82R6639 KCR-D
By: Carona S.B. No. 553
A BILL TO BE ENTITLED
AN ACT
relating to the nonrenewal of, and the assessment of premium
surcharges against, certain insurance policies.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Sections 551.107(b) and (e), Insurance Code, are
amended to read as follows:
(b) A claim under this section does not include a claim:
(1) resulting from a loss caused by natural causes; or
(2) that is filed but is not paid or payable under the
policy[; or
[(3) that an insurer is prohibited from using under
Section 544.353].
(e) An insurer may notify an insured who has filed two
claims in a period of less than three years that the insurer may
refuse to renew the policy if the insured files a third claim during
the three-year period. If the insurer does not notify the insured
in accordance with this subsection, the insurer may not refuse to
renew the policy because of claims. The notice form must:
(1) list the policyholder's claims; and
(2) contain the sentence: "The filing by you of
another claim, except for a claim resulting from a loss caused by
natural causes or[,] a claim filed but not paid or payable under the
policy under which it was filed, [or an appliance-related claim
that we are prohibited from using under Section 544.353, Texas
Insurance Code,] could cause us to refuse to renew your policy."
SECTION 2. Subchapter C, Chapter 551, Insurance Code, is
amended by adding Sections 551.1071 and 551.1072 to read as
follows:
Sec. 551.1071. ELECTION OF NONRENEWAL AND SURCHARGE
PRACTICE; REPORT; CONSTRUCTION OF LAW. (a) An insurer to which
Sections 551.107 and 551.1072 apply shall elect whether the insurer
will nonrenew policies and assess surcharges in accordance with
Section 551.107 or 551.1072.
(b) An election made under this section remains in effect
until an insurer notifies the department of a change in the
insurer's election. The department shall allow an insurer an
opportunity to change the insurer's election under this section
once every three years and may not allow an insurer to change the
insurer's election more frequently.
(c) An insurer that does not make an initial election under
this section is governed by Section 551.107.
(d) Not later than January 31 of each calendar year, an
insurer that elects to nonrenew policies and assess surcharges in
accordance with Section 551.1072 shall submit a report to the
department containing the total number of policies that the insurer
refused to renew in this state, and in each county of this state, in
the calendar year immediately preceding the year in which the
report is submitted.
(e) Sections 551.107 and 551.1072 may not be construed to
limit an insurer's authority to refuse to renew an insurance policy
for a reason other than the insured's claim history.
Sec. 551.1072. RENEWAL OF CERTAIN POLICIES; PREMIUM
SURCHARGE AUTHORIZED; ALTERNATIVE PRACTICE. (a) This section
applies only to a standard fire, homeowners, or farm or ranch owners
insurance policy.
(b) A claim under this section does not include a claim that
is filed but is not paid or payable under the policy.
(c) Subject to Subsection (d), an insurer may, consistent
with the insurer's underwriting standards, refuse to renew an
insurance policy for any reason related to:
(1) the insured's claim history under the policy; or
(2) an increased risk of hazard on the property
insured under the policy.
(d) The total number of policies an insurer refuses in a
calendar year to renew under Subsection (c) may not exceed:
(1) for the entire state, two percent of the total
number of standard fire, homeowners, or farm or ranch owners
insurance policies written by the insurer in this state in the
immediately preceding calendar year; and
(2) except as provided by Subsection (e), for each
county, two percent of the total number of standard fire,
homeowners, or farm or ranch owners insurance policies written by
the insurer in the county in the immediately preceding calendar
year.
(e) An insurer may, in each calendar year, refuse to renew
one policy in each county in which the insurer writes standard fire,
homeowners, or farm or ranch owners insurance policies if the two
percent limit described by Subsection (d)(2) is an amount that is
less than one.
(f) An insurer may assess a premium surcharge at the time an
insurance policy is renewed if the insured has filed one or more
claims in the preceding three policy years. The amount of the
surcharge must be based on sound actuarial principles.
(g) In this section, "premium surcharge" has the meaning
assigned by Section 551.107.
SECTION 3. Section 2006.052(c), Insurance Code, is amended
to read as follows:
(c) A residential property insurance claim under this
section does not include a claim:
(1) resulting from a loss caused by natural causes; or
(2) that is filed but is not paid or payable under the
policy[; or
[(3) that an insurer is prohibited from using under
Section 544.353].
SECTION 4. Section 2006.0521, Insurance Code, is amended to
read as follows:
Sec. 2006.0521. COMPLIANCE WITH OTHER LAW REQUIRED. Any
change in the amount of a premium discount provided under this
subchapter must comply with the requirements of Section 551.107 or
551.1072, as applicable.
SECTION 5. Subchapter H, Chapter 544, Insurance Code, is
repealed.
SECTION 6. The change in law made by this Act applies only
to an insurance policy that is delivered, issued for delivery,
renewed, or subject to nonrenewal on or after January 1, 2012. An
insurance policy that is delivered, issued for delivery, renewed,
or subject to nonrenewal before January 1, 2012, is governed by the
law as it existed immediately before January 1, 2012, and that law
is continued in effect for that purpose.
SECTION 7. This Act takes effect September 1, 2011.