Office of House Bill AnalysisH.B. 1613
By: Burnam


Enacted in 1991, Article 5.07-1 of the Insurance Code is intended to
provide Texans freedom of choice under auto insurance policies when
repairing damage to their vehicles.  In 1997, the legislature enacted H.B.
423, which specified unacceptable practices by insurance companies and
required disclosure to consumers of their right of choice under state law.
The Texas Department of Insurance was authorized to promulgate rules
regarding notice of the article and fraudulent activities. In spite of
these protections, the steering of business by insurance companies to
"preferred" shops still occurs.  H.B. 1613 further clarifies freedom of
choice requirements in the repair of autos covered by insurance policies. 


It is the opinion of the Office of House Bill Analysis that this bill does
not expressly delegate any additional rulemaking authority to a state
officer, department, agency, or institution. 


SECTION 1.  Amends Article 5.07-1, Insurance Code, as follows: (a)
Prohibits a person subject to this article to this article, rather than an
insurer, from limiting its liability for a third-party claimant's property
repairs by recommending or requiring a particular brand, rather than by
specifying the type, kind, age, vendor, supplier, or condition of the parts
or products used to repair the motor vehicle. Makes a conforming change. 

(b)  Prohibits a person subject to this article from soliciting or
accepting a referral fee, gratuity, or other form of compensation for
referring a beneficiary or third-party claimant to a repair person of
facility for repairs.  Prohibits a person subject to this article from
communicating to a beneficiary that, for the damage repair or parts
replacement to be covered by the policy, a beneficiary is required or
encouraged to use a specific repair person or facility identified on a
list, rather than a preferred list, of repair persons and facilities
maintained or compiled by a person subject to this article.  Prohibits a
person subject to this article from restricting a beneficiary's right to
choose a repair person by threatening to remove the beneficiary's or
claimant's motor vehicle from a repair person or facility selected by the
beneficiary or claimant for any reason.  Prohibits a person subject to this
article from communicating to a beneficiary or a third party claimant that
a repair work is guaranteed by a person other than the person or facility
that performs the damage repairs; or alternative communicating that direct
billed transportation coverage is allowed following the filing of a claim
only if the damaged motor vehicle is repaired by a repair person or
facility selected by the insurer or insurer's agent.  Makes conforming and
nonsubstantive changes. 

(c)  Prohibits a person from prohibiting a repair person or facility from
providing a beneficiary or third-party claimant with any information
relative to the damage repairs of the beneficiary or the claimant.  Deletes
text authorizing a contract between an insurer and a repair person to
result in a reduction of coverage under the insured's auto insurance

(d)  Requires a person subject to this article, rather than an insurer or
insurance adjuster  or other person in connection with a claim for damage
repair to provide the beneficiary or third-party claimant notice of the
provisions of this article.  Redesignates existing Subsection (d) to (c). 

(e)  Adds a consumer group and a representative of a consumer group to the
beneficiaries authorized to submit a written complaint to the department
with respect to an alleged violation.  Redesignated from existing
Subsection (f). 

(f)  Deletes text authorizing the commissioner to exercise the rule making
authority with respect to fraudulent activity.  Makes conforming changes.
Redesignated from existing Subsection (g). 

Redesignates existing Subsection (i) to (g).

(h)  Requires a person who uses or references survey data to influence
persons engaged in collision repair, policy holders, or third-party
claimants to ensure that survey data was obtained by statistically sound
methods, to publish a report that contains the criteria used for the survey
and divides the results of the survey by each market surveyed, and to
provide a copy of the report to the commissioner and each person surveyed. 

(i) Provides that this article applies to the enumerated entities.

(j)  Provides that a person commits an unfair and deceptive act or practice
in the business of insurance if the person violates Subsection (b) and is
subject to each penalty or other sanction provided by Article 21.21 (Unfair
Competition and Unfair Practices), Insurance Code. 

(k)  Defines "communicate,"and "survey data."

SECTION 2.  Effective date: September 1, 1999.

SECTION 3.  Emergency clause.