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A BILL TO BE ENTITLED
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AN ACT
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relating to certain automobile insurance loss adjustment and claims |
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settlement practices and the collection and use of certain data by |
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insurers regarding automobile loss and damage claims; providing |
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administrative penalties. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Chapter 1953, Insurance Code, is amended by |
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adding Subchapter D to read as follows: |
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SUBCHAPTER D. DATA MINING AND PATTERN RECOGNITION |
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Sec. 1953.151. APPLICABILITY OF SUBCHAPTER. This |
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subchapter applies to an insurer writing automobile insurance in |
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this state, including an insurance company, reciprocal or |
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interinsurance exchange, county mutual insurance company, farm |
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mutual insurance company, Lloyd's plan, or other insurer. |
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Sec. 1953.152. COLLECTION OF INFORMATION CONCERNING DATA |
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MINING AND PATTERN RECOGNITION. (a) The commissioner by rule may |
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require an insurer to report to the department concerning: |
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(1) technologies to be used by the insurer to identify |
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relationships among variables that are used to predict differences |
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in expected losses of covered persons or applicants for automobile |
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insurance coverage or are otherwise used in the activities of |
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regulated entities; and |
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(2) the manner in which the insurer intends to use the |
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relationships derived from the technologies described by |
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Subdivision (1) in: |
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(A) underwriting and creating and defining risk |
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classifications; |
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(B) setting rates and premiums, as applicable; |
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(C) detecting fraudulent claims; |
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(D) identifying subrogation opportunities; |
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(E) improving marketing; or |
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(F) performing other activities identified by |
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the commissioner; and |
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(3) services provided by third party loss-evaluation |
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services to identify loss statistics and information for the |
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purpose of evaluating claims, loss-settlement reserves, and losses |
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paid and the manner in which the insurer uses those services and the |
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information obtained. |
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(b) In exercising the commissioner's authority under this |
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section, the commissioner may require that insurers report with |
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respect to selected segments of the market and may limit the |
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reporting to specific uses of relationships derived from the |
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technologies. |
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(c) Underwriting guidelines, loss and claims evaluation |
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data, and related information obtained by the commissioner under |
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this section are subject to Section 38.003. Other information |
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obtained under this section is commercial information not subject |
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to the disclosure requirements of Chapter 552, Government Code. |
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Sec. 1953.153. ADMINISTRATIVE PENALTIES. If the department |
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determines that an insurer has violated this chapter or a rule |
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adopted under this chapter, the department shall assess |
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administrative penalties against the insurer in the manner provided |
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by Chapter 84. The amount of an administrative penalty imposed |
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under this section shall be based on: |
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(1) the seriousness of the violation, including the |
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nature, circumstances, extent, or gravity of the violation; and |
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(2) the economic harm caused by the violation. |
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Sec. 1953.154. REPORT TO LEGISLATURE. The department shall |
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include in its biennial report to the legislature under Section |
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32.022 information concerning the use of relationships derived from |
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the technologies described by Section 1953.152 by insurers. The |
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information must include the impact of the use of those |
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relationships on insurance and other coverage to covered persons |
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and applicants for coverage in this state. The report must include, |
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as applicable, recommendations for: |
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(1) proposed legislation appropriate to regulate the |
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use of relationships derived from the technologies; and |
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(2) means to facilitate availability of insurance in |
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underserved markets and to maintain fair and equitable |
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loss-evaluation and claims settlement practices in this state. |
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SECTION 2. This Act takes effect September 1, 2011. |