By: Hegar S.B. No. 1074
A BILL TO BE ENTITLED
AN ACT
relating to electronic transmission of documentation involved in
certain insurance transactions.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 35.001, Insurance Code, is amended by
amending Subdivision (2) and adding Subdivisions (3), (4), and (5)
to read as follows:
(2) "Regulated entity" means each insurer, [or other]
organization, person, or program regulated by the department,
including:
(A) a domestic or foreign, stock or mutual, life,
health, or accident insurance company;
(B) a domestic or foreign, stock or mutual, fire
or casualty insurance company;
(C) a Mexican casualty company;
(D) a domestic or foreign Lloyd's plan;
(E) a domestic or foreign reciprocal or
interinsurance exchange;
(F) a domestic or foreign fraternal benefit
society;
(G) a domestic or foreign title insurance
company;
(H) an attorney's title insurance company;
(I) a stipulated premium company;
(J) a nonprofit legal service corporation;
(K) a health maintenance organization;
(L) a statewide mutual assessment company;
(M) a local mutual aid association;
(N) a local mutual burial association;
(O) an association exempt under Section 887.102;
(P) a nonprofit hospital, medical, or dental
service corporation, including a company subject to Chapter 842;
(Q) a county mutual insurance company; [and]
(R) a farm mutual insurance company; and
(S) an agency or agent of an insurer,
organization, person, or program described by this subdivision.
(3) "Deliver by electronic means" means:
(A) deliver to an e-mail address at which a party
has consented to receive notices, documents, or information; or
(B) post on an electronic network or Internet
website accessible by an electronic device, including a computer,
mobile device, or tablet, and deliver notice of the posting to an
e-mail address at which the party has consented to receive notices.
(4) "Party" means a recipient, including an applicant,
insured, policyholder, enrollee, or annuity contract holder, of a
notice or document or of information required as part of an
insurance transaction.
(5) "Written communication" means a notice or document
or other information provided in writing.
SECTION 2. Section 35.004, Insurance Code, is amended to
read as follows:
Sec. 35.004. MINIMUM STANDARDS FOR REGULATED ENTITIES
ELECTRONICALLY CONDUCTING BUSINESS WITH CONSUMERS. (a) This
section does not apply to a notice of cancellation or termination of
health insurance or benefits or life insurance or benefits,
excluding annuities.
(b) Subject to Subsection (d), a notice to a party or other
written communication with a party required in an insurance
transaction or that is to serve as evidence of insurance coverage
may be delivered, stored, and presented by electronic means only if
the delivery, storage, or presentment complies with Chapter 322,
Business & Commerce Code.
(c) Delivery of a written communication in compliance with
this section is equivalent to any delivery method required by law,
including delivery by first class mail, first class mail, postage
prepaid, or certified mail.
(d) A written communication may be delivered by electronic
means to a party by a regulated entity under this section if:
(1) the party affirmatively consented to delivery by
electronic means and has not withdrawn the consent;
(2) the party, before giving consent, is provided with
a clear and conspicuous statement informing the party of:
(A) any right or option the party may have for the
written communication to be provided or made available in paper or
another nonelectronic form;
(B) the right of the party to withdraw consent
under this section and any conditions or consequences imposed if
consent is withdrawn;
(C) whether the party's consent applies:
(i) only to a specific transaction for
which the written communication must be given; or
(ii) to identified categories of written
communications that may be delivered by electronic means during the
course of the relationship between the party and the regulated
entity;
(D) the means, after consent is given, by which a
party may obtain a paper copy of a written communication delivered
by electronic means; and
(E) the procedure a party must follow to:
(i) withdraw consent under this section;
and
(ii) update information needed for the
regulated entity to contact the party electronically; and
(3) the party:
(A) before giving consent, is provided with a
statement identifying the hardware and software requirements for
the party's access to and retention of a written communication
delivered by electronic means; and
(B) consents electronically or confirms consent
electronically in a manner that reasonably demonstrates that the
party can access a written communication in the electronic form
used to deliver the communication.
(e) After consent of the party is given, in the event a
change in the hardware or software requirements to access or retain
a written communication delivered by electronic means creates a
material risk that the party may not be able to access or retain a
subsequent written communication to which the consent applies, the
regulated entity shall:
(1) provide the party with a statement:
(A) identifying the revised hardware and
software requirements for access to and retention of a written
communication delivered by electronic means; and
(B) disclosing the right of the party to withdraw
consent without the imposition of any condition or consequence that
was not disclosed under Subsection (d)(2)(B); and
(2) comply with Subsection (d)(3).
(f) This section does not affect requirements for content or
timing of any required written communication.
(g) If a written communication provided to a party expressly
requires verification or acknowledgment of receipt, the written
communication may be delivered by electronic means only if the
method used provides for verification or acknowledgment of receipt.
(h) The legal effectiveness, validity, or enforceability of
any contract or policy of insurance executed by a party may not be
denied solely due to the failure to obtain electronic consent or
confirmation of consent of the party in accordance with Subsection
(d)(3)(B).
(i) A withdrawal of consent by a party does not affect the
legal effectiveness, validity, or enforceability of a written
communication delivered by electronic means to the party before the
withdrawal of consent is effective. A withdrawal of consent is
effective within a reasonable period of time after the date of the
receipt by the regulated entity of the withdrawal. Failure by a
regulated entity to comply with Subsection (e) may be treated by the
party as a withdrawal of consent.
(j) If the consent of a party to receive a written
communication by electronic means is on file with a regulated
entity before January 1, 2014, and if the entity intends to deliver
to the party written communications under this section, then before
the entity may deliver by electronic means additional written
communications, the entity must notify the party of:
(1) the written communications that may be delivered
by electronic means that were not previously delivered by
electronic means; and
(2) the party's right to withdraw consent to have
written communications delivered by electronic means.
(k) Except as otherwise provided by law, an oral
communication or a recording of an oral communication may not
qualify as a written communication delivered by electronic means
for purposes of this chapter.
(l) If a signature on a written communication is required by
law to be notarized, acknowledged, verified, or made under oath,
the requirement is satisfied if the electronic signature of the
notary public or other authorized person and the other required
information are attached to or logically associated with the
signature or written communication. [RULES. (a) The commissioner
shall adopt rules necessary to implement and enforce this chapter.
[(b) The rules adopted by the commissioner under this
section must include rules that establish minimum standards with
which a regulated entity must comply in the entity's electronic
conduct of business with other regulated entities and consumers.]
SECTION 3. Chapter 35, Insurance Code, is amended by adding
Section 35.005 to read as follows:
Sec. 35.005. EXEMPTION FROM CERTAIN FEDERAL LAWS. This
chapter modifies, limits, or supersedes the provisions of the
federal Electronic Signatures in Global and National Commerce Act
(15 U.S.C. Section 7001 et seq.) as authorized by Section 102 of
that Act (15 U.S.C. Section 7002).
SECTION 4. This Act applies only to a written communication
that is delivered by electronic means on or after January 1, 2014.
A written communication delivered by electronic means before
January 1, 2014, 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 5. This Act takes effect September 1, 2013.