82R7664 TJS-F
By: Davis S.B. No. 1064
A BILL TO BE ENTITLED
AN ACT
relating to the collection and use of certain information by
certain insurers; providing administrative penalties.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subtitle A, Title 10, Insurance Code, is amended
by adding Chapter 1811 to read as follows:
CHAPTER 1811. DATA MINING AND PATTERN RECOGNITION
Sec. 1811.001. DEFINITIONS. In this chapter, "insurer,"
"personal automobile insurance," and "residential property
insurance" have the meanings assigned by Section 2301.051.
Sec. 1811.002. COLLECTION OF INFORMATION CONCERNING DATA
MINING AND PATTERN RECOGNITION. (a) The commissioner by rule
shall require an insurer that writes personal automobile insurance
or residential property insurance in this state to report to the
department concerning:
(1) technologies to be used by the insurer to identify
relationships among variables that are used to predict differences
in expected losses of covered persons and perils or applicants for
coverage or are otherwise used in the activities of regulated
entities; and
(2) the manner in which the insurer intends to use the
relationships derived from the technologies described by
Subdivision (1) in:
(A) underwriting and creating and defining risk
classifications;
(B) setting rates and premiums, as applicable;
(C) detecting fraudulent claims;
(D) identifying subrogation opportunities;
(E) improving marketing; or
(F) performing other activities identified by
the commissioner.
(b) In exercising the commissioner's authority under this
section, the commissioner shall require that insurers report
specific uses of relationships derived from the technologies.
(c) Underwriting guidelines and related information
obtained by the commissioner under this section are subject to
Section 38.003. Other information obtained under this section is
commercial information not subject to the disclosure requirements
of Chapter 552, Government Code.
Sec. 1811.003. ADMINISTRATIVE PENALTIES. If the department
determines that an insurer has violated this chapter or a rule
adopted under this chapter, the department shall assess
administrative penalties against the insurer in the manner provided
by Chapter 84. The amount of an administrative penalty imposed
under this section shall be based on:
(1) the seriousness of the violation, including the
nature, circumstances, extent, or gravity of the violation; and
(2) the economic harm caused by the violation.
Sec. 1811.004. REPORT TO LEGISLATURE. The department shall
include in its biennial report to the legislature under Section
32.022 information concerning the use of relationships derived from
the technologies described by Section 1811.002 by insurers. The
information must include the impact of the use of those
relationships on insurance and other coverage to covered persons
and perils and applicants for coverage in this state. The report
must include, as applicable, recommendations for proposed
legislation appropriate to regulate the use of relationships
derived from the technologies and means to facilitate availability
of insurance in underserved markets.
SECTION 2. (a) In this section, "department" means the
Texas Department of Insurance.
(b) The department shall conduct a study of:
(1) technologies such as statistical techniques,
devices, or models that may be used by or on behalf of an insurer
that writes personal automobile insurance or residential property
insurance in this state to establish new classifications or to
change methods of classification for rating, tiering, or
underwriting; and
(2) the manner in which insurers use the relationships
derived from the technologies described by Subdivision (1) in:
(A) predicting differences in expected losses of
covered persons and perils or applicants for coverage;
(B) underwriting and creating and defining risk
classifications or changing a method of classification;
(C) setting or determining rates and premiums; or
(D) using classifications or a change in a method
of classification to deny coverage, limit coverage, or refuse to
renew or cancel coverage under personal automobile or residential
property insurance policies.
(c) The department shall include the results of the study
conducted under this section in the biennial report to the 83rd
Legislature made under Section 32.022, Insurance Code. The report
must describe the impact that the use of the relationships derived
from technologies described by Subsection (b) of this section has
on insurance, policyholders, and applicants for insurance in this
state, and may include recommendations for proposed legislation
appropriate to regulate or mitigate the use of those technologies.
SECTION 3. 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, 2011.