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By:  Van de Putte, et al.                                         S.B. No. 113


A BILL TO BE ENTITLED

AN ACT

relating to premium discounts for certain residential property 
insurance policies.
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:                        
	SECTION 1.  Subchapter C, Chapter 5, Insurance Code, is 
amended by adding Article 5.43 to read as follows:
	Art. 5.43.  OPTIONAL PREMIUM DISCOUNT FOR CERTAIN 
RESIDENTIAL PROPERTY INSURANCE POLICIES.  (a)  In this article:
		(1)  "Affiliate" means an entity classified as an 
affiliate of an insurer under Section 823.003 of this code.
		(2)  "Insurer" means an insurer authorized to write 
residential property insurance, including a county mutual 
insurance company, farm mutual insurance company, Lloyd's plan, or 
reciprocal or interinsurance exchange.
		(3)  "Residential property insurance" means property 
or property and casualty insurance covering a dwelling, including 
homeowners insurance, residential fire and allied lines insurance, 
farm and ranch insurance, or farm and ranch owners insurance.
	(b)  An insurer that issues a residential property insurance 
policy in this state may:
		(1)  provide a discount of not less than three percent 
in the premiums that would otherwise be charged for the policy if 
the policyholder has continuously been a residential property 
insurance policyholder with that insurer or an affiliate of that 
insurer but has not filed a residential property insurance claim 
during the three years before the effective date of the policy; and
		(2)  increase the amount of the discount by one percent 
for each subsequent year in which the policyholder has been a 
residential property insurance policyholder with that insurer or an 
affiliate of that insurer but has not filed a residential property 
insurance claim.
	(c)  An insurer that provides a discount under this article 
is not required to provide a discount under this article that 
exceeds 10 percent of the premiums that would otherwise be charged 
for the residential property insurance policy.
	(d)  This article applies without regard to whether any of 
the policies that continuously covered the policyholder, as 
described by Subsections (b)(1) and (2) of this article, was a 
different type of residential property insurance policy from the 
policy eligible for the discount.
	(e)  The commissioner shall adopt rules as necessary to 
implement this article and shall establish by rule guidelines under 
which an insurer that provides a discount under this article shall 
determine the appropriate discount based on sound actuarial 
principles.  The commissioner may approve a discount filed with the 
department that is greater or less than the discount specified by 
this article if the commissioner determines the discount is 
actuarially justified.
	SECTION 2.  As soon as practicable after the effective date 
of this Act, the commissioner of insurance shall adopt rules to 
implement Article 5.43, Insurance Code, as added by this Act.
	SECTION 3.  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.