By: Watson, Lucio, Hegar S.B. No. 1655
(In the Senate - Filed March 11, 2011; March 23, 2011, read
first time and referred to Committee on Business and Commerce;
April 11, 2011, reported adversely, with favorable Committee
Substitute by the following vote: Yeas 7, Nays 0; April 11, 2011,
sent to printer.)
COMMITTEE SUBSTITUTE FOR S.B. No. 1655 By: Watson
A BILL TO BE ENTITLED
AN ACT
relating to transparency and propagation of information regarding
personal automobile and residential property insurance rates,
policies, and complaints.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. This Act shall be known as the Texas Insurance
Consumer Awareness and Affordability Act.
SECTION 2. Subchapter B, Chapter 32, Insurance Code, is
amended by adding Sections 32.024 and 32.025 to read as follows:
Sec. 32.024. TEXAS RESIDENTIAL PROPERTY INSURANCE STUDY.
(a) In this section, "residential property insurance" means
insurance against loss to real or tangible personal property at a
fixed location that is provided through a homeowners insurance
policy or residential fire and allied lines insurance policy.
(b) The department and the office of public insurance
counsel shall study:
(1) residential property insurance rates in this
state;
(2) regulatory changes with the potential to lower
residential property insurance rates over time in a sustainable
manner;
(3) practices by individual companies that have the
effect of lowering residential property insurance rates or
increasing customer satisfaction over time in a sustainable manner;
(4) other states' laws that have the effect of lowering
residential property insurance rates over time in a sustainable
manner;
(5) the impact of weather events on residential
property insurance rates in this state;
(6) in an effort to identify practices that lower
insurance rates, the similarities and differences between the
residential property insurance market and the commercial property
insurance market in this state;
(7) industry practices and regulatory changes that
encourage policyholders to learn more about the insurance market
and to actively shop for insurance alternatives, and that overcome
technological barriers facing certain consumers or groups of
consumers;
(8) industry practices and regulatory changes that
encourage mid-level and small-level carriers to compete for
increased market share and that attract new carriers to Texas;
(9) the role of general economic factors such as
inflation and changes in the costs of certain products and services
in the setting of insurance rates;
(10) the effects of fraud on insurance rates and
strategies to reduce fraud in this state;
(11) practices that increase efficiency and decrease
administrative costs in the requests for information and data by
the department and the conveyance of information and data by
companies; and
(12) the effect of the market cycle by which insurance
costs and underwriting criteria change due to economic factors on
the affordability and availability of insurance.
(c) Not later than September 1, 2012, the department and the
office of public insurance counsel shall submit to the governor,
the lieutenant governor, the speaker of the house of
representatives, and the appropriate standing committees of the
legislature a report regarding the results of the study conducted
under Subsection (b), together with any recommendations for
legislation. If joint recommendations cannot be made, the
department and the office shall list their recommendations
separately.
(d) This section expires January 1, 2013.
Sec. 32.025. TEXAS PERSONAL AUTOMOBILE INSURANCE STUDY.
(a) In this section, "personal automobile insurance" means motor
vehicle insurance coverage for the ownership, maintenance, or use
of a private passenger, utility, or miscellaneous type motor
vehicle, including a motor home, mobile home, trailer, or
recreational vehicle, that is:
(1) owned or leased by one or more individuals; and
(2) not primarily used for the delivery of goods,
materials, or services, other than for use in farm or ranch
operations.
(b) The department and the office of public insurance
counsel shall study:
(1) personal automobile insurance rates in this state;
(2) regulatory changes with the potential to lower
personal automobile insurance rates over time in a sustainable
manner;
(3) practices by individual companies that have the
effect of lowering personal automobile insurance rates or
increasing customer satisfaction over time in a sustainable manner;
(4) other states' laws that have the effect of lowering
personal automobile insurance rates over time in a sustainable
manner;
(5) in an effort to identify practices that lower
insurance rates, the similarities and differences between the
personal automobile insurance market and the commercial automobile
insurance market in this state;
(6) industry practices and regulatory changes that
encourage policyholders to learn more about the insurance market
and to actively shop for insurance alternatives, and that overcome
technological barriers facing certain consumers or groups of
consumers;
(7) industry practices and regulatory changes that
encourage mid-level and small-level carriers to compete for
increased market share and that attract new carriers to Texas;
(8) the role of general economic factors such as
inflation and changes in the costs of certain products and services
in the setting of personal automobile insurance rates;
(9) the effects of fraud on insurance rates and
strategies to reduce fraud in this state;
(10) the number of uninsured drivers in this state,
the effects they have on personal automobile insurance rates, and
strategies for reducing the number of uninsured drivers;
(11) practices that increase efficiency and decrease
administrative costs in the requests for information and data by
the department and the conveyance of information and data by
companies; and
(12) the effect of the market cycle by which insurance
costs and underwriting criteria change due to economic factors on
the affordability and availability of insurance.
(c) Not later than September 1, 2012, the department and the
office of public insurance counsel shall submit to the governor,
the lieutenant governor, the speaker of the house of
representatives, and the appropriate standing committees of the
legislature a report regarding the results of the study conducted
under Subsection (b), together with any recommendations for
legislation. If joint recommendations cannot be made, the
department and the office shall list their recommendations
separately.
(d) This section expires January 1, 2013.
SECTION 3. Section 32.103, Insurance Code, is amended to
read as follows:
Sec. 32.103. PUBLIC INFORMATION CONCERNING INTERNET
WEBSITE. The department and the office of public insurance counsel
shall publicize the existence of the Internet website required by
this subchapter in a conspicuous manner on any websites,
correspondence, or publications created by the department or the
office, as part of the program to facilitate resolution of
policyholder complaints as provided by Section 521.002.
SECTION 4. Section 32.104, Insurance Code, is amended by
amending Subsection (b) and adding Subsections (c) and (d) to read
as follows:
(b) An insurer shall provide in a conspicuous manner with
each residential property insurance or personal automobile
insurance policy issued in this state, and on any correspondence
sent from the insurer to an insured, notice of the Internet website
required by this subchapter. An insurer is not required to provide
the notice on a separate document if the notice is included on the
policy or correspondence. The commissioner shall determine the
form and content of the notice. An insurer that transacts business
electronically and provides conspicuous notice of the Internet
website required by this chapter on the insurer's website is not
required to comply with this subsection.
(c) To the extent possible, an insurance agent who sells a
residential property insurance or personal automobile insurance
policy must, at the time of the initial sale, advise the customer
verbally, electronically, or in writing of the Internet website
maintained under this subchapter.
(d) A renewal of a residential property insurance or
personal automobile insurance policy must include the location of
the department's Internet website prominently displayed on the
declarations page of the renewal policy.
SECTION 5. Section 521.052, Insurance Code, is amended to
read as follows:
Sec. 521.052. INFORMATION PROVIDED. (a) The department
shall provide to the public through the department's toll-free
telephone number only the following information:
(1) information collected or maintained by the
department relating to the number and disposition of complaints
received against an insurer that are justified, verified as
accurate, and documented as valid, expressed as a percentage of the
total number of insurance policies written by the insurer and in
force on December 31 of the preceding year;
(2) the rating of an insurer, if any, as published by a
nationally recognized rating organization;
(3) the kinds of coverage available to a consumer
through any insurer writing insurance in this state;
(4) an insurer's admitted assets-to-liabilities
ratio; and
(5) other appropriate information collected and
maintained by the department.
(b) The department shall make the information described by
Subsection (a)(1) available to the public through the department's
Internet website.
SECTION 6. Section 551.054, Insurance Code, is amended by
adding Subsections (d) and (e) to read as follows:
(d) An insurer that refuses to renew a residential property
insurance policy or a personal automobile insurance policy but
offers a different policy in the place of that policy shall provide
to the insured:
(1) a table that clearly lists the premium charged
under the original policy, the premium charged under the new
policy, and the percentage change, if any, between those amounts;
(2) an explanation, in plain language, of any changes
in the coverage under the new policy; and
(3) notice of the department's Internet website that
is designated by the department to help consumers compare premiums
and coverages of different insurers' policies.
(e) The commissioner shall adopt appropriate wording for
notice under Subsection (d).
SECTION 7. Subchapter B, Chapter 2301, Insurance Code, is
amended by adding Sections 2301.0535, 2301.0536, and 2301.0537 to
read as follows:
Sec. 2301.0535. REQUIRED INFORMATION IN RENEWAL POLICY.
(a) At the time a residential property insurance policy or a
personal automobile insurance policy is renewed, the insurer shall
provide to the insured:
(1) a table that conspicuously and clearly lists the
premium charged under the policy before renewal, the new premium
charged under the renewal policy, and the percentage change, if
any, between those amounts; and
(2) notice of the department's Internet website
designated by the department to help consumers compare premiums and
coverages of different insurers' policies.
(b) The commissioner shall adopt appropriate wording for
notice under this section.
Sec. 2301.0536. UPDATED POLICY REQUIRED. At any time there
is a change in the coverage of a residential property insurance
policy or personal automobile insurance policy, the insurer, on
request from the consumer, shall provide the consumer with an
updated declarations page and the policy form that was changed. The
insurer shall inform the insured of the insured's right to request
an updated copy of the policy that identifies the changes.
Sec. 2301.0537. STATEMENT OF DEDUCTIBLE. (a) A
residential property insurance policy, personal automobile
insurance policy, or other document that expresses a deductible as
a percentage of the coverage amount must state the actual dollar
amount of the deductible next to the percentage.
(b) If a residential property insurance policy or personal
automobile insurance policy includes an endorsement or other
provision that includes a variable deductible or a deductible with
an escalator clause, the policy or document must explain how the
deductible will be calculated and provide an example of how the
deductible will be calculated, stating the actual dollar cost for
the example.
SECTION 8. Subsection (d), Section 32.104, Subsection (d),
Section 551.054, and Sections 2301.0535, 2301.0536, and 2301.0537,
Insurance Code, as added by this Act, apply only to an insurance
policy or contract that is delivered, issued for delivery, or
renewed on or after January 1, 2012. An insurance policy or
contract delivered, issued for delivery, or renewed before January
1, 2012, 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 9. This Act takes effect September 1, 2011.
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