82R16212 TRH-D

By: McClendon H.B. No. 207

Substitute the following for H.B. No. 207:

By: Eiland C.S.H.B. No. 207

A BILL TO BE ENTITLED

AN ACT

relating to a mile-based rating plan for personal automobile insurance.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Chapter 2251, Insurance Code, is amended by adding Subchapter G to read as follows:

SUBCHAPTER G. MILE-BASED AUTOMOBILE INSURANCE RATING PLANS

Sec. 2251.301. DEFINITION. In this subchapter, "mile-based automobile insurance" means personal automobile insurance that is rated using a rating plan for which a unit of exposure is one mile driven by the insured.

Sec. 2251.302. APPLICABILITY OF OTHER LAW. (a) Subchapters A, B, C, and D apply to mile-based automobile insurance written under this subchapter.

(b) An insurer shall make separate filings under Subchapter C for mile-based automobile insurance written under this subchapter and other automobile insurance written in this state.

Sec. 2251.303. MILE-BASED AUTOMOBILE INSURANCE AUTHORIZED. (a) An insurer authorized to write personal automobile insurance in this state may write mile-based automobile insurance in this state.

(b) An insurer that writes mile-based automobile insurance in this state may also write personal automobile insurance in this state using a rating plan for which a unit of exposure is a unit other than the number of miles driven by the insured and that complies with this chapter.

(c) An insurer may require a person purchasing personal automobile insurance to use the same type of rating plan for all vehicles covered under the person's personal automobile insurance policy.

Sec. 2251.304. COMMISSIONER POWERS AND DUTIES; RULES. (a) The commissioner shall compile information regarding:

(1) the number of insurers writing mile-based automobile insurance in this state;

(2) the geographic areas of this state in which mile-based automobile insurance is written; and

(3) the premium rates for mile-based automobile insurance compared to personal automobile insurance rated on another basis.

(b) The commissioner shall adopt rules as necessary or appropriate to govern the use of mile-based automobile insurance under this subchapter, including rules regarding:

(1) prepayment arrangements;

(2) proof of financial responsibility; and

(3) auditing of the odometer of a vehicle for the purpose of determining coverage and number of miles driven.

SECTION 2. Section 1952.054, Insurance Code, is amended to read as follows:

Sec. 1952.054. REQUIRED DISCLOSURES REGARDING SHORT-TERM POLICIES. (a) An insurance policy or other document evidencing proof of purchase of a personal automobile insurance policy, other than a mile-based automobile insurance policy written under Subchapter G, Chapter 2251, that is written for a term of less than 30 days or a mile-based automobile insurance policy written under Subchapter G, Chapter 2251, that is written for fewer than 1,000 miles may not be used to obtain an original or renewal driver's license, an automobile registration or license plates, or a motor vehicle inspection certificate. An insurance policy or other document described by this subsection must contain the following statement:

TEXAS LAW PROHIBITS USE OF THIS DOCUMENT TO OBTAIN A MOTOR VEHICLE INSPECTION CERTIFICATE, AN ORIGINAL OR RENEWAL DRIVER'S LICENSE, OR AN AUTOMOBILE REGISTRATION OR LICENSE PLATES.

(b) Before accepting any premium or fee for a personal automobile insurance policy or binder for a term of less than 30 days, other than a policy or binder for a mile-based automobile insurance policy written under Subchapter G, Chapter 2251, or any premium or fee for a mile-based automobile insurance policy written under Subchapter G, Chapter 2251, that is written for fewer than 1,000 miles, an agent or insurer must make the following written disclosure to the applicant or insured:

TEXAS LAW PROHIBITS USE OF THIS POLICY OR BINDER TO OBTAIN A MOTOR VEHICLE INSPECTION CERTIFICATE, AN ORIGINAL OR RENEWAL DRIVER'S LICENSE, OR AN AUTOMOBILE REGISTRATION OR LICENSE PLATES.

SECTION 3. Section 2251.001, Insurance Code, is amended to read as follows:

Sec. 2251.001. PURPOSE. The purposes of this subchapter and Subchapters B, C, D, [and] E, and G are to:

(1) promote the public welfare by regulating insurance rates to prohibit excessive, inadequate, or unfairly discriminatory rates;

(2) promote the availability of insurance;

(3) promote price competition among insurers to provide rates and premiums that are responsive to competitive market conditions;

(4) prohibit price-fixing agreements and other anticompetitive behavior by insurers; and

(5) provide regulatory procedures for the maintenance of appropriate information reporting systems.

SECTION 4. Sections 2251.003(a) and (b), Insurance Code, are amended to read as follows:

(a) This subchapter and Subchapters B, C, D, [and] E, and G apply to:

(1) an insurer to which Article 5.13 applies, other than the Texas Windstorm Insurance Association, the FAIR Plan Association, and the Texas Automobile Insurance Plan Association; and

(2) except as provided by Subsection (c), a Lloyd's plan, reciprocal or interinsurance exchange, and county mutual insurance company with respect to the lines of insurance described by Subsection (b).

(b) This subchapter and Subchapters B, C, D, [and] E, and G apply to all lines of the following kinds of insurance written under an insurance policy or contract issued by an insurer authorized to engage in the business of insurance in this state:

(1) general liability insurance;

(2) residential and commercial property insurance, including farm and ranch insurance and farm and ranch owners insurance;

(3) personal and commercial casualty insurance, except as provided by Section 2251.004;

(4) medical professional liability insurance;

(5) fidelity, guaranty, and surety bonds other than criminal court appearance bonds;

(6) personal umbrella insurance;

(7) personal liability insurance;

(8) guaranteed auto protection (GAP) insurance;

(9) involuntary unemployment insurance;

(10) financial guaranty insurance;

(11) inland marine insurance;

(12) rain insurance;

(13) hail insurance on farm crops;

(14) personal and commercial automobile insurance;

(15) multi-peril insurance; and

(16) identity theft insurance issued under Chapter 706.

SECTION 5. Section 32.102(a), Insurance Code, is amended to read as follows:

(a) The department, in conjunction with the office of public insurance counsel, shall establish and maintain a single Internet website that provides information to enable consumers to make informed decisions relating to the purchase of residential property insurance and personal automobile insurance. The website must include:

(1) a description of each type of residential property insurance policy and personal automobile insurance policy issued in this state, including a comparison of the coverage, exclusions, and restrictions of each policy that allows a side-by-side comparison of the features of the policy forms;

(2) a listing of each insurer writing residential property insurance or personal automobile insurance in this state, indexed by each county or zip code in which the insurer is actively writing that insurance, and a profile of the insurer that includes:

(A) contact information for the insurer, including the insurer's full name, address, and telephone number and the insurer's fax number and e-mail address, if available;

(B) information on rates charged by the insurer, including:

(i) sample rates for different policyholder profiles in each county or zip code; and

(ii) the percentage by which the sample rate has fallen or risen due to filings in the previous 12, 24, and 36 months;

(C) a list of policy forms, exclusions, endorsements, and discounts offered by the insurer;

(D) an indication of whether the insurer uses credit scoring in underwriting, rating, or tiering, and a link to the insurer's credit model or a link explaining how to request the insurer's credit model;

(E) the insurer's financial rating determined by A. M. Best or similar rating organization and an explanation of the meaning and importance of the rating;

(F) a complaint ratio or similar complaint rating system for the insurer for each of the previous three years and an explanation of the meaning of the rating system; and

(G) information, other than information made confidential by law, on the insurer's regulatory and administrative experience with the department, the office of public insurance counsel, and insurance regulatory authorities in other states; [and]

(3) if feasible, as determined by the commissioner and the public insurance counsel:

(A) a side-by-side comparison of credit scoring models, including factors, key variables, and weights, of residential property insurers in this state; and

(B) a side-by-side comparison of credit scoring models, including factors, key variables, and weights, of private passenger automobile insurers in this state; and

(4) information that is compiled by the commissioner under Section 2251.304 concerning mile-based automobile insurance policies written under Subchapter G, Chapter 2251, and is not otherwise described by this subsection.

SECTION 6. The change in law made by this Act applies only to a personal automobile insurance policy that is delivered, issued for delivery, or renewed on or after January 1, 2012. An insurance policy that is delivered, issued for delivery, or renewed before January 1, 2012, is covered by the law in effect at the time the policy was delivered, issued for delivery, or renewed, and that law is continued in effect for that purpose.

SECTION 7. This Act takes effect September 1, 2011.