84R566 PMO-D

By: Hunter H.B. No. 2175

A BILL TO BE ENTITLED

AN ACT

relating to the operation of the Texas Department of Insurance.

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

SECTION 1. Section 31.004, Insurance Code, is amended by amending Subsection (a) and adding Subsection (a-1) to read as follows:

(a) The Texas Department of Insurance is subject to Chapter 325, Government Code (Texas Sunset Act). Unless continued in existence as provided by that chapter, the department is abolished September 1, 2019 [2023].

(a-1) Notwithstanding Section 325.015, Government Code, the legislature may not continue the department in existence for a period that exceeds four years. The department is abolished on September 1 of the fourth calendar year after the year in which the department was last continued in existence by law as provided by Chapter 325, Government Code.

SECTION 2. Subchapter C, Chapter 31, Insurance Code, is amended by adding Section 31.040 to read as follows:

Sec. 31.040. DEFINITION. In this subchapter, "employ" includes any arrangement under which an individual renders or performs a service or labor for compensation, including an individual hired on a part-time or temporary basis or a full-time or permanent basis.

SECTION 3. Section 31.041, Insurance Code, is amended by amending Subsections (a) and (b) and adding Subsections (d) and (e) to read as follows:

(a) Subject to the General Appropriations Act or other law, the commissioner shall appoint or employ deputies, assistants, and other personnel as necessary to carry out the powers and duties of the commissioner and the department under this code, other insurance laws of this state, and other laws granting jurisdiction or applicable to the department or the commissioner.

(b) A person appointed or employed under this section must have the professional, administrative, and insurance experience necessary to qualify the person for the position to which the person is appointed or employed.

(d) The commissioner shall comply with Section 31.046 before appointing or employing an individual.

(e) The commissioner shall appoint or employ an individual based primarily on criteria established by this section.

SECTION 4. Subchapter C, Chapter 31, Insurance Code, is amended by adding Section 31.046 to read as follows:

Sec. 31.046. JUSTIFICATION FOR APPOINTMENTS AND EMPLOYMENT. (a) The commissioner shall justify in writing the appointment or employment of an individual as an officer or employee of the department.

(b) The written justification described by Subsection (a) must:

(1) demonstrate that the appointment or employment of the individual complies with Sections 31.041 and 31.043; and

(2) disclose the departmental workload that necessitates the creation or continuation of the position filled by the individual.

SECTION 5. Subchapter A, Chapter 32, Insurance Code, is amended by adding Section 32.005 to read as follows:

Sec. 32.005. RECORD OF EXPENDITURES. (a) The department shall conspicuously post on the department's Internet website a link to the searchable state expenditure database established by Section 403.024, Government Code, as it relates to expenditures by the department.

(b) The department shall conspicuously post on the department's Internet website with respect to an expenditure listed in the database described by Subsection (a):

(1) a copy of the contract for the expenditure; and

(2) a copy of the payee's financial statement prepared by a certified public accountant and current at the time the contract is executed.

SECTION 6. 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

(H) a list of all names under which the insurer is doing business under the insurer's certificate of authority; 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.

SECTION 7. Chapter 32, Insurance Code, is amended by adding Subchapter F to read as follows:

SUBCHAPTER F. TRANSPARENCY

Sec. 32.201. APPLICABILITY OF SUBCHAPTER. This subchapter applies to residential property insurance or personal automobile insurance policies in this state, including policies issued by a Lloyd's plan, a reciprocal or interinsurance exchange, a county mutual insurance company, a farm mutual insurance company, the Texas Windstorm Insurance Association, the FAIR Plan Association, and the Texas Automobile Insurance Plan Association.

Sec. 32.202. DEFINITIONS. In this subchapter:

(1) "Contact" means an incident of oral communication in person, through electronic means, by telephone, or otherwise.

(2) "Individual" means a natural person, acting in an individual capacity or representing another person or a legal entity, including a department, agency, or officer of a state or the federal government, a corporation, a trust, a partnership, an interest group, or an association.

Sec. 32.203. DISCLOSURE OF CONTACT WITH COMMISSIONER. (a) The commissioner shall, substantially contemporaneously with the contact, conspicuously post and maintain on the department's Internet website a written disclosure of any contact between an individual and the commissioner if the contact:

(1) occurs while the commissioner is acting within the course and scope of the commissioner's office as it relates to residential property insurance or personal automobile insurance;

(2) relates to the business of residential property insurance or personal automobile insurance; or

(3) involves an individual engaged in the business of residential property insurance or personal automobile insurance.

(b) The disclosure required by Subsection (a) must include:

(1) the identity of each individual involved in the contact with the commissioner, and, if acting in a representative capacity, the identity of each person or entity represented;

(2) the date and time of the contact; and

(3) the subject matter of the contact, if known when the contact is initiated.

(c) On conclusion of the contact, the commissioner shall supplement the written disclosure required by Subsection (a) with a statement of:

(1) the duration of the contact;

(2) the actual subject matter of the contact; and

(3) in detail, all information exchanged during the contact.

(d) In disclosing the subject matter of the contact, the commissioner shall specifically identify the order, rule, proposed rule, bulletin, publication, rate, or procedure, or decision or proposed decision of or action or proposed action by the commissioner or the department, if any, that is the subject matter of the contact.

Sec. 32.204. DISCLOSURE OF CERTAIN CONTACT WITH DEPARTMENT. (a) With regard to a contact other than a contact described by Section 32.203 between the department and an individual relating to a bulletin or a proposed or adopted rule related to an insurance policy to which this subchapter applies, the department shall, substantially contemporaneously with the contact, conspicuously post and maintain on the department's Internet website a written disclosure of:

(1) the identity of each person representing the department involved in the contact;

(2) the identity of each other individual involved in the contact and, if acting in a representative capacity, the identity of each person or entity represented;

(3) the date and time of the contact; and

(4) each bulletin or proposed or adopted rule that is the subject matter of the contact, if known at the time contact is initiated.

(b) On conclusion of the contact, the department shall supplement the written disclosure required by Subsection (a) with a statement of:

(1) the duration of the contact;

(2) the identification of each bulletin or proposed or adopted rule that was the subject matter of the contact; and

(3) in detail, all information exchanged during the contact.

Sec. 32.205. DISCLOSURE RELATING TO RULEMAKING. With regard to a rule related to an insurance policy to which this subchapter applies proposed or adopted by the commissioner, the department shall include in the notice required under Section 2001.023 or 2008.053, Government Code, and any order adopting the rule described by Section 2001.033, Government Code:

(1) all information related to the rule disclosed under Sections 32.203 and 32.204 as of the date of the notice or order; and

(2) a link to the department's Internet website to provide public access to the supplemental information related to the rule required under Sections 32.203(c) and 32.204(b).

Sec. 32.206. DISCLOSURE RELATING TO BULLETINS. The department shall include in any bulletin related to an insurance policy to which this subchapter applies issued by the department or the commissioner:

(1) all information related to the bulletin disclosed under Sections 32.203 and 32.204 as of the date of the bulletin; and

(2) a link to the department's Internet website to provide public access to the supplemental information related to the bulletin required under Sections 32.203(c) and 32.204(b).

Sec. 32.207. DEPARTMENT DISCLOSURES TO INSURED. (a) The department shall prepare a written notice of a rate change for or imposition of a surcharge on an insurance policy to which this subchapter applies.

(b) The notice required by Subsection (a) must include:

(1) an explanation of the rate change or surcharge;

(2) a justification for the rate change or surcharge; and

(3) an estimate of the annual change in cost to the insured as a result of the rate change or surcharge.

(c) The department shall notify the insureds affected by the rate change or surcharge by:

(1) having the notice prepared under Subsection (a) published in a newspaper of general circulation in each county in this state in which the last known address of any affected insured is located; and

(2) mailing by first class prepaid mail the notice prepared under Subsection (a) to each affected insured at the insured's last known address provided by the insurer.

Sec. 32.208. PUBLIC DISCLOSURE BY DEPARTMENT. (a) The department shall conspicuously post and maintain on the department's Internet website a concise summary of any rate change for or imposition of a surcharge on an insurance policy to which this subchapter applies. The summary must disclose:

(1) the geographic or rating area affected by the filing;

(2) the coverage and, if applicable, the change in coverage to which the rate filing and supporting information apply; and

(3) whether the rate filing results in an increase or decrease of the overall rates for coverage in a specific geographic or rating area.

(b) The department must post on the department's Internet website the summary required by Subsection (a) not later than the 10th day after the date the rate change is effective or the surcharge is imposed, as applicable.

Sec. 32.209. DUTIES OF INSURER. On the request of the department, an insurer shall provide to the department any information the department determines is reasonable or necessary to fulfill the department's duties under this subchapter.

SECTION 8. Chapter 81, Insurance Code, is amended by adding Section 81.005 to read as follows:

Sec. 81.005. PUBLIC DISCLOSURE BY DEPARTMENT. (a) The department shall conspicuously post on the department's Internet website a summary of each action imposing a sanction, penalty, or fine, including an administrative penalty, against an insurer, agent, or license holder. Unless the information is made confidential by other law, the summary must disclose:

(1) the identity of the insurer, agent, or license holder subject to the sanction, penalty, or fine;

(2) the statutory authority for the imposition of the sanction, penalty, or fine;

(3) the grounds for the imposition of the sanction, penalty, or fine;

(4) the amount, duration, extent, or other measure of the sanction, penalty, or fine imposed; and

(5) whether an appeal of the sanction, penalty, or fine has been filed.

(b) The department shall post the summary required by Subsection (a) not later than the 10th day after the date the sanction, penalty, or fine is imposed.

SECTION 9. (a) This Act applies to an appointment or employment of an individual commencing on or after the effective date of this Act. An appointment or employment commencing before the effective date of this Act 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.

(b) This Act applies to a contract for an expenditure entered into on or after the effective date of this Act. A contract entered into before the effective date of this Act 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.

(c) This Act applies to a rate filing made or surcharge imposed on or after the effective date of this Act. A rate filing made or surcharge imposed before the effective date of this Act 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 10. 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, 2015.