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78R964 PB-D
By: Burnam H.B. No. 125
A BILL TO BE ENTITLED
AN ACT
relating to requirements for underwriting guidelines used in
writing certain consumer lines of insurance; providing a penalty.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subchapter E, Chapter 21, Insurance Code, is
amended by adding Article 21.49-2X to read as follows:
Art. 21.49-2X. UNDERWRITING REQUIREMENTS FOR CERTAIN
CONSUMER LINES
Sec. 1. DEFINITIONS. In this article:
(1) "Insurer" means an insurer authorized to write
property and casualty insurance in this state. The term includes:
(A) a county mutual insurance company, a farm
mutual insurance company, a Lloyd's plan, and a reciprocal or
interinsurance exchange; and
(B) an affiliate of an insurer, as described
under Section 823.003 of this code.
(2) "Underwriting guideline" means a rule, standard,
marketing decision, or practice that is used by an insurer or an
agent of an insurer to examine, bind, accept, reject, cancel, or
limit insurance coverage to groups of consumers of insurance.
Sec. 2. APPLICATION. This article applies only to an
insurer in this state that writes:
(1) a personal automobile insurance policy;
(2) a homeowners or farm and ranch owners insurance
policy; or
(3) a residential fire and allied lines insurance
policy or farm and ranch insurance policy.
Sec. 3. OVERSIGHT OF UNDERWRITING PROCESS; STANDARDS. (a)
The commissioner, by rule, shall adopt standards for underwriting
guidelines to be used by insurers in writing insurance policies
subject to this article.
(b) In adopting standards under Subsection (a) of this
section, the commissioner shall consider information submitted by:
(1) the office of public insurance counsel;
(2) consumer protection organizations with
demonstrated expertise in the subject of consumer lines of
insurance coverage; and
(3) individuals who are policyholders or applicants
for insurance coverage in this state.
(c) The rules adopted under Subsection (a) of this section
must ensure that underwriting guidelines used by insurers in
writing insurance policies subject to this article:
(1) promote mitigation of losses;
(2) fairly spread risk among insureds based on
probable loss costs; and
(3) do not unfairly impact individuals who are
traditionally underserved by the insurance industry, including
low-income individuals and members of minority groups.
Sec. 4. SUBMISSION OF UNDERWRITING GUIDELINES BY INSURERS;
PUBLIC ACCESS. (a) Each insurer shall submit to the department, in
the form prescribed by the department, copies of the underwriting
guidelines used by the insurer in writing insurance policies
subject to this article.
(b) Underwriting guidelines submitted under Subsection (a)
of this section are not confidential and are subject to public
access in the manner prescribed by Chapter 552, Government Code.
Sec. 5. PROHIBITION; PENALTY. (a) An insurer may not use an
underwriting guideline that violates a standard adopted under
Section 3 of this article.
(b) An insurer that violates this article commits an unfair
practice in violation of Article 21.21 of this code.
Sec. 6. RULES. The commissioner shall adopt rules as
necessary to implement this article.
SECTION 2. Section 38.002, Insurance Code, is amended by
adding Subsection (g) to read as follows:
(g) This section does not apply to an underwriting guideline
that is subject to Article 21.49-2X.
SECTION 3. Article 21.49-2X, Insurance Code, as added by
this Act, applies only to an insurance policy delivered, issued for
delivery, or renewed on or after January 1, 2004. A policy
delivered, issued for delivery, or renewed before January 1, 2004,
is governed by the law as it existed immediately before the
effective date of this Act, and that law is continued in effect for
that purpose.
SECTION 4. This Act takes effect September 1, 2003.