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.