Texas 2009 - 81st Regular

Texas House Bill HB4658 Compare Versions

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1	1	By: Martinez Fischer H.B. No. 4658
2	2
3	3
4	4	A BILL TO BE ENTITLED
5	5	AN ACT
6	6	relating to regulation of property and casualty insurance rates,
7	7	required use by insurers of certain standard insurance policy forms
8	8	for residential property insurance, and the election of the
9	9	commissioner of insurance.
10	10	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
11	11	SECTION 1. ARTICLE 1. LEGISLATIVE FINDINGS
12	12	SECTION 1. PURPOSE AND FINDINGS. The Legislature finds
13	13	that the purchase of insurance coverage is one of the most important
14	14	purchases that Texas consumers make. The Legislature finds it is in
15	15	the public interest to promote fair competition among insurers by
16	16	requiring minimum standards of coverage, while allowing insurers to
17	17	offer enhanced and reduced coverage choices; and by requiring that
18	18	consumers be fully informed of their coverage choices. The
19	19	Legislature further finds that effective regulation to provide fair
20	20	rates that balance affordable coverage for consumers with a
21	21	reasonable rate of return to maintain insurer solvency is vital to
22	22	the financial health of the State. In addition, the Legislature
23	23	finds that direct accountability of the Commissioner of Insurance
24	24	to the voters of Texas will promote the goals of fair coverage at
25	25	fair rates.
26	26	ARTICLE 2. STANDARD FORMS
27	27	SECTION 2.01. Section 2301.008, Insurance Code, is amended
28	28	to read as follows:
29	29	Sec. 2301.008. ADOPTION AND USE OF STANDARD FORMS. (a)
30	30	The commissioner shall [may] adopt standard insurance policy forms,
31	31	printed endorsement forms, and related forms other than insurance
32	32	policy forms and printed endorsement forms, that an insurer shall
33	33	[may] use in addition to [instead of] the insurer's own forms in
34	34	writing insurance subject to this subchapter.
35	35	SECTION 2.02. Section 2301.052(b), Insurance Code, is
36	36	amended to read as follows:
37	37	(b) Subject to Section 2301.0525, an [An] insurer may
38	38	continue to use an insurance policy form or endorsement
39	39	promulgated, approved, or adopted under Article 5.06 or 5.35 before
40	40	June 11, 2003, on written notification to the commissioner that the
41	41	insurer will continue to use the form or endorsement.
42	42	SECTION 2.03. Subchapter B, Chapter 2301, Insurance Code,
43	43	is amended by adding Section 2301.0525 to read as follows:
44	44	Sec. 2301.0525. USE OF MINIMUM STANDARD INSURANCE POLICY
45	45	FORMS REQUIRED. (a) Each insurer that writes residential property
46	46	insurance in this state shall use the standard insurance policy
47	47	forms adopted by the commissioner under Section 2301.008 for
48	48	residential property insurance and, subject to Subsection (b), may
49	49	also use alternative policy forms approved by the commissioner
50	50	under Section 2301.006.
51	51	(b) An insurer may not deliver or issue for delivery in this
52	52	state a residential property insurance policy unless the insurer
53	53	informs each applicant for that insurance coverage, in the manner
54	54	prescribed by commissioner rule, that an applicant otherwise
55	55	qualified for that insurance coverage under this code may elect to
56	56	obtain residential property insurance coverage under a standard
57	57	insurance policy adopted by the commissioner under Section
58	58	2301.008.
59	59	(c) An insurer that offers coverage under the standard
60	60	policy forms shall disclose to the applicant or insured, at the time
61	61	of the initial application and each renewal, each policy limit and
62	62	type of coverage available to the insured and the respective costs
63	63	for each coverage. The form of the disclosure shall be specified by
64	64	the commissioner, subject to the provisions of Section 2301.053(c).
65	65	(d) An insurer that offers coverages under approved forms
66	66	other than the standard policy forms shall disclose to the
67	67	applicant or insured, at the time of the initial application and
68	68	each renewal, in comparison to the standard policy forms each
69	69	additional coverage that is provided and the additional cost, each
70	70	reduction in coverage or exclusion of coverage and the reduced
71	71	cost, and each policy limit and type of coverage available to the
72	72	insured and the respective costs for each coverage. The form of the
73	73	disclosure shall be specified by the commissioner, subject to the
74	74	provisions of Section 2301.053(c).
75	75	SECTION 2.04. Subchapter B, Chapter 2301, Insurance Code,
76	76	is amended by adding Section 2301.056 to read as follows:
77	77	Sec. 2301.056. REQUIRED COVERAGES. The standard insurance
78	78	policy forms adopted by the commissioner under Section 2301.008
79	79	for residential property insurance shall provide, in addition to
80	80	other coverages determined by the commissioner, the following:
81	81	(a) Wind-driven rain. Damage caused or contributed to by
82	82	wind-driven rain shall be covered.
83	83	(b) Concurrent causation. An insurer shall be liable for
84	84	damage that is caused in whole or in part by a covered cause,
85	85	whether by concurrent or sequential causation or otherwise, except
86	86	to the extent that the insurer establishes the portion of the loss,
87	87	if any, solely caused by an excluded cause.
88	88	(c) Animal injuries. Injuries to third parties caused by
89	89	pets shall be covered.
90	90	(d) Appraisal. Any right to invoke appraisal shall be
91	91	invoked within sixty (60) days after a dispute arises and not later
92	92	than sixty (60) days after suit is filed relating to the claim.
93	93	(e) Additional living expenses. Coverage for additional
94	94	living expenses shall be provided whenever the property becomes
95	95	uninhabitable, including a mandatory evacuation.
96	96	ARTICLE 3. PRIOR APPROVAL OF RATES
97	97	SECTION 3.01. Section 706.004, Insurance Code, as effective
98	98	April 1, 2009, is amended to read as follows:
99	99	Sec. 706.004. RATES AND FORMS. Notwithstanding any other
100	100	law, rates and forms for insurance coverage issued under this
101	101	chapter are governed by:
102	102	(1) Subchapters A-D [A-E], Chapter 2251;
103	103	(2) Subchapter A, Chapter 2301; and
104	104	(3) Article 5.13-2.
105	105	SECTION 3.02. Section 912.002(c), Insurance Code, as
106	106	effective April 1, 2009, is amended to read as follows:
107	107	(c) Rate regulation for a residential fire and allied lines
108	108	insurance policy written by a county mutual insurance company is
109	109	subject to Chapters 2251 and [Chapter] 2253. Rate [On and after
110	110	December 1, 2004, rate] regulation for a personal automobile
111	111	insurance policy and a residential fire and allied lines insurance
112	112	policy written by a county mutual insurance company is subject to
113	113	Article 5.13-2 and Chapter 2251. A county mutual insurance company
114	114	is subject to Chapter 2253. The commissioner may adopt rules as
115	115	necessary to implement this subsection.
116	116	SECTION 3.03. Section 1806.052, Insurance Code, is amended
117	117	to read as follows:
118	118	Sec. 1806.052. CONSTRUCTION OF SUBCHAPTER. This subchapter
119	119	may not be construed to prohibit the modification of rates by a
120	120	rating plan that complies [is filed in accordance] with the
121	121	requirements of Chapter 2251 or Article 5.13-2, as applicable,
122	122	[that has not been disapproved by the commissioner,] and that is
123	123	designed to encourage the prevention of accidents, and to account
124	124	for all relevant factors inside and outside this state, including
125	125	the peculiar hazards and experience of past and prospective
126	126	individual risks.
127	127	SECTION 3.04. Section 2151.001(2), Insurance Code, is
128	128	amended to read as follows:
129	129	(2) "Authorized insurer" means an insurer authorized
130	130	by the department to write automobile liability coverage under this
131	131	title. [Except as provided by Section 2251.204, the term does not
132	132	include a county mutual insurance company organized under Chapter
133	133	912.]
134	134	SECTION 3.05. Section 2251.003, Insurance Code, is amended
135	135	to read as follows:
136	136	Sec. 2251.003. APPLICABILITY OF CERTAIN SUBCHAPTERS.
137	137	(a) This subchapter and Subchapters B, C, D, and E apply to:
138	138	(1) an insurer to which Article 5.13 applies, other than the
139	139	Texas Windstorm Insurance Association, the FAIR Plan Association,
140	140	and the Texas Automobile Insurance Plan Association; and
141	141	(2) [except as provided by Subsection (c), a] A Lloyd's
142	142	plan, reciprocal or interinsurance exchange, and county mutual
143	143	insurance company with respect to the lines of insurance described
144	144	by Subsection (b).
145	145	(b) This subchapter and Subchapters B, C, D, and E apply to
146	146	all lines of the following kinds of insurance written under an
147	147	insurance policy or contract issued by an insurer authorized to
148	148	engage in the business of insurance in this state:
149	149	(1) general liability insurance;
150	150	(2) residential and commercial property insurance,
151	151	including farm and ranch insurance and farm and ranch owners
152	152	insurance;
153	153	(3) personal and commercial casualty insurance, except as
154	154	provided by Section 2251.004;
155	155	(4) medical professional liability insurance;
156	156	(5) fidelity, guaranty, and surety bonds other than
157	157	criminal court appearance bonds;
158	158	(6) personal umbrella insurance;
159	159	(7) personal liability insurance;
160	160	(8) guaranteed auto protection (GAP) insurance;
161	161	(9) involuntary unemployment insurance;
162	162	(10) financial guaranty insurance;
163	163	(11) inland marine insurance;
164	164	(12) rain insurance;
165	165	(13) hail insurance on farm crops;
166	166	(14) personal and commercial automobile insurance;
167	167	(15) multi-peril insurance; and
168	168	(16) identity theft insurance issued under Chapter 706.
169	169	[(c) Sections 2251.008, 2251.052, 2251.101, 2251.102,
170	170	2251.103, 2251.104, 2251.105, and 2451.107 do not apply to a
171	171	Lloyd's plan or a reciprocal or interinsurance exchange with
172	172	respect to commercial property insurance, inland marine insurance,
173	173	rain insurance, or hail insurance on farm crops.]
174	174	SECTION 3.06. Section 2251.101(a), Insurance Code, is
175	175	amended to read as follows:
176	176	(a) For [Except as provided by Subchapter D, for] risks
177	177	written in this state, each insurer shall file with the
178	178	commissioner all rates, applicable rating manuals, supplementary
179	179	rating information, and additional information as required by the
180	180	commissioner.
181	181	SECTION 3.07. The heading of Subchapter D, Chapter 2251,
182	182	Insurance Code, is amended to read as follows:
183	183	SUBCHAPTER D. PRIOR APPROVAL OF RATES [UNDER CERTAIN CIRCUMSTANCES]
184	184	SECTION 3.08. Section 2251.151, Insurance Code, is amended
185	185	to read as follows:
186	186	Sec. 2251.151. FILING OF [REQUIREMENT TO FILE] RATES FOR
187	187	PRIOR APPROVAL [UNDER CERTAIN CIRCUMSTANCES]. (a) An insurer may
188	188	not use a rate until the rate has been filed with the department in
189	189	accordance with Subchapter C and approved by the commissioner in
190	190	accordance with this subchapter.
191	191	[The commissioner by order may require an insurer to file
192	192	with the department for the commissioner's approval all rates,
193	193	supplementary rating information, and any supporting information
194	194	in accordance with this subchapter if the commissioner determines
195	195	that:
196	196	[(1) the insurer's rates require supervision because
197	197	of the insurer's financial condition or rating practices; or
198	198	[(2) a statewide insurance emergency exists.]
199	199	(b) [(a 1)] If an insurer files a petition under Subchapter
200	200	D, Chapter 36, for judicial review of an order disapproving a rate
201	201	under this chapter, the insurer must use the rates in effect for the
202	202	insurer at the time the petition is filed and may not file and use
203	203	any higher rate for the same line of insurance subject to this
204	204	chapter before the matter subject to judicial review is finally
205	205	resolved unless the insurer, in accordance with this subchapter,
206	206	files the new rate with the department, along with any applicable
207	207	supplementary rating information and supporting information, and
208	208	obtains the commissioner's approval of the rate.
209	209	(c) [(b)] From the date a [of the filing of the] rate is
210	210	filed with the department under this section to the effective date
211	211	of the new rate, the insurer's previously approved [filed] rate
212	212	that is in effect on the date of the filing remains in effect.
213	213	[(c) The commissioner may require an insurer to file the
214	214	insurer's rates under this section until the commissioner
215	215	determines that the conditions described by Subsection (a) no
216	216	longer exist.]
217	217	(d) For purposes of this section, a rate is filed with the
218	218	department on the date the department receives the rate filing.
219	219	[(e) If the commissioner requires an insurer to file the
220	220	insurer's rates under this section, the commissioner shall issue an
221	221	order specifying the commissioner's reasons for requiring the rate
222	222	filing. An affected insurer is entitled to a hearing on written
223	223	request made to the commissioner not later than the 30th day after
224	224	the date the order is issued.]
225	225	SECTION 3.09. Section 2251.152, Insurance Code, is
226	226	repealed.
227	227	SECTION 3.10. Section 2251.156, Insurance Code, is amended
228	228	to read as follows:
229	229	Sec. 2251.156. RATE FILING DISAPPROVAL BY COMMISSIONER;
230	230	HEARING. (a) If the commissioner disapproves a rate filing under
231	231	this chapter [Section 2251.153(a)(2)], the commissioner shall
232	232	issue an order specifying in what respects the filing fails to meet
233	233	the requirements of this chapter [disapproving the filing in
234	234	accordance with Section 2251.103(b)].
235	235	(b) An insurer whose rate filing is disapproved is entitled
236	236	to a hearing on written request made to the commissioner not later
237	237	than the 30th day after the date the order disapproving the rate
238	238	filing takes effect [in accordance with Section 2251.103(c)].
239	239	ARTICLE 4. ELECTION OF INSURANCE COMMISSIONER.
240	240	SECTION 4.01. Section 31.022, Insurance Code, is amended to
241	241	read as follows:
242	242	Sec. 31.022. ELECTION [APPOINTMENT; TERM]. The
243	243	commissioner is elected by the qualified voters at the general
244	244	election for state and county officers for a term of four years.
245	245	[(a) The governor, with the advice and consent of the senate, shall
246	246	appoint the commissioner. The commissioner serves a two-year term
247	247	that expires on February 1 of each odd-numbered year.
248	248	[(b) The governor shall appoint the commissioner without
249	249	regard to the race, color, disability, sex, religion, age, or
250	250	national origin of the appointee.]
251	251	SECTION 4.02. Section 31.024, Insurance Code, is amended to
252	252	read as follows:
253	253	Sec. 31.024. INELIGIBILITY FOR PUBLIC OFFICE. The
254	254	commissioner is ineligible to be a candidate for another [a] public
255	255	elective office in this state, unless the commissioner has resigned
256	256	and the governor has accepted the resignation.
257	257	SECTION 4.03. Section 31.027(a), Insurance Code, is amended
258	258	to read as follows:
259	259	(a) It is a ground for removal from office if the
260	260	commissioner:
261	261	(1) [does not have at the time of appointment the
262	262	qualifications required by Section 31.023;
263	263	[(2) does not maintain during service as commissioner
264	264	the qualifications required by Section 31.023;
265	265	[(3)] violates a prohibition established by Section
266	266	33.001, 33.003, 33.004, or 33.005; or
267	267	(2) [(4)] cannot, because of illness or disability,
268	268	discharge the commissioner's duties for a substantial part of the
269	269	commissioner's term.
270	270	SECTION 4.04. Section 52.092(c), Election Code, is amended
271	271	to read as follows:
272	272	(c) Statewide offices of the state government shall be
273	273	listed in the following order:
274	274	(1) governor;
275	275	(2) lieutenant governor;
276	276	(3) attorney general;
277	277	(4) comptroller of public accounts;
278	278	(5) commissioner of the General Land Office;
279	279	(6) commissioner of agriculture;
280	280	(7) commissioner of insurance;
281	281	(8) railroad commissioner;
282	282	(9) [(8)] chief justice, supreme court;
283	283	(10) [(9)] justice, supreme court;
284	284	(11) [(10)] presiding judge, court of criminal
285	285	appeals;
286	286	(12) [(11)] judge, court of criminal appeals.
287	287	SECTION 4.05. Section 504.401(d), Transportation Code, is
288	288	amended to read as follows:
289	289	(d) In this section, "state official" means:
290	290	(1) a member of the legislature;
291	291	(2) the governor;
292	292	(3) the lieutenant governor;
293	293	(4) a justice of the supreme court;
294	294	(5) a judge of the court of criminal appeals;
295	295	(6) the attorney general;
296	296	(7) the commissioner of the General Land Office;
297	297	(8) the comptroller;
298	298	(9) a member of the Railroad Commission of Texas;
299	299	(10) the commissioner of agriculture;
300	300	(11) the commissioner of insurance;
301	301	(12) the secretary of state; or
302	302	(13) [(12)] a member of the State Board of Education.
303	303	SECTION 4.07. Sections 31.023 and 33.002, Insurance Code,
304	304	are repealed.
305	305	ARTICLE 5. ELECTION DATE; EFFECTIVE DATE.
306	306	SECTION 5.01. (a) The first general election for
307	307	commissioner of insurance shall be held November 2, 2010, for a
308	308	two-year term beginning on January 1, 2011. Thereafter, the
309	309	commissioner of insurance shall be elected to serve a four-year
310	310	term.
311	311	(b) Until the first commissioner of insurance elected under
312	312	this Act takes office, the commissioner serving on the effective
313	313	date of this Act shall, unless otherwise removed as provided by law,
314	314	continue in office under the prior law that governed the office, and
315	315	that prior law is continued in effect for that purpose. If on
316	316	January 1, 2011, there is a vacancy in the office of commissioner of
317	317	insurance created under this Act because the first
318	318	commissioner-elect has died or refuses or is permanently unable to
319	319	serve, the commissioner serving on that date shall, unless
320	320	otherwise removed as provided by law, continue in office under the
321	321	prior law that governed the office until the governor fills the
322	322	vacancy by appointment in the manner provided by law. The prior law
323	323	that governed the office of the commissioner of insurance is
324	324	continued in effect for that purpose.
325	325	SECTION 5.02. This Act takes effect September 1, 2009,
326	326	except as otherwise provided.
327	327	SECTION 5.03. The commissioner of insurance shall adopt all
328	328	rules necessary to implement this Act on or before December 1, 2009.
329	329	SECTION 5.04. The change in law made by this Act applies to
330	330	insurance policies delivered, issued for delivery, or renewed on or
331	331	after January 1, 2010, and to rates for those policies. An insurance
332	332	policy delivered, issued for delivery, or renewed before January 1,
333	333	2010, and rates for the policy are governed by the law as it existed
334	334	immediately before the effective date of this Act, and that law is
335	335	continued in effect for that purpose.