By: Watson, Lucio, Hegar S.B. No. 1655

(In the Senate - Filed March 11, 2011; March 23, 2011, read first time and referred to Committee on Business and Commerce; April 11, 2011, reported adversely, with favorable Committee Substitute by the following vote: Yeas 7, Nays 0; April 11, 2011, sent to printer.)

COMMITTEE SUBSTITUTE FOR S.B. No. 1655 By: Watson

A BILL TO BE ENTITLED

AN ACT

relating to transparency and propagation of information regarding personal automobile and residential property insurance rates, policies, and complaints.

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

SECTION 1. This Act shall be known as the Texas Insurance Consumer Awareness and Affordability Act.

SECTION 2. Subchapter B, Chapter 32, Insurance Code, is amended by adding Sections 32.024 and 32.025 to read as follows:

Sec. 32.024. TEXAS RESIDENTIAL PROPERTY INSURANCE STUDY. (a) In this section, "residential property insurance" means insurance against loss to real or tangible personal property at a fixed location that is provided through a homeowners insurance policy or residential fire and allied lines insurance policy.

(b) The department and the office of public insurance counsel shall study:

(1) residential property insurance rates in this state;

(2) regulatory changes with the potential to lower residential property insurance rates over time in a sustainable manner;

(3) practices by individual companies that have the effect of lowering residential property insurance rates or increasing customer satisfaction over time in a sustainable manner;

(4) other states' laws that have the effect of lowering residential property insurance rates over time in a sustainable manner;

(5) the impact of weather events on residential property insurance rates in this state;

(6) in an effort to identify practices that lower insurance rates, the similarities and differences between the residential property insurance market and the commercial property insurance market in this state;

(7) industry practices and regulatory changes that encourage policyholders to learn more about the insurance market and to actively shop for insurance alternatives, and that overcome technological barriers facing certain consumers or groups of consumers;

(8) industry practices and regulatory changes that encourage mid-level and small-level carriers to compete for increased market share and that attract new carriers to Texas;

(9) the role of general economic factors such as inflation and changes in the costs of certain products and services in the setting of insurance rates;

(10) the effects of fraud on insurance rates and strategies to reduce fraud in this state;

(11) practices that increase efficiency and decrease administrative costs in the requests for information and data by the department and the conveyance of information and data by companies; and

(12) the effect of the market cycle by which insurance costs and underwriting criteria change due to economic factors on the affordability and availability of insurance.

(c) Not later than September 1, 2012, the department and the office of public insurance counsel shall submit to the governor, the lieutenant governor, the speaker of the house of representatives, and the appropriate standing committees of the legislature a report regarding the results of the study conducted under Subsection (b), together with any recommendations for legislation. If joint recommendations cannot be made, the department and the office shall list their recommendations separately.

(d) This section expires January 1, 2013.

Sec. 32.025. TEXAS PERSONAL AUTOMOBILE INSURANCE STUDY. (a) In this section, "personal automobile insurance" means motor vehicle insurance coverage for the ownership, maintenance, or use of a private passenger, utility, or miscellaneous type motor vehicle, including a motor home, mobile home, trailer, or recreational vehicle, that is:

(1) owned or leased by one or more individuals; and

(2) not primarily used for the delivery of goods, materials, or services, other than for use in farm or ranch operations.

(b) The department and the office of public insurance counsel shall study:

(1) personal automobile insurance rates in this state;

(2) regulatory changes with the potential to lower personal automobile insurance rates over time in a sustainable manner;

(3) practices by individual companies that have the effect of lowering personal automobile insurance rates or increasing customer satisfaction over time in a sustainable manner;

(4) other states' laws that have the effect of lowering personal automobile insurance rates over time in a sustainable manner;

(5) in an effort to identify practices that lower insurance rates, the similarities and differences between the personal automobile insurance market and the commercial automobile insurance market in this state;

(6) industry practices and regulatory changes that encourage policyholders to learn more about the insurance market and to actively shop for insurance alternatives, and that overcome technological barriers facing certain consumers or groups of consumers;

(7) industry practices and regulatory changes that encourage mid-level and small-level carriers to compete for increased market share and that attract new carriers to Texas;

(8) the role of general economic factors such as inflation and changes in the costs of certain products and services in the setting of personal automobile insurance rates;

(9) the effects of fraud on insurance rates and strategies to reduce fraud in this state;

(10) the number of uninsured drivers in this state, the effects they have on personal automobile insurance rates, and strategies for reducing the number of uninsured drivers;

(11) practices that increase efficiency and decrease administrative costs in the requests for information and data by the department and the conveyance of information and data by companies; and

(12) the effect of the market cycle by which insurance costs and underwriting criteria change due to economic factors on the affordability and availability of insurance.

(c) Not later than September 1, 2012, the department and the office of public insurance counsel shall submit to the governor, the lieutenant governor, the speaker of the house of representatives, and the appropriate standing committees of the legislature a report regarding the results of the study conducted under Subsection (b), together with any recommendations for legislation. If joint recommendations cannot be made, the department and the office shall list their recommendations separately.

(d) This section expires January 1, 2013.

SECTION 3. Section 32.103, Insurance Code, is amended to read as follows:

Sec. 32.103. PUBLIC INFORMATION CONCERNING INTERNET WEBSITE. The department and the office of public insurance counsel shall publicize the existence of the Internet website required by this subchapter in a conspicuous manner on any websites, correspondence, or publications created by the department or the office, as part of the program to facilitate resolution of policyholder complaints as provided by Section 521.002.

SECTION 4. Section 32.104, Insurance Code, is amended by amending Subsection (b) and adding Subsections (c) and (d) to read as follows:

(b) An insurer shall provide in a conspicuous manner with each residential property insurance or personal automobile insurance policy issued in this state, and on any correspondence sent from the insurer to an insured, notice of the Internet website required by this subchapter. An insurer is not required to provide the notice on a separate document if the notice is included on the policy or correspondence. The commissioner shall determine the form and content of the notice. An insurer that transacts business electronically and provides conspicuous notice of the Internet website required by this chapter on the insurer's website is not required to comply with this subsection.

(c) To the extent possible, an insurance agent who sells a residential property insurance or personal automobile insurance policy must, at the time of the initial sale, advise the customer verbally, electronically, or in writing of the Internet website maintained under this subchapter.

(d) A renewal of a residential property insurance or personal automobile insurance policy must include the location of the department's Internet website prominently displayed on the declarations page of the renewal policy.

SECTION 5. Section 521.052, Insurance Code, is amended to read as follows:

Sec. 521.052. INFORMATION PROVIDED. (a) The department shall provide to the public through the department's toll-free telephone number only the following information:

(1) information collected or maintained by the department relating to the number and disposition of complaints received against an insurer that are justified, verified as accurate, and documented as valid, expressed as a percentage of the total number of insurance policies written by the insurer and in force on December 31 of the preceding year;

(2) the rating of an insurer, if any, as published by a nationally recognized rating organization;

(3) the kinds of coverage available to a consumer through any insurer writing insurance in this state;

(4) an insurer's admitted assets-to-liabilities ratio; and

(5) other appropriate information collected and maintained by the department.

(b) The department shall make the information described by Subsection (a)(1) available to the public through the department's Internet website.

SECTION 6. Section 551.054, Insurance Code, is amended by adding Subsections (d) and (e) to read as follows:

(d) An insurer that refuses to renew a residential property insurance policy or a personal automobile insurance policy but offers a different policy in the place of that policy shall provide to the insured:

(1) a table that clearly lists the premium charged under the original policy, the premium charged under the new policy, and the percentage change, if any, between those amounts;

(2) an explanation, in plain language, of any changes in the coverage under the new policy; and

(3) notice of the department's Internet website that is designated by the department to help consumers compare premiums and coverages of different insurers' policies.

(e) The commissioner shall adopt appropriate wording for notice under Subsection (d).

SECTION 7. Subchapter B, Chapter 2301, Insurance Code, is amended by adding Sections 2301.0535, 2301.0536, and 2301.0537 to read as follows:

Sec. 2301.0535. REQUIRED INFORMATION IN RENEWAL POLICY. (a) At the time a residential property insurance policy or a personal automobile insurance policy is renewed, the insurer shall provide to the insured:

(1) a table that conspicuously and clearly lists the premium charged under the policy before renewal, the new premium charged under the renewal policy, and the percentage change, if any, between those amounts; and

(2) notice of the department's Internet website designated by the department to help consumers compare premiums and coverages of different insurers' policies.

(b) The commissioner shall adopt appropriate wording for notice under this section.

Sec. 2301.0536. UPDATED POLICY REQUIRED. At any time there is a change in the coverage of a residential property insurance policy or personal automobile insurance policy, the insurer, on request from the consumer, shall provide the consumer with an updated declarations page and the policy form that was changed. The insurer shall inform the insured of the insured's right to request an updated copy of the policy that identifies the changes.

Sec. 2301.0537. STATEMENT OF DEDUCTIBLE. (a) A residential property insurance policy, personal automobile insurance policy, or other document that expresses a deductible as a percentage of the coverage amount must state the actual dollar amount of the deductible next to the percentage.

(b) If a residential property insurance policy or personal automobile insurance policy includes an endorsement or other provision that includes a variable deductible or a deductible with an escalator clause, the policy or document must explain how the deductible will be calculated and provide an example of how the deductible will be calculated, stating the actual dollar cost for the example.

SECTION 8. Subsection (d), Section 32.104, Subsection (d), Section 551.054, and Sections 2301.0535, 2301.0536, and 2301.0537, Insurance Code, as added by this Act, apply only to an insurance policy or contract that is delivered, issued for delivery, or renewed on or after January 1, 2012. An insurance policy or contract delivered, issued for delivery, or renewed before January 1, 2012, 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 9. This Act takes effect September 1, 2011.

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