HBA-TYH C.S.H.B. 2501 76(R)BILL ANALYSIS


Office of House Bill AnalysisC.S.H.B. 2501
By: Moreno, Joe
Insurance
4/29/1999
Committee Report (Substituted)



BACKGROUND AND PURPOSE 

Under current law, an insurance company may use the fact that an individual
was previously insured by a county mutual insurance company as an
underwriting guideline for a personal automobile insurance policy.
C.S.H.B. 2501 prohibits a motor vehicle insurer from using an underwriting
guideline that rejects or limits insurance coverage based solely on whether
an applicant for insurance has had prior motor vehicle insurance coverage
written by a nonstandard insurer. 

RULEMAKING AUTHORITY

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 BY SECTION ANALYSIS

SECTION 1.  Amends Subchapter B, Chapter 21, Insurance Code, by adding
Article 21.21-12, as follows: 
 
Art. 21.21-12.  PROHIBITION ON USE IN MOTOR VEHICLE INSURANCE OF
UNDERWRITING GUIDELINES BASED ON CERTAIN PREVIOUS COVERAGE 
 
Sec. 1.  DEFINITIONS.  Defines "insurer," "nonstandard insurer," and
"underwriting guideline." 
  
Sec. 2.  APPLICATION.  Provides that this article applies to a personal
automobile insurance policy.  
 
Sec. 3.  PROHIBITION; EXEMPTION.  Prohibits an insurer from using an
underwriting guideline that rejects or limits insurance coverage based
solely on whether an applicant for insurance has had prior motor vehicle
insurance coverage written by a nonstandard insurer.  
 
Sec. 4.  PENALTY.  Provides that an insurer who violates this article
commits an unfair practice in violation of Article 21.21 (Unfair
Competition and Unfair Practices) of this code and is subject to the
penalties imposed under that article. 

SECTION 2.  Makes application of this Act prospective, as of January 1,
2000. 

SECTION 3.  Effective date: September 1, 1999.

SECTION 4.  Emergency clause.

COMPARISON OF ORIGINAL TO SUBSTITUTE

C.S.H.B. 2501 differs from the original bill in SECTION 1 by including a
surplus lines insurer among the types of insurers defined by Section 1 of
proposed Article 21.21-12, Insurance Code, as "nonstandard insurers." 


 The substitute also differs from the original in Section 1 of proposed
Article 21.21-12, Insurance Code, by redefining "underwriting guideline" to
expand its meaning.  Under the substitute, "underwriting guideline" means a
rule, standard, marketing decision, or practice, whether written, oral, or
electronic, that is used by an insurer or its agent to: examine, bind,
accept, reject, renew, nonrenew, cancel or limit insurance coverage made
available to groups of consumers of insurance; classify risks for insurance
coverage; or charge different rates for the same insurance coverage. Under
the original, "underwriting guideline" means a rule, standard, marketing
decision, or practice that is used by an insurer or its agent to examine,
bind, accept, reject, cancel or limit insurance coverage to groups of
consumers of insurance.