BILL ANALYSIS

 

 

 

H.B. 4074

By: Morgan

Insurance

Committee Report (Unamended)

 

 

 

BACKGROUND AND PURPOSE

 

The bill author has informed the committee that appraisers, who are selected by an insurer or insured to assess the value of damages or loss in an insurance dispute, and umpires, who serve as a neutral third-party in resolving disputes between appraisers in an insurance appraisal process, have no specific state-mandated insurance training requirements. The bill author has also informed the committee that appraisers are often expected to have experience in assessing property damages or losses, typically from field experience in insurance, construction, real estate, or related industries and that umpires should have specific expertise in areas like engineering, architecture, general contracting, law, or a relevant technical field to assess damages effectively. The bill author has further informed the committee that there are specific insurance appraisal associations that provide certifications for appraisers and umpires designed to ensure that professionals in the industry maintain a high standard of knowledge, ethics, and skills and that these resources could provide consumer protection for individuals who purchase insurance products and services from unfair, deceptive, or fraudulent practices. H.B. 4074 seeks to enhance consumer protections when utilizing insurance appraisers and insurance umpires by establishing licensing requirements for insurance appraisers and umpires, including training and continuing education requirements.

 

CRIMINAL JUSTICE IMPACT

 

It is the committee's opinion that this bill does not expressly create a criminal offense, increase the punishment for an existing criminal offense or category of offenses, or change the eligibility of a person for community supervision, parole, or mandatory supervision.

 

RULEMAKING AUTHORITY

 

It is the committee's opinion that rulemaking authority is expressly granted to the commissioner of insurance in SECTION 1 of this bill.

 

ANALYSIS

 

H.B. 4074 amends the Insurance Code to prohibit an individual from serving as an umpire or appraiser unless the individual holds a valid license issued by the Texas Department of Insurance (TDI). The bill requires TDI to issue an umpire or appraiser license to an applicant who meets the following criteria:

·       is at least 18 years old and a United States citizen or legal resident authorized to work in the United States;

·       completes a 40-hour pre-licensing course approved by the commissioner of insurance;

·       successfully passes a state licensing examination approved by the commissioner;

·       submits to a fingerprint-based criminal background check;

·       files a completed application and pays the required fees to TDI not later than the first anniversary of the date the applicant passes the examination; and

·       maintains a surety bond in an amount set by the commissioner that is not less than $10,000.

The bill defines "appraiser" as an individual selected by an insurer or insured to assess the value of damages or loss in an insurance dispute and "umpire" as a neutral third-party professional selected to resolve disputes between appraisers in an insurance appraisal process.

 

H.B. 4074 requires an umpire or appraiser, in order to maintain such a license, to complete 24 hours of continuing education every two years as required by the commissioner of insurance, which must include ethics training of at least three hours, insurance policy interpretation and appraisal processes, alternative dispute resolution, and any other subject as determined by the commissioner. The bill requires at least 12 of the 24 continuing education hours to be completed in a classroom or equivalent setting in accordance with commissioner rule.

 

H.B. 4074 establishes that an umpire or appraiser license is valid for two years and must be renewed before the last day of the license holder's birth month. The bill requires an applicant for renewal to demonstrate compliance with continuing education requirements under the bill and pay the renewal fee as set by the commissioner. The bill authorizes TDI to investigate complaints, conduct audits, and enforce compliance with the bill's provisions. The bill authorizes the commissioner, not earlier than the 90th day after the last day of a licensing period,  to impose an administrative penalty of $50 per deficient hour for failure to complete those continuing education requirements. The bill authorizes the commissioner to impose an administrative penalty on a person who acts as an umpire or appraiser without a valid license in an amount that does not exceed $4,500 per violation in addition to any other enforcement action authorized by the Insurance Code that the commissioner considers necessary.

 

H.B. 4074 authorizes the commissioner to adopt rules to implement the bill's provisions.

 

H.B. 4074 establishes that an umpire or appraiser who began operating before the bill's effective date is not required to comply with the licensing, bonding, and educational requirements prescribed by the bill until September 1, 2027. The bill requires the commissioner, as soon as practicable after the bill's effective date, to establish temporary licensing procedures for such an umpire or appraiser that apply to the umpire or appraiser until September 1, 2027.

 

EFFECTIVE DATE

 

September 1, 2025.