HBA-ATS H.B. 2793 76(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 2793 By: Gutierrez Insurance 4/9/1999 Introduced BACKGROUND AND PURPOSE The Texas Motor Vehicle Safety Responsibility Act prohibits a person from operating a motor vehicle in Texas unless financial responsibility is established for that vehicle through a motor vehicle liability insurance policy, or by other enumerated means. Nevertheless, it is estimated that as many as one of four motorists drives without liability insurance. Uninsured motorists circumvent the system by various means. Some purchase an insurance policy solely to have their vehicle registered. Once the vehicle is registered, they cancel the policy. Others purchase fraudulent proof-of-insurance cards based on nonexistent insurance or on actual policies backdated to show coverage. Proof-ofinsurance cards may not be an effective method to verify proof of financial responsibility. H.B. 2793 requires the Department of Public Safety (department) to establish the Motor Vehicle Insurance Verification Program (program) to verify compliance with the Motor Vehicle Safety Responsibility Act. Under this bill, the department administers the program with a designated agent that develops and maintains a computer database to manage and provide access to information. The database consists of motor vehicle insurance information provided by insurers. This information is compared against all current motor vehicle registrations provided by the Texas Department of Transportation (TxDOT). If a motor vehicle is not insured, the agent must mail a notice to the vehicle's owner informing the owner to present proof of financial responsibility by various means. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that rulemaking authority is expressly delegated to the Department of Public Safety in SECTIONS 1 (Sections 601.441 and 601.447, Insurance Code), 3 (Section 502.1715, Transportation Code), and 7 and to the Texas Department of Transportation in SECTION 3 (Section 502.1715, Transportation Code) of this bill. SECTION BY SECTION ANALYSIS SECTION 1. Amends Chapter 601, Transportation Code, by adding Subchapter N, as follows: SUBCHAPTER N. MOTOR VEHICLE INSURANCE VERIFICATION PROGRAM; INSURER REPORTING Sec. 601.440. DEFINITIONS. Defines "database," "designated agent," and "program." Sec. 601.441. ESTABLISHMENT OF PROGRAM. Requires the Department of Public Safety (department) to establish the Motor Vehicle Insurance Verification Program (program) to verify compliance with this chapter (Motor Vehicle Safety Responsibility Act). Requires the department, by rule, to administer the program with a designated agent. Sets forth that the program must comply with the Driver's Privacy Protection Act of 1994 (18 U.S.C. Section 2721 et seq.). Sec. 601.442. DESIGNATED AGENT; MAINTENANCE OF DATABASE. Requires the department to contract with a third party to act as the department's designated agent (agent). Authorizes the contract to be awarded under a competitive bid procedure. Prohibits the contract from obligating the department to pay more money than is determined by the public safety director from fees collected under Section 502.1715. Requires the agent to develop and maintain a computer database to manage and provide access to information provided under Sections 601.444, 601.445, and 601.446. Requires that the database be developed, maintained, and administered to permit efficient access by courts and state and local law enforcement agencies. Sec. 601.443. VERIFICATION; NOTICE FOR NONCOMPLIANCE. (a) Requires the agent, at least monthly, to update the database with the motor vehicle insurance (insurance) information provided by insurers under Section 601.444 and compare all current motor vehicle registrations provided by the Texas Department of Transportation (TxDOT) against the database. (b) Authorizes the department, if a motor vehicle is not insured, to direct that the agent mail a notice to the vehicle's owner stating that the owner has 45 days to provide: _proof of the owner's financial responsibility in a form described by Section 601.053 (Evidence of Financial Responsibility); _a letter from an insurance agent or company verifying that the person had the required insurance coverage on the date of action specified by the database query; _proof of an exemption from the owner's financial responsibility under Section 601.052 (Exceptions to Financial Responsibility Requirement); or _proof that the vehicle's owner is insured by an insurance company located in another state because the owner is a member of the United States armed forces, a student attending an educational institution in this state and residing in this state, or a faculty member of an educational institution in this state who is residing in this state. (c) Authorizes the department to direct the agent to provide an additional notice if a vehicle's owner has not provided proof of financial responsibility to the agent by the 45th day after the notice is sent. Sec. 601.444. INFORMATION PROVIDED BY INSURANCE COMPANY. Requires each motor vehicle liability insurer in this state to provide the agent a record of each insurance policy, including certain information that identifies the insurance policy, driver, and vehicle. Requires each insurer to provide the required information to the agent in an electronic submission monthly or more frequently. Requires the insurer, if the information it provides is incorrect, to provide corrected information to the agent in a timely manner after the insurer receives notice of the error from the agent. Provides that the required information provided by an insurer remains its property and prohibits the information from being sold or made available except to enforce a state law. Sec. 601.445. INFORMATION PROVIDED BY DEPARTMENT. Requires the department to provide the agent certain information on each Texas driver's license holder. Requires the department, for each motor vehicle covered by a bond filed under Section 601.121 (Surety Bond), a deposit made under Section 601.123 (Deposit of Cash or Cashier's Check With County Judge), or a certificate of self-insurance issued under Section 601.124 (Self-Insurance), to provide to the agent certain information about the owner. Requires the department to notify the agent of the cancellation of the surety bond or the cash or check deposit or the termination of the certificate of self-insurance. Sets forth that this section does not require the department to provide to the agent information that it does not possess. Requires the department to provide the information under this section in an electronic submission to the agent in a timely manner. Provides that the department is not liable to any person for damages arising as a result of providing information as required by this section. Sec. 601.446. INFORMATION PROVIDED BY TEXAS DEPARTMENT OF TRANSPORTATION. Requires TxDOT to provide the department or its agent information, for each vehicle to which this chapter applies, about the vehicle and its owner. Provides that TxDOT is not required to provide information under this section about a vehicle registered under Subchapter G (Temporary Registration), Chapter 502 (Registration of Vehicles). Requires TxDOT to provide the information under this section and each change to information previously provided under this section in a report that includes the information for registrations and changes occurring during the week preceding the date of the report. Requires TxDOT to provide by electronic submission to the department or its agent any information required under this section in a timely manner. Sec. 601.447. RULES. Authorizes the department to adopt rules as necessary to implement this subchapter. Requires the department to consult with TxDOT about rules that affect the reporting of information relating to vehicle registrations. Authorizes the department, by rule, to waive a requirement that particular information be provided to the agent if the department finds that the information is not useful for enforcing this chapter or that the burden of collecting or reporting the information is not justified by its value in enforcing this chapter. Sec. 601.448. INFORMATION REMAINS PROPERTY OF AGENCIES. Sets forth that information provided by both the department and TxDOT under Sections 601.445 and 601.446 respectively, remains the property of each agency, is prohibited from being sold or made available, except to enforce a state law, and is confidential and not subject to disclosure under Chapter 552 (Public Information), Government Code. Sec. 601.449. LIABILITY OF CERTAIN OFFICERS, EMPLOYEES, AND AGENTS. Specifies that an officer or employee of an insurer, an officer, employee, or agent of the department, or an officer, employee, agent, or statutory agent of TxDOT is not liable in a civil action for an act performed in good faith in providing information in compliance with this subchapter. Sec. 601.450. VIOLATION; ADMINISTRATIVE SANCTIONS. (a) Sets forth that violation of this subchapter by an insurer is a ground for an administrative sanction by the commissioner of insurance (commissioner) under Articles 1.10 (Duties of the Department) and 1.10E (Administrative Penalties), Insurance Code, including the revocation of the company's certificate of authority to engage in the business of insurance in this state. Authorizes the commissioner to assess an administrative penalty against that insurer in an amount not to exceed $250 for each policy involved for each day of noncompliance. (b) Requires the commissioner, within 10 days after the commissioner determines a violation has occurred, to send by certified mail a notice of the determination to the insurer involved with a statement of the right of the insurer to a hearing relating to the alleged violation and the amount of the penalty. (c) Authorizes the insurer, within 20 days after the report is sent, to make a written request for a hearing or to remit the amount of the administrative penalty to the Texas Department of Insurance (TDI). Sets forth that failure to request a hearing or to remit the amount of the administrative penalty within the time provided waives the right to a hearing. Requires the insurer charged, within 30 days after the notice is received, to pay the administrative penalty in full or, if the insurer wishes to contest the amount of the penalty or the violation, forward the amount of the penalty assessed to TDI for deposit in an escrow account. (d) Requires TDI to return the appropriate amount to the insurer charged with the violation by the 30th day after the determination becomes final if it is determined that a violation did not occur or that the amount of the penalty should be reduced. Sec. 601.451. VIOLATION; CRIMINAL PENALTY. Creates an offense punishable as a Class A misdemeanor for a person who knowingly releases information maintained by the department or its agent under this subchapter except to enforce a state law. SECTION 2. Amends Section 502.104, Transportation Code, to include a fee collected under Section 502.1715 among the fees that compose the amount that a county assessor-collector is required to send to TxDOT on each Monday. SECTION 3. Amends Subchapter D, Chapter 502, Transportation Code, by adding Section 502.1715, as follows: Sec. 502.1715. ADDITIONAL FEE FOR EVIDENCE OF FINANCIAL RESPONSIBILITY SYSTEM. Requires an applicant for registration or renewal of registration of a motor vehicle for which the owner is required to submit evidence of financial responsibility under Section 502.153 to pay a fee of $3. Requires fees to be deposited to the credit of the state highway fund. Requires TxDOT to use money appropriated from the state highway fund that represents those fees to administer Subchapter N, Chapter 601, and to reimburse the department for expenses in administering that subchapter. Requires TxDOT and the department to adopt rules and develop forms necessary to administer this section. SECTION 4. Effective date: September 1, 1999. SECTION 5. Requires the department to appoint a technical advisory committee to assist the department in developing the initial rules required for implementation of Subchapter N, Chapter 601, Transportation Code, as soon as practicable after the effective date of this Act. Provides that this committee must include representatives of the affected insurers and representatives of TxDOT. Requires this committee to prepare recommended rules for consideration by the department by April 1, 2000. Establishes September 1, 2000, as the date this section expires and the date the technical advisory committee is abolished. SECTION 6. Requires the department, by September 1, 2000, to contract with an entity to serve as its agent under Subchapter N, Chapter 601, Transportation Code, and to adopt any rules necessary to implement Subchapter N, Chapter 601, Transportation Code. Sets forth that a motor vehicle insurance company is not required to report under Section 601.444, Transportation Code, before September 1, 2000, except that the department, by rule, is authorized to designate, by market share, premium volume, or another similar characteristic, smaller motor vehicle insurance companies that are not required to report under Section 601.444, Transportation Code, before September 1, 2001. Provides that the department is not required to report under Sections 601.445(b) and (c), Transportation Code, before September 1, 2000. SECTION 7. Emergency clause.