HBA-TYH H.B. 3490 76(R)    BILL ANALYSIS


Office of House Bill AnalysisH.B. 3490
By: Dunnam
Insurance
3/30/1999
Introduced



BACKGROUND AND PURPOSE 

Currently, an insured party's attorneys can be compelled to submit billings
with detailed statements to a third-party auditor.  This may constitute a
violation of attorney-client privilege that could lead to revelation of
client confidences and make those materials discoverable by an adversary.
H.B. 3490 requires the insured party to give full consent in order for
information to be given to a thirdparty auditor. 

RULEMAKING AUTHORITY

It is the opinion of the Office of House Bill Analysis that rulemaking
authority is expressly delegated to the commissioner of insurance in
SECTION 1 (Article 21.56C, Insurance Code) of this bill. 

SECTION BY SECTION ANALYSIS

SECTION 1.  Amends Subchapter E, Chapter 21, Insurance Code, by adding
Article 21.56C, as follows: 

Art. 21.56C.  AUDIT OF BILLING BY DEFENSE COUNSEL.  Prohibits an insurer
that is obligated to provide a defense for an insured under a casualty
insurance policy from performing certain enumerated actions.  Authorizes an
insurer to take the above enumerated actions with the prior written consent
of the insured, obtained after full disclosure to the insured.  Requires
the commissioner of insurance, in consultation with the State Bar of Texas,
to adopt rules to implement this article.  Provides that the rules must
specify the disclosure required to be made. 

SECTION 2.  Effective date: September 1, 1999.

SECTION 3.  Emergency clause.
  Effective date: upon passage.