Texas 2009 - 81st Regular

Texas House Bill HB3858 Compare Versions

Only one version of the bill is available at this time.

Old	New	Differences
1	1	81R11364 KCR-D
2	2	By: Herrero H.B. No. 3858
3	3
4	4
5	5	A BILL TO BE ENTITLED
6	6	AN ACT
7	7	relating to the writing of and rate regulation for residential
8	8	property insurance in this state.
9	9	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
10	10	ARTICLE 1. RATE FILING AND RATE ASSESSMENT FOR RESIDENTIAL
11	11	PROPERTY INSURANCE
12	12	SECTION 1.01. Subtitle H, Title 10, Insurance Code, is
13	13	amended by adding Chapter 2255 to read as follows:
14	14	CHAPTER 2255. FILING OF RESIDENTIAL PROPERTY INSURANCE RATES FOR
15	15	RATE ASSESSMENT
16	16	Sec. 2255.001. APPLICABILITY; DEFINITIONS. (a) This
17	17	chapter applies only to residential property insurance.
18	18	(b) The definitions under Chapter 2251 apply to this
19	19	chapter.
20	20	Sec. 2255.002. CONSTRUCTION WITH OTHER LAW. (a)
21	21	Notwithstanding any other law, rates for residential property
22	22	insurance are governed by this chapter from the effective date of
23	23	this chapter until the completion of the rate assessment under this
24	24	chapter and any resulting hearings or other proceedings under this
25	25	chapter.
26	26	(b) When the rate assessment and any resulting hearings or
27	27	other proceedings under this chapter are completed, rates for
28	28	residential property insurance are regulated as provided by Section
29	29	2251.1511.
30	30	Sec. 2255.003. RATE STANDARDS. (a) A rate filed by an
31	31	insurer under Section 2255.004 or a rate ordered by the
32	32	commissioner following a rate hearing under Section 2255.005 may
33	33	not be excessive, inadequate, unfairly discriminatory, or
34	34	unreasonable.
35	35	(b) A rate ordered by the commissioner following a rate
36	36	hearing under Section 2255.005 must comply with the rate standards
37	37	described by Subsection (a) and may not be confiscatory.
38	38	Sec. 2255.004. RATE FILING; RATE ASSESSMENT. (a) Not later
39	39	than the 20th day after the effective date of this chapter, each
40	40	insurer writing residential property insurance shall file with the
41	41	commissioner the insurer's rates, supporting information, and
42	42	supplementary rating information. If the insurer has made a rate
43	43	filing under Chapter 2251 not more than 30 days before the effective
44	44	date of this chapter, the insurer may:
45	45	(1) notify the department that the insurer is using
46	46	the rate filing submitted under Chapter 2251 to comply with the
47	47	requirements of this chapter; or
48	48	(2) file an update to the material filed under Chapter
49	49	2251.
50	50	(b) If, after reviewing a filing under Subsection (a), the
51	51	commissioner determines that the filing does not contain
52	52	information sufficient to allow the commissioner to determine if
53	53	the filed rate meets all rate standards under Section 2255.003, not
54	54	later than the 10th day after the insurer makes the filing, the
55	55	commissioner may request in writing any specific additional
56	56	information from the insurer necessary to make the determination.
57	57	(c) Not later than the 30th day after the date the
58	58	department receives an insurer's filing under Subsection (a), the
59	59	commissioner shall:
60	60	(1) if the filed rate meets all rate standards under
61	61	Section 2255.003, approve the filed rate; or
62	62	(2) if the filed rate fails to meet any rate standard
63	63	under Section 2255.003, disapprove the filed rate and issue an
64	64	order specifying in what respects the filed rate fails to comply
65	65	with the rate standards.
66	66	Sec. 2255.005. HEARING. If the commissioner disapproves a
67	67	rate under Section 2255.004(c)(2), the department shall hold a rate
68	68	hearing and the commissioner shall issue an order in accordance
69	69	with Chapter 40.
70	70	Sec. 2255.006. JUDICIAL REVIEW. (a) Not later than the
71	71	10th day after the date an insurer receives the commissioner's
72	72	order issued under Section 2255.005, the insurer may file a
73	73	petition for judicial review in a district court of Travis County.
74	74	The standard of review of the commissioner's order is substantial
75	75	evidence.
76	76	(b) During the pendency of an appeal under this section, the
77	77	insurer may charge either the insurer's existing rates or the rate
78	78	ordered by the commissioner under Section 2255.005.
79	79	Sec. 2255.007. REFUND. If on final appeal a court upholds
80	80	the commissioner's order issued under Section 2255.005, the insurer
81	81	shall refund the difference in overcharged premium, if any, plus
82	82	interest to each policyholder. The interest rate is the prime rate
83	83	for the calendar year in which the refund is issued, plus six
84	84	percent.
85	85	Sec. 2255.008. CERTAIN SETTLEMENTS PROHIBITED. If an
86	86	insurer files a petition for judicial review under Section
87	87	2255.006, the department may not agree to a settlement of the
88	88	lawsuit in any amount that is less than the amount of the refund,
89	89	including interest, that the insurer would be obligated to pay
90	90	under Section 2255.007.
91	91	Sec. 2255.009. EXPIRATION. (a) This chapter expires
92	92	September 1, 2010.
93	93	(b) The expiration of this chapter does not affect an action
94	94	or proceeding against an insurer subject to this chapter for a
95	95	failure to comply with this chapter before the expiration of this
96	96	chapter, regardless of when the action or proceeding was commenced,
97	97	and this chapter is continued in effect only for that purpose.
98	98	SECTION 1.02. This article applies to a residential
99	99	property insurance policy that is delivered, issued for delivery,
100	100	or renewed on or after the effective date of this Act and to rates
101	101	for such a policy. A residential property insurance policy
102	102	delivered, issued for delivery, or renewed before the effective
103	103	date of this Act and the rates for such a policy are governed by the
104	104	law as it existed immediately before the effective date of this Act,
105	105	and that law is continued in effect for that purpose.
106	106	ARTICLE 2. RATE REGULATION FOR RESIDENTIAL PROPERTY INSURANCE
107	107	SECTION 2.01. Subchapter D, Chapter 2251, Insurance Code,
108	108	is amended by adding Section 2251.1511 to read as follows:
109	109	Sec. 2251.1511. PRIOR APPROVAL FOR CERTAIN RESIDENTIAL
110	110	PROPERTY INSURANCE RATES. (a) An insurer may not use a rate for
111	111	residential property insurance until the rate and all other
112	112	information required by Section 2251.101 have been filed with the
113	113	department and the rate has been approved by the commissioner.
114	114	(b) Sections 2251.151(b) and (d) apply to rates filed under
115	115	this section.
116	116	(c) Section 2251.152 does not apply to rates for which prior
117	117	approval is required by this section.
118	118	SECTION 2.02. Section 2251.156(a), Insurance Code, is
119	119	amended to read as follows:
120	120	(a) If the commissioner disapproves a rate filing under
121	121	Section 2251.153(a)(2) or Section 2251.1511, the commissioner
122	122	shall issue an order disapproving the filing in accordance with
123	123	Section 2251.103(b).
124	124	SECTION 2.03. The change in law made by this article applies
125	125	only to rates for residential property insurance that is delivered,
126	126	issued for delivery, or renewed on or after January 1, 2010. Rates
127	127	for residential property insurance delivered, issued for delivery,
128	128	or renewed before January 1, 2010, are governed by the law as it
129	129	existed immediately before the effective date of this Act, and that
130	130	law is continued in effect for that purpose.
131	131	ARTICLE 3. WITHDRAWAL PLANS; RESUMPTION OF WRITING INSURANCE
132	132	SECTION 3.01. Section 827.001, Insurance Code, is amended
133	133	by adding Subdivision (3) to read as follows:
134	134	(3) "Residential property insurance" has the meaning
135	135	assigned by Section 2254.001.
136	136	SECTION 3.02. Section 827.003, Insurance Code, is amended
137	137	to read as follows:
138	138	Sec. 827.003. WITHDRAWAL PLAN REQUIRED; NOTICE. (a) An
139	139	insurer shall file with the commissioner a plan for orderly
140	140	withdrawal if the insurer proposes to:
141	141	(1) reduce the insurer's total annual premium volume
142	142	by 50 percent or more;
143	143	(2) reduce the insurer's annual premium by 75 percent
144	144	or more in a line of insurance in this state; or
145	145	(3) reduce in this state, or in any applicable rating
146	146	territory, the insurer's total annual premium volume in a line of
147	147	personal automobile or residential property insurance by 50 percent
148	148	or more.
149	149	(b) An insurer that files a withdrawal plan under Subsection
150	150	(a) must provide notice to each of the insurer's policyholders of
151	151	the intention to reduce the insurer's total annual premium volume
152	152	in this state or in any applicable rating territory in this state.
153	153	The insurer must provide the notice required by this subsection, in
154	154	the manner prescribed by the commissioner by rule, not later than
155	155	the 90th day before the date the withdrawal plan is scheduled to be
156	156	implemented by the insurer.
157	157	SECTION 3.03. Section 827.006, Insurance Code, is amended
158	158	to read as follows:
159	159	Sec. 827.006. [RESUMPTION OF] WRITING INSURANCE AFTER
160	160	COMPLETE WITHDRAWAL. An insurer that withdraws from writing
161	161	residential property [all lines of] insurance in this state may not
162	162	write any line of [, without the approval of the commissioner,
163	163	resume writing] insurance in this state before the third [fifth]
164	164	anniversary of the date of withdrawal unless the commissioner
165	165	approves the insurer to write a particular line of insurance after
166	166	determining that the line of insurance is not available to a
167	167	substantial number of policyholders or potential policyholders in a
168	168	rating territory in this state at an affordable rate.
169	169	SECTION 3.04. The change in law made by this article applies
170	170	only to a withdrawal plan filed with the Texas Department of
171	171	Insurance on or after the effective date of this Act. A withdrawal
172	172	plan filed with the Texas Department of Insurance before the
173	173	effective date of this Act is covered by the law in effect at the
174	174	time the withdrawal plan was filed, and that law is continued in
175	175	effect for that purpose.
176	176	ARTICLE 4. CREDIT SCORING
177	177	SECTION 4.01. Subchapter B, Chapter 559, Insurance Code, is
178	178	amended by adding Section 559.0511 to read as follows:
179	179	Sec. 559.0511. USE OF CREDIT INFORMATION IN WRITING CERTAIN
180	180	POLICIES PROHIBITED. (a) Notwithstanding any other provision of
181	181	this subchapter, in writing a residential property insurance
182	182	policy, an insurer may not:
183	183	(1) use an underwriting guideline that is based,
184	184	wholly or partly, on the credit information, credit report, or
185	185	credit score of an applicant for insurance coverage or any other
186	186	person other than the applicant who would be insured under a policy
187	187	of personal insurance;
188	188	(2) refuse to underwrite, cancel, or nonrenew the
189	189	policy based, wholly or partly, on the credit information, credit
190	190	report, or credit score of an applicant for insurance coverage or
191	191	any other person other than the applicant who would be insured under
192	192	the policy;
193	193	(3) take an action that results in an adverse effect
194	194	against a consumer because the consumer does not have a credit card
195	195	account;
196	196	(4) charge an applicant for the policy a higher
197	197	premium than otherwise would be charged based, wholly or partly, on
198	198	the credit information, credit report, or credit score of the
199	199	applicant or any other person other than the applicant who would be
200	200	insured under the policy;
201	201	(5) rate a risk based, wholly or partly, on the credit
202	202	information, credit report, or credit score of the applicant or any
203	203	other person other than the applicant who would be insured under the
204	204	policy, including:
205	205	(A) providing or removing a discount;
206	206	(B) assigning the applicant to a rating tier; or
207	207	(C) placing the applicant with an affiliated
208	208	company; or
209	209	(6) require a particular payment plan based, wholly or
210	210	partly, on the credit information, credit report, or credit score
211	211	of the applicant or any other person other than the applicant who
212	212	would be insured under the policy.
213	213	(b) An insurer may not consider an absence of credit
214	214	information or an inability to determine credit information for an
215	215	applicant for an insurance policy described by Subsection (a) or
216	216	insured as a factor in underwriting or rating the policy.
217	217	SECTION 4.02. (a) The changes in law made by this article
218	218	in adding Section 559.0511, Insurance Code, apply only to a
219	219	residential property insurance policy:
220	220	(1) that is delivered, issued for delivery, or renewed
221	221	on or after January 1, 2010;
222	222	(2) the application for which is submitted on or after
223	223	January 1, 2010; or
224	224	(3) that is subject to determination of denial,
225	225	cancellation, or nonrenewal on or after January 1, 2010.
226	226	(b) A residential property insurance policy delivered,
227	227	issued for delivery, or renewed before January 1, 2010, or the
228	228	application for which is submitted before January 1, 2010, is
229	229	governed by the law as it existed immediately before January 1,
230	230	2010, and that law is continued in effect for that purpose.
231	231	ARTICLE 5. EFFECTIVE DATE
232	232	SECTION 5.01. This Act takes effect September 1, 2009.