and effect as to the interest of
each spouse covered, irrespective of divorce or change of ownership
between the spouses unless excluded by endorsement attached to this
policy until the expiration of the policy or until canceled in
accordance with the terms and conditions of this policy."
SECTION 4. Section 912.152(b), Insurance Code, as effective
June 1, 2003, is amended to read as follows:
(b) The commissioner, in accordance with Article 5.35, may
adopt for use by county mutual insurance companies uniform policy
forms that differ from the forms adopted for [use by] other
companies [and shall prescribe the conditions under which a county
mutual insurance company:
[(1) may use the policy forms adopted under this
subsection; or
[(2) shall use the policy forms adopted for other
companies].
SECTION 5. This Act applies only to a policy delivered,
issued for delivery, or renewed on or after the 60th day after the
effective date of this Act. A policy delivered, issued for
delivery, or renewed before the 60th day after the effective date of
this Act is governed by the law in effect immediately before the
effective date of this Act, and that law is continued in effect for
that purpose.
SECTION 6. This Act takes effect immediately if it receives
a vote of two-thirds of all the members elected to each house, as
provided by Section 39, Article III, Texas Constitution. If this
Act does not receive the vote necessary for immediate effect, this
Act takes effect September 1, 2003.