Texas House Bill HB773

Texas 2015 - 84th Regular

Caption

Relating to the use by certain insurers of forms that are not approved by the Texas Department of Insurance.

Impact

The bill's implications for state laws include the establishment of clearer liability for insurers regarding their documentation practices. Should an insurer utilize a form that contravenes the established regulations, the Commissioner will have the ability to mandate restitution for any financial damages incurred by insured parties as a result of such violations. This provision is expected to enhance consumer protection and promote fair treatment of policyholders by ensuring insurance companies adhere strictly to approved practices.

Summary

House Bill 773 seeks to amend the Insurance Code concerning the use of insurance forms that have not been approved by the Texas Department of Insurance. Specifically, it prohibits insurers from using forms which are either unapproved or disapproved by the Commissioner. This legislative move is intended to tighten compliance amongst insurers regarding the documentation they utilize, thereby ensuring that all documents conform to standards established by the Department of Insurance. Insurers would be required to cease use of any non-compliant forms immediately upon notification from the Commissioner.

Contention

While the primary aim of HB 773 is to reinforce regulatory compliance, the bill could face scrutiny over its potential impacts on policy flexibility and insurer operations. Stakeholders may express concern regarding the burden of compliance that such regulations place on smaller insurance companies, particularly in the context of adapting their forms and contracts promptly, which might lead to operational challenges. Furthermore, the ramifications for insurers who inadvertently use disapproved forms could spark debate about the adequacy of the notification process by the Texas Department of Insurance.

Implementation

If enacted, the changes introduced by HB 773 would take effect specifically on forms used to write insurance documents after its passage, while forms in use prior to this legislation would be governed by the existing laws at that time. This phased approach allows for a transition period for insurers to adjust to the new requirements. The bill seeks to establish a more organized insurance market through the enforcement of consistent form usage, aiming to reduce disputes related to form validity in coverage claims.